Relocation redundancy: Best practices for employers

If you decide to move your company to a different location in the UK, you’ll no doubt want your employees to come with you. The good news is that if your employees have a mobility or relocation clause in their contract, you may well be able to require them to move with you – unless they can prove the request is unreasonable. 

If there is no mobility clause and they refuse to move with you, you might have to consider relocation redundancy. 

In this article, our HR & Employment Law experts tell you all you need to know when it comes to relocation, including employee rights, what happens if employees refuse to relocate, relocation redundancy distance, and much more.

 

Understanding employee relocation redundancy rights

The first key consideration when it comes to relocation and employee rights is what’s written in an employee’s contract. In particular, whether you have the right as an employer to require relocation. These are known as mobility or relocation clauses. If an employee has one in their contract, in theory they will have to move with you – unless they choose to resign – but you’ll have to exercise it appropriately. 

 

Exercising a mobility clause in the contract

Even if there is a mobility or relocation clause in the contract, if it’s never been used or referred to before it could be argued that it’s lapsed. Sometimes, employees have a mobility clause in their contracts that isn’t thought about for years. If you suddenly try to rely on this to move the employee, this could well be a breach of trust and confidence.   

A contractual mobility clause must also be exercised reasonably – for example, you must give reasonable notice of the move, or have a good reason for moving, particularly when you’re moving a long distance.  If the move is going to be quite disruptive for employees, then you should have considered any alternatives. 

As well as this, make sure you consult with employees first, where this is possible. This will help to maintain employee engagement and trust, which can in turn help to keep your workforce productive and motivated.  

You should keep in mind that exercising a mobility clause could be found to be indirectly discriminatory on the grounds of sex – for example, if it was found that women found it more difficult than men to move their home and job. You’d therefore need a good reason for the change in location.  

Of course, even if there is a contractual mobility clause you can’t force an employee to move. Instead, they may choose to resign rather than relocate. However, explaining the reasons for the move and treating them fairly throughout the process can go a long way in persuading them to stay committed to the business.  

If they don’t resign but your business has relocated and they won’t move, then you may end up having to take them through a disciplinary/dismissal procedure.  This is likely to be for breaching their contract and failing to follow reasonable management instructions to relocate in line with their mobility clause.  

 

Offering the chance to relocate

Relocation isn’t a reason to be able to start ‘afresh’ with a new workforce. You’d need to offer all your employees the opportunity to relocate, whether or not there’s a mobility clause, otherwise you could be risking an unfair dismissal claim. 

If employees agree to the move, then this can be followed up in writing with a relocation letter to the employee. 

In this letter, the reasons for the relocation should be outlined and when it would take effect. You may decide to introduce a transition period first and could also consider employee relocation expenses. The letter should be signed and dated by both you and the employee to confirm the change. 

 

Redundancy process when restructuring

It would only be if you had a good business case for a restructure that you might be able to justify not offering all employees their jobs at the new location – for example, if you were downsizing. If that were the case, you’d need to first go through a proper redundancy consultation process. 

This would include setting out the business reason for the move and consulting fully with your employees on the reductions to the workforce. If 20 or more employees are at risk of redundancy, you would need to undertake collective consultation first. 

You should always set out why you’re relocating and present this as a reasonable business reason to your workforce.

 

Relocation packages

You don’t have to offer a relocation package, but it could help to encourage staff to relocate. It would be best to offer these packages consistently – e.g., to all managers or to all employees – rather than picking and choosing. Otherwise, you’re risking claims of unfairness, or even discrimination.  

 

No mobility clause in the contract

Without a mobility or relocation clause, if you try to force your employees to move with you, you’ll be at risk of a claim of breach of contract.

 

What happens if an employee refuses to relocate?

If an employee doesn’t have a mobility or relocation clause in their contract and refuses to relocate, then the alternative is relocation redundancy. You could make them redundant as their previous job (i.e., at their old location) has disappeared. They would then have the right to a redundancy payment (if they qualify).

If an employee has over two years’ service, they’ll be entitled to a statutory redundancy payment. Click here for more information on statutory redundancy pay, and a handy calculator to help you work out the costs.

Again, you would need to follow a fair redundancy consultation process before the move is decided.  If 20 or more employees are at risk of redundancy, you would need to undertake collective consultation first. 

 

What is a reasonable relocation redundancy distance? 

If the business is moving only a very short distance away, you shouldn’t need to worry about the above. Legally, there’s no defined distance that’s considered to be reasonable when relocating. It all depends on what your employees are happy with. 

Employment tribunals tend to take the stance that there’s a very limited mobility clause in contracts of employment, so a move to a place that’s just around the corner should not present a problem. In this scenario, it’s highly unlikely that an employee would try to object anyway.

 

How Citation can help 

There’s lots to consider when moving your business and, when relocation redundancies are necessary, the process can get a little bit more complicated. So, it’s always a good idea to seek advice first. 

Our HR & Employment Law experts are on hand to help. With over 60 barristers, solicitors and HR professionals in our team, you can trust that you’re receiving the most up to date and accurate advice. 

If you are already a client of ours, please call 0345 844 4848 to discuss how your business should approach relocation and possible redundancies due to relocation. 

If you’re not already benefiting from 24/7 access to our expert advice, please call 0345 844 1111 to find out more.