A common cost cutting measure for struggling businesses is to move its workforce, or part of it, to a more cost effective site. If this means that there is no longer work for employees in the location where they are employed, they may be dismissed by reason of redundancy and consequently, might be entitled to receive a redundancy payment. However, many employers include mobility clauses in their employees’ contracts of employment which may state, for example, that the employee may be required to work “anywhere in the UK” or “anywhere within reasonable daily travelling distance” of the existing premises. If the employer is able to rely on a mobility clause, there may well be no need to dismiss the employee and therefore there might be a saving in terms of not having to pay a redundancy payment.
Employers do need to beware however as enforcing mobility clauses can be problematic, particularly if they are widely drafted because employers have to act reasonably when enforcing them, and often what is ‘reasonable’ is debatable.
In Kellogg Brown & Root (UK) Ltd v (1) Fitton UKEAT/0205/16 and (2) Ewer UKEAT/0206/16, the EAT considered whether an employment tribunal was correct in finding that two employees had been unfairly dismissed when their employer had tried to exercise a mobility clause to move them to another office when their office closed. The new office would have increased the claimants commute by over four hours per day and one of the claimants was nearing retirement. Both Claimants refused to relocate and were dismissed.
The EAT upheld the tribunals decision that the employees had been unfairly dismissed but disagreed with the reason. The EAT decided that although the dismissal was during a redundancy process, the reason for dismissal was misconduct because the claimants refused to comply with the relocation, rather than redundancy itself.
In reaching its decision, the tribunal had considered the wording of the mobility clauses, how reasonable it was for the respondent to impose the relocation and how reasonable it was for the claimants to refuse. It concluded that the mobility clause was so widely drafted that it lacked certainty and therefore could not be relied upon. It also found that although Kellogg put in measures to lessen the negative effects of the longer commute (by allowing affected employees to leave early and providing compensation) this did not alleviate the issues of the claimants. It was therefore still reasonable for the claimants to refuse.
This case demonstrates the importance for employers of a well drafted mobility clause if they are hoping to reply on it. On the one hand, it may save the employer from dismissing employees for redundancy, however, an Employment Tribunal may scrutinise the clause closely during any dispute, and this could prove more costly in the long run.
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