Weekly dilemma Redundancy on closure of business

We need to close down our Guildford office and move to Reading. There are mobility clauses in the contracts of employment for staff based in Guildford, and we have a contractual redundancy procedure. Some employees are refusing to relocate because of the extra travelling time. Do we need to pay them redundancy pay?

A similar situation was recently examined in Home Office v Evans (2007), when the Home Office sought to relocate certain employees during Waterloo International’s closure. The employees refused to move so resigned and claimed constructive dismissal. The court held that the Home Office could invoke the mobility clause in its employee contracts rather than follow the agreed redundancy procedure.

To relocate your employees by relying on their mobility clause, you should first check that any mobility clauses within their contracts of employment are sufficiently wide to cover the relocation. Second, make it clear to the employees from the outset that they are being relocated pursuant to the mobility clause, rather than giving them the option of taking redundancy. Third, consult your employees and give reasonable notice of any move. Failure to do so will undermine the implied term of trust and confidence and could lead to constructive dismissal claims.

What is unclear from the Home Office decision, however, is whether employees who refuse to relocate, and are subsequently dismissed, can make claims for statutory redundancy pay.

It is arguable such employees are dismissed for misconduct for failing to follow a lawful order, rather than redundancy. As such, there should be no liability to pay redundancy payments. However, until the courts give guidance, employers may need to make statutory redundancy payments, unless the employees have unreasonably refused suitable alternative employment.

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