02 February 2017

It is not uncommon for employers to close one place of work, and transfer the work to another existing site, or to new premises. Employees may be told that there is no longer a job for them at their former place of work, but that the company wants them to work at the new location.

Traditionally, employers had 2 choices:

1. Treat this as a redundancy situation, on the basis that the employer’s requirements for employees to do work of a particular kind at the place where the employee was employed have ceased. Employees would be offered alternative employment at the new site. If they accept that offer, their employment continues, and there is no redundancy pay. If they refuse the offer, their employment will end due to redundancy and they will be entitled to redundancy pay unless the offer of alternative employment was a suitable offer and it was unreasonable for the employee to refuse it. 
    
2. If there was a contractual mobility clause, whereby employees could be required to work at other locations, then the employer could choose to rely on that clause, and insist that the staff relocate. No question of redundancy arises, and if staff refuse to relocate, the employer would potentially dismiss for misconduct – the employee’s refusal to follow a lawful instruction.

Both these approaches would be valid, but the employer must be clear from the outset which of the 2 approaches he is adopting and cannot “dodge from one position to another”.

In the recent case of Kellogg Brown & Root (UK) Ltd v Fitton & Anor the Employment Appeal Tribunal (“EAT”) reminded employers that there are limits on the scope of option 2, and that this will not always be a solution.

The employer in that case closed its premises in Greenford, and proposed to move staff to its existing premises in Leatherhead, some distance away. The employer adopted option 2 and stated that it was issuing an instruction for employees to report to Leatherhead, the company having changed the place of work in terms of the contractual mobility clause. The company offered a certain amount of assistance with extra travelling costs and was willing to be flexible on start and finish times to assist with avoiding traffic.

Two employees refused to relocate as it would mean 20-30 extra hours of travel time per week. They were dismissed for gross misconduct – refusing to follow a lawful and reasonable order.

The EAT upheld the tribunal’s decision that they were unfairly dismissed. There were 3 main issues to consider, and the tribunal had found that:

• The mobility clause itself was excessively wide and not sufficiently clear. It stated that the mobility clause would not apply in exceptional circumstances but it was not clear what those would be or who should decide what was “exceptional”
• The order to relocate to Leatherhead was not a reasonable one for these employees given the impact it would have on them
• The refusal to follow the order was in any case not unreasonable given the employee’s personal circumstances

It followed, therefore, that the employees could not be said to have been guilty of misconduct, it was not reasonable for the employer to conclude that they had, and the dismissals were therefore unfair.

The EAT’s judgement does not address the issue of compensation but it seems unlikely that the employees would be awarded significant compensation for lost earnings – had the employer not acted unreasonably, the employees would have been fairly dismissed for redundancy. The “basic award” of compensation would, however, equate to the statutory redundancy payment they would have received. The employer could have saved itself a lot of trouble by agreeing to pay redundancy from the outset.

This case is a useful reminder of the limits placed on mobility clauses and other contractual terms. Just because a term appears to give an employer a particular power, does not mean it will always be reasonable for the employer to rely on it, or unreasonable for the employee to refuse to comply. Expert advice should of course be taken when these issues arise.

Contact: Douglas Strang Senior Associate dst@bto.co.uk T. 0141 221 8012