The dangers of relying on mobility clauses upon relocating an office

The dangers of relying on mobility clauses upon relocating an office

In the recent case of Kellogg Brown & Root (UK) Limited v Fitton, the Employment Appeal Tribunal has underscored the risks an employer runs in seeking to rely upon a mobility clause when it is relocating its offices. Claims of unfair dismissal were upheld against the employer because the mobility clause in question was too widely drafted and it was unreasonable to require the employees to move a significant distance.

In a fairly old case (Curling v Securicor, 1992) the Employment Appeal Tribunal (‘EAT’) observed that, when an employer is closing down a part of its business in one location and relocating it to another it can adopt two different attitudes to how it deals with its employees:

“The employer can evoke a mobility clause in the contract and require the employee to go to a new location or job, if the clause entitles him to do so, whereupon no question of redundancy will arise.  Alternatively the employer can decide not to invoke the mobility clause and rely instead on alternative suitable offers of employment as a defence to claims to a redundancy payment.”

This principle was subsequently approved in Home Office v Evans, 2008 where the Court of Appeal confirmed that an employer was legally entitled to invoke a mobility clause where a redundancy situation might arise or has arisen on the closure of part of a business and the employer wishes to move the employees to another location.

The employer, in this case, was closing its office in Greenford and relocating all of its employees there to its Leatherhead office.  The two employees who brought the claims both objected to the move because they would have to travel for approximately 20 or 30 hours more a week.  All of the employees at the Greenford site had an express mobility clause in their contract which said that the employer could require employees to move to “any new office location of the Company either in the UK or overseas either on a temporary or permanent basis”.

The employer required the claimants to move pursuant to this clause.  When they refused to do so, it dismissed them on the grounds of failing to follow a reasonable instruction.  The employees brought claims of unfair dismissal and for statutory redundancy pay.

While the Employment Tribunal held that the employees were entitled to statutory redundancy pay and had been unfairly dismissed, the EAT said they were not entitled to statutory redundancy pay because the reason for the dismissal given by the employer was not redundancy but the refusal to follow a reasonable instruction.  The EAT upheld the decision that the dismissals were unfair.

The EAT reiterated the long established principle that an express mobility clause must be read as having an implied term of reasonableness incorporated within it.  It considered not only that the clause was unreasonably wide but also that the requirement for these two employees to travel an extra 20 or 30 miles was unreasonable.  So, the employees will secure compensation for unfair dismissal.

This case serves to underline the point that while an employer can rely upon a reasonably drafted mobility clause if an office is being relocated over a relatively short distance; if the employees are required to move a significant distance there is a risk of successful claims of unfair dismissal in seeking to rely upon a mobility clause.  In most cases a statutory redundancy payment will be less than compensation for unfair dismissal. An employer will have to weigh up the relative risks of relying upon a mobility clause as opposed to following a redundancy process, which may involve making redundancy payments to employees who reasonably refuse offers of suitable alternative employment in the new location.

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