Resources

Relying on Contractual Mobility Clauses to Avoid Redundancies

15 February 2017

Contractual mobility clauses permit employers to change an employee’s place of work. They are often relied upon in redundancy situations to avoid making compulsory redundancies – and, in particular, to avoid making statutory redundancy payments.

However, one must be careful when relying on specific flexibility clauses like these, as they are interpreted narrowly by the tribunals and courts. Mobility clauses that are widely drafted or contain ambiguous wording will be interpreted in favour of the employee. They will be placed under particular scrutiny when the clause results in a material change in working conditions to the employee’s detriment.

The general principles that have developed through previous case law is that, when relying on a mobility clause, an employer must give reasonable notice, exercise their discretion reasonably, and should not act in such a way as to damage the relationship of trust and confidence between the employer and employee.

A contractual mobility clause was recently challenged by two employees employed by Kellogg Brown & Root (UK) Ltd. Kellogg operated its business out of two premises: one in Greenford and one in Leatherhead, some 20 miles apart. When Kellogg decided to close its premises in Greenford, which gave rise to potential workplace closure redundancies, it relied upon the contractual mobility clause in the employees’ contracts of employment to transfer their employment to the Leatherhead site.

The mobility clause read:

“The location of your employment is ……… but the company may require you to work at a different location including any new office location of the company either in the UK or overseas either on a temporary or permanent basis. You agree to comply with this requirement unless exceptional circumstances prevail.”

Some of the affected employees who had ‘exceptional circumstances’, such as childcare responsibilities, were made redundant and received redundancy payments.

The two employees who disputed the clause were Mr Fitton and Mr Ewer.

Mr Fitton was 34 years old and had been employed by Kellogg for 11 years. He lived in Harrow, did not have a car, and could walk or catch the tube into work in 20 minutes. The effect of the change of workplace was that he would face a two hour commute each way every day.

Mr Ewer was 64 years old and had been employed by Kellogg for 25 years. He lived in St Albans and the change of workplace resulted in his commute increasing from 18 miles to 47 miles.

Kellogg did not deem Mr Fitton or Mr Ewer to have ‘exceptional circumstances’, and instead sought to rely on the mobility clause on the basis that it ensured retention of the workforce and continuity of delivery for clients.

When Mr Fitton and Mr Ewer refused to accept the change of workplace, they were dismissed for misconduct on the grounds of refusing to follow a reasonable instruction from their employer.

The Employment Tribunal, and subsequently the Employment Appeal Tribunal, found that their dismissals were unfair. Whilst the reason for dismissal was misconduct, it was held that Kellogg’s reliance on the mobility clause was unreasonable for the following reasons:

    ·the contractual requirement to change an employee’s place of work was not valid; and

    ·the employer’s instruction to transfer their place of work from Greenford to Leatherhead was not reasonable; and

    ·it was reasonable for Mr Fitton and Mr Ewer to refuse to the change of workplace.

Whilst contractual mobility clauses can assist employers in avoiding compulsory redundancies, this case is a useful reminder of the constraints of relying on them without proper consideration. Employers must look at the impact of mobility clauses on employees’ working conditions and take into account any detrimental consequences when seeking to rely on them.

We will be discussing developments in unfair dismissal at our upcoming seminar at the Lightbox, Woking on 9 March. You can register your attendance here.

To discuss anything in the article further, please contact Michelle Tudor in our Employment team on 01483 464292 or alternatively email MichelleTudor@BarlowRobbins.com