Pitfalls to watch out for when reorganising staff

Employers who fail to correctly enforce a mobility clause could face claims
or wrongful or constructive dismissal

In the present economic climate, there are a number of employers who are
considering reducing or reorganising their workforce. Some employers are
shutting down their branch offices and employees are being made redundant or
asked to relocate.

As a result, mobility clauses in employment contracts are increasingly
coming into play. However, any employer seeking to enforce a mobility clause
must give careful thought to what can be required of the employee. Get it
wrong, and an employee could claim wrongful dismissal and may also be able to
claim they have constructively been unfairly dismissed.

This is unsatisfactory commercially on a number of levels. An employer will
be faced with the costs and administrative head- ache of defending a claim; a
successful employee may be awarded damages for wrongful dismissal and, where
relevant, an award for unfair dismissal. In addition, the staff morale of
remaining employees may be affected and any case may attract unwelcome
publicity.

If you need an employee to relocate, first you will want to know whether
there is an express contractual term, or an implied term, relating to job
mobility.

If a contract expressly specifies a workplace and there is no mobility
clause, an employer will usually be in breach of contract if it insists on
relocating its employees.

However, an insistence by the employer on a move a short distance away is
unlikely to amount to a fundamental breach of contract, entitling the employee
to resign and claim constructive dismissal. But if the employer requires a move
of greater distance, it will need to obtain express consent from the employees
to vary their contracts and agree to the relocation.

Where a contract is silent as to the employee’s place of work, a court or
tribunal may imply a term in respect of the place of work or job mobility.
However, this will depend on individual circumstances and is therefore not
particularly attractive because of lack of certainty.

An employer can avoid many of the problems by including a right in its
employment contracts to require employees to move offices as the needs of the
business dictate. For more junior employees, employers should consider limiting
the right to a reasonable travelling distance from the employee’s existing
location.

However, even where there is a mobility clause in the contract, an employer
must exercise caution when relying on this right. The guiding principle is that
the employer must act reasonably. It must bear in mind the fact that it owes an
implied duty of trust and confidence towards the employee.

Accordingly, the employer should consider factors which will affect the
employee outside of any strict contractual right. For example, the personal
circumstances of the employee and where they live in relation to the proposed
office.

The relative seniority of the employee is also important because what may be
reasonable for a senior employee will not necessarily be reasonable for a
junior employee.

In addition, the employer should ensure:

– The employee is given as much notice as possible of the proposed move

– The distance between offices is not unreasonable, and

– The move will not undermine the employee’s status.

An employer should also consider whether arrangements should be put in place
to assist an employee with the move, – helping with additional travelling
costs, for instance.

In summary, as always, the best advice is for an employer is to act
reasonably.

By Sarah Keeble a partner at Olswang solicitors

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