Does an employee qualify for redundancy pay even if they’re on a fixed-term contract? Martin Brewer and Esther Smith advise.
The question:
Our UK office may close and shift to a new city. It is just far enough away that two of the three staff may not want to shift. There is no issue with not retaining these two staff on the part of the company, but I was wondering what issues I might need to consider when/if the employees say that they cannot move. How do I need to treat this in terms of a resignation/termination, due to the new circumstances of the company, to ensure the employees are treated fairly and to ensure that the company is protected to the best of my ability, should one of the employees (or both) want to file any type of claim against the company claiming an unfair situation. The move is strictly to get access to better services and resources, and to take advantage of the better prices for rent and services in a more urban area.
Legal advice:
Martin Brewer, partner, Mills & Reeve
There are two ways to look at this. First, if you have a contract with a mobility clause, provided the clause is drafted widely enough to cover the move then you can insist the employees move. You cannot act in a way that makes the move very difficult or impossible for the employees to achieve, otherwise that could breach trust and confidence, but again, provided a mobility clause is drafted widely enough to cover what you want to do, no question of acting reasonably in requiring the move arises.
In other words; if you have the contractual right to move the staff then you may do so, even if that move is a considerable distance, provided that you, for example, give them sufficient notice of the move. If the employees refuse to move they are in breach of contract and can be dismissed.
If you don’t have a mobility clause and have time, think about introducing one, getting staff to agree to it before implementing the move. In the absence of a clause you are left only with persuasion and option two – redundancy.
So, as indicated above, if you don’t have a mobility clause which covers the move or can’t agree one then all of your staff are, in fact, in a redundancy situation. There are two definitions of redundancy – the disappearing job and the disappearing workplace. If you are relocating then you no longer need staff to carry out work at your current location and that falls within the ‘disappearing workplace’ definition of redundancy. The issue will then be whether the offer of jobs in the new location amount to offers of ‘suitable alternative employment’ and that has to be looked at from the employees’ perspective – is it suitable, taking into account their particular domestic/travel/childcare etc. arrangements.
You will need to follow a proper redundancy process and do so in good time to facilitate the move and, if necessary, recruit new staff. You will also have to build into your process the possibility of redundancy payments if you agree with staff that the relocation is too far for some of them for it to be ‘suitable’.
Martin Brewer can be contacted at martin.brewer@mills-reeve.com. For further information, please visit Mills & Reeve.
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Esther Smith, partner, Thomas Eggar
If you offer people suitable work (presumably the jobs they are already doing) at the new location they need to decide whether or not the offer of that work is suitable for them personally. This is a subjective test, and will therefore depend on each individual’s circumstances. If the employee reasonably refuses the new position, due, for example, for it being too far away, then they would get notice and redundancy pay. If they unreasonably refuse, then you could dismiss them on notice and withhold their redundancy pay.
Esther Smith is a partner in Thomas Eggar’s Employment Law Unit. For further information, please visit Thomas Eggar.
One Response
Office Relocation
I think the legal situation is fairly unambiguous, as suggested?
But don’t forget that those current employees who don’t want to move are still to be valued, and will still have views about their soon-to-be ex-employers that they may well wish to share with all and sundry?
My own experience as a UK MD in past recessions, in having to close sites in the UK and offering continued employment in relatively nearby establishments with all the help possible, including free transport and relocation costs as necessary, rarely produces much take-up – save at least at really quite senior and well-paid levels.
The idea that more junior people, less well-paid and possibly less career-focussed, especially with a tight family support-network more locally, might up-sticks and relocate in the case of their employer’s own relocation, may only be a fond hope. It happens widely within the USA, where ‘labor-mobility’ is legendary. It also happens frequently in other really distressed countries, where there is no economic (or political, sociological or religious) choice. But I haven’t found it happens very often anywhere in Western Europe in practice.
So if you ever plan a major relocation – be forewarned? Few may follow you, however intrinsically loyal. But don’t treat them any worse than you yourself might wish to be treated in their circumstances? Those affected may still become future employees, customers, suppliers or even employers in the future, and word of how they have been treated travels fast and is rarely forgotten! For generations, sometimes.
With best wishes to all who may face this dilemma, at any level;
Jeremy