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Relocation redundancy
[ch 11: pages 325-326]One common example of redundancy is where the employer moves to a new location or site 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 should be paid to its terms, as the employer is likely to argue that it removes members’ rights 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. In that case, 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 this more recent case, which followed the closure of the Waterloo International Terminal in 2007:
Instead of declaring redundancies, the Home Office invoked a mobility clause which allowed it to force employees to relocate to new premises within a reasonable distance on reasonable notice. It required staff to relocate to Heathrow. The Court of Appeal said that under the terms of the employment contract, the Home Office could 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 redundancy dismissals. Two employees who refused to relocate were dismissed. The Court of Appeal 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).
The Home Office case above illustrates the need for great care in this kind of situation. There is also a risk that an offer of a new role in the new location may be suitable alternative employment, meaning that an unreasonable refusal to relocate results in the loss of any redundancy payment (see Alternative work, page 353). Refusing the role could also be a failure to mitigate loss and could significantly reduce any compensatory award in an unfair dismissal claim (see Chapter 10: Unfair dismissal).
In a new case, Exol Lubricants Limited v (1) Birch and (2) Perrin [2014] UKEAT/0219/14/KN, the EAT has looked at “place of work” redundancies for mobile employees who have no obvious fixed place of work, such as delivery drivers. In these circumstances, says the EAT, tribunals should look first at the contract wording, to see whether a place of work is identified, such as the Head Office or a depot. However, as always, the wording chosen is not conclusive and context is important. In appropriate cases, the place of work is likely to be the place where employees are expected to attend to receive instructions, and in the case of a delivery driver, to load up their next delivery.