Relocation redundancy

There can be a redundancy where an employer’s need for employees to carry out work in “the place where they are employed” has ceased or diminished (section 139 ERA 96). This is often called relocation redundancy.

However, the contract may contain a “mobility” or “relocation” clause. This is a contract term that allows the employer to require employees to change their work location. This is another issue on which the law is uncertain and unsatisfactory. Based on the case law to date, it is unclear whether there will always be a redundancy situation triggering a right to a redundancy payment where the employer can point to a mobility clause entitling it to force staff to relocate. As a result, reps should be very cautious where employers invoke mobility clauses in the context of redundancy and relocation instead of offering redundancy terms.

In High Table Ltd v Horst [1997] EWCA Civ 2000, the Court of Appeal ruled that an employee who had always worked in one location was entitled to a redundancy payment when her employer required her to relocate to new premises, even though her contract entitled the employer to force her to relocate. The court said that employers should not use mobility clauses in employment contracts to defeat genuine redundancy claims. The same result was reached in Bass Leisure v Thomas [1994] IRLR 104.

However, the Court of Appeal took the opposite view in a more recent case, Home Office v Evans & Laidlaw [2007] EWCA Civ 1089. In this case, instead of declaring redundancies, the Home Office invoked a mobility clause to force employees to relocate. The Court of Appeal said that the employer could effectively choose between invoking the mobility clause and making 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 — and not for redundancy, so no redundancy payments were due. 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.

The Home Office case shows 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 an offer of suitable alternative employment, removing the entitlement to a redundancy payment (see Alternative work, page 341). It would also enable the employer to argue that the employee has failed to mitigate their loss and should receive no compensatory award in any unfair dismissal claim (see Chapter 10: Unfair dismissal).