Brexit: what’s the legal position if employees must relocate?

Speculation has been rife that Brexit will lead major financial institutions based in London to relocate to mainland Europe. Rob Powell/LNP/REX/Shutterstock.
Speculation has been rife that Brexit will lead major financial institutions based in London to relocate to mainland Europe. Rob Powell/LNP/REX/Shutterstock.

Suggestions that high-profile businesses such as banks will leave the UK because of Brexit highlight the employment law issues employers face when relocating. Ashok Kanani looks at some of the key questions employers should consider if they decide to relocate.

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Is there a mobility clause?

Employers are required to notify their employees of the place of work in the written particulars of employment.

However, it is common to incorporate a term into the contract of employment that allows them to require an employee to change his or her place of work.

A mobility clause can include relocation to an overseas location.

What if there is no mobility clause?

Where there is no express mobility clause in the contract of employment, the courts have held that there exists an implied mobility clause if the relocation is within travelling distance of the employee’s home.

In O’Brien v Associated Fire Alarms Ltd, the employer dismissed three employees who refused to relocate.

The employer argued that the employees were in breach of an implied term in the employment contract that they could be required to work anywhere within the geographical area covered by the branch office where they were based.

The Court of Appeal did not find any such implied term. Instead, it found that there was an implied term that the employees could be employed within a reasonable travelling distance of their homes.

Subsequent court decisions have agreed with that finding.

In Courtaulds Northern Spinning Ltd v Sibson and another, the Court of Appeal held that the employee could be transferred anywhere within reasonable commuting distance of his home. It found that moving the workplace by one mile was acceptable.

In Prestwick Circuits Ltd v McAndrew, it was reasonable to move the employee to a workplace 15 miles away.

Have we consulted and given notice of the move?

The case of Prestwick Circuits Ltd v McAndrew is a reminder that employers need to act reasonably and consult with affected employees well in advance when proposing to relocate them.

In this case, the employer attempted to transfer the employee to a different location giving three days’ notice.

The employee refused the move and signed a resignation letter that had been prepared by the employer. Subsequently, the employee complained that he was constructively and unfairly dismissed.

The Court of Session upheld the tribunal’s findings of unfair dismissal. It held that requiring the employee to transfer at short notice was a fundamental breach of the employment contract.

Do we have to make a redundancy payment if an employee is dismissed for refusing to move?

Where an employee refuses to move to a new location and is dismissed, the employer might be liable to make a redundancy payment. This is can be the case even if a mobility clause exists.

The law on redundancy refers to a redundancy situation arising where the employer has ceased to carry on the business in the place where the employee was employed.

It does not matter if the employer then starts up the business again at a different location, and whether or not the employee could be required to work in the new location pursuant to a mobility clause.

How could a mobility clause help in avoiding redundancy?

It may be possible for an employer to avoid a redundancy process if it relies on the mobility clause from the outset.

In Home Office v Evans and another, the Court of Appeal held that the employer was entitled to rely on wide contractual mobility clauses where a relocation exercise did not foresee any redundancies.

In that case, the employer did not engage the redundancy process. Instead, it sought to rely on the mobility clauses to relocate employees.

The employer consulted and had held regular meetings with staff, but it refused to begin a redundancy procedure. Two employees resigned and claimed constructive unfair dismissal.

The Court of Appeal agreed with the employer that it had had a choice as to whether or not to invoke the mobility clauses to avoid redundancy dismissals.

As the employer was not proposing to dismiss employees and instead had chosen to rely on the contractual mobility clauses the obligation to follow a redundancy process did not arise.

Further reading

XpertHR’s guide for global employers provides an overview of the main issues facing employers with staff in more than one country.

What practical steps could we take?

Employers should bear in mind that, where there is no express mobility clause, they can still explore with employees their willingness to relocate, and effect a mutually agreed variation to the employment contract.

Employers may wish to offer employees assistance to allow them to adjust to a new place of work, assist them with expenses and finding accommodation.

Where assistance is offered, it is good practice to set out the terms of the assistance and eligibility criteria in a policy document.

Relocating abroad is likely to be bring up many other challenges for organisations. If it is common practice to send employees abroad, employers should ensure that their international assignments policy is kept up to date.