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Relocation redundancy
[ch 11: pages 382-383]One common example of redundancy is where the employer relocates and no longer needs employees to carry out work in “the place where they are employed” (section 139, ERA 96).
The employment contract may contain a mobility clause. Close attention must be paid to its terms as the employer may argue that it removes the right to a redundancy payment.
In High Table Ltd v Horst [1997] EWCA Civ. 2000, the Court of Appeal ruled that whether or not fewer employees are needed in the place where the employee was employed is a question of fact, to be answered by looking at where the employee actually worked day-to-day before being dismissed. Ms Horst had always worked in the same location. The court said that she was entitled to a redundancy payment when her employer required her to relocate to new premises, even though her contract entitled her employer to force her to relocate. Employers should not be encouraged to use mobility clauses in employment contracts to defeat genuine redundancy claims, said the court. The same result was reached in Bass Leisure v Thomas [1994] IRLR 104.
However, the Court of Appeal took the opposite view in the next case, which followed the closure of the Waterloo International Terminal in 2007:
Instead of declaring redundancies, the Home Office invoked a contractual mobility clause which required employees to relocate to new premises within a reasonable distance on reasonable notice. Staff were told to relocate from Waterloo International Terminal, which was being closed, to Heathrow. The Court of Appeal (CA) said that the Home Office had the contractual right to choose between invoking the mobility clause and making redundancy dismissals. In other words, the law did not prevent the Home Office relying on the mobility clause to avoid the cost of declaring redundancies. Two employees who refused to relocate were dismissed. The CA said they were fairly dismissed for misconduct — refusing to obey a lawful order — not for redundancy. No redundancy payments were due.
Home Office v Evans & Laidlaw [2007] EWCA Civ. 1089
Employers who invoke a mobility clause late in the day after announcing planned redundancies or starting redundancy consultation are less likely to be able to avoid liability for redundancy payments in this way.
A mobility clause must not be exercised capriciously (United Bank Ltd v Akhtar [1989] IRLR 507) or unreasonably:
An employer relocated to a new geographical region and tried to enforce a contractual mobility clause to require one employee of 24 years’ service who was a year short of retirement to add a 100-mile motorway round trip to his daily commute. Another employee, who did not own a car, faced a two hour commute each way. When neither employee was able to comply with the request to relocate, the employer dismissed them. Both dismissals were ruled unfair. The EAT ruled that the employer could not rely on the mobility clause to avoid paying redundancy pay because the instruction to relocate was unreasonable and invalidated the clause.
Kellogg Brown & Root (UK) Ltd v (1) Fitton UKEAT/0205/16 and (2) Ewer [2017] UKEAT/0206/16
Employers must not breach obligations under the Equality Act 2010 when enforcing a mobility clause, including the duty to make reasonable adjustments and the obligation not to discriminate (see Chapter 7, page 254). There is more information about express mobility clauses on page 78, Chapter 3.
An offer of a new role in the new location may be “suitable alternative employment”. An unreasonable refusal of the offer can result in the loss of any redundancy payment (see Alternative work, page 409). In practice, reps need to take great care when faced with a mobility clause in the context of redundancies. It can result in the loss of redundancy payments.