The importance of including a mobility clause in your contract of employment

Introduction

Under The Terms of Employment (Information) Acts 1994 – 2014, an employer is required to provide an employee with a statement in writing containing the employee’s terms of employment. This statement is required to be delivered to the employee within two months of commencing employment. One of the terms to be set out in writing is the employee’s place of work.

However, it has now become common practice for an employer to include a mobility clause in a contract of employment.

What is a mobility Clause?

A mobility clause generally reserves the right of the employer to relocate an employee to an alternative place of work. The contract of employment may contain wording to the effect that:-

‘The Company reserves the right to make reasonable changes to the Employee’s place of work, in which event, the Employee will be given reasonable notice.’

The inclusion of a mobility clause in a contract of employment provides an employer with flexibility to move an employee’s place of work to a different location within a reasonable area.

Why would an employer want to include a mobility clause in the contract of employment?

Employers will generally want to retain as much flexibility as possible in the contract of employment. Mobility clauses may be relied upon by an employer to relocate employees for a number of reasons, including:-

• Expansion of the business, requiring a move to a larger premises with more accommodation;
• Downsizing of a business, requiring a move to a smaller premises with lower costs;
• Expiry of a lease;
• Reorganisation of a business;
• To facilitate a merger of businesses;

If a business has a mobility clause in a contract of employment, is there anything else it should consider before relying on the mobility clause?

Yes, while it is important to have a mobility clause in an employee’s contract of employment, it is equally important that an employer acts reasonably and responsibly when seeking to rely on such a clause.

Including a mobility clause in a contract of employment does not confer an absolute power on an employer to relocate an employee. The mobility clause must be exercised reasonably and in consultation with the employees concerned.

What factors are considered in assessing reasonableness?

The test for reasonableness is a subjective one.

Issues arising from the proposed change must be considered on a case by case basis. What may be considered a reasonable request for one employee may not be considered reasonable by another employee.

Employers should engage with employees where a material change is necessary even where the contract of employment contains a mobility clause. Failure to do so may leave the employer open to a successful claim for redundancy or a constructive dismissal claim should the employee resign.

An Illustrative UK Case

Kellogg Brown & Root (UK) Ltd. v (1) Fitton and (2) Ewer is a 2016 UK case which looks at the concept of reasonableness.

In this case Kelloggs, the company, had two UK offices, one in Greenford and one in Leatherhead (approximately 50km apart). Kelloggs decided to close its site in Greenford and instructed some of the affected employees to transfer to the Leatherhead site in reliance on a mobility clause in the employees’ contracts of employment.

Those employees who Kelloggs considered to have “exceptional circumstances”, such as childcare responsibilities were made redundant and received redundancy payments.

Two employees, who were not considered by Kelloggs to have “exceptional circumstances”, refused to relocate as their commute would increase substantially (by some 20-30 hours a week). These employees also had notable ties to the location of the former office. One of the employees was 64, with 25 years service to the company with significant life ties to the Greenford area. The other employee just recently bought a property near the Greenford site.

Kelloggs was of the opinion that as work was available to the employees at the new location, redundancy did not apply. It viewed the refusal by the employees to transfer as a breach of contract and dismissed the employees.

The Employment Appeals Tribunal in the UK found that their dismissal was unfair. It held that the instruction to relocate was unreasonable in light of the considerably extended commute for the employees concerned and their personal circumstances. The Tribunal also held that the wording of the mobility clause was too wide and was therefore unenforceable.

What should an employer do if an employee is refusing to relocate?

An employer should consult with the employee concerned to ascertain the reasons why the employee is resisting the proposed relocation.

Once the reasons for the refusal have been identified, the employer can consider whether any reasonably steps can be taken by the business to find a mutually agreeable solution. For example, if the issue is a longer commute, the employer could consider whether the employee could work remotely certain days during the week; if the issue is public transport, the employer could consider arranging a feeder bus from the previous location.

If the employee’s concerns in relation to the relocation are reasonable and a business is unable to facilitate the employee in some way, redundancy may apply. The definition of redundancy as set out in the Redundancy Payments legislation provides: –

“An employee who is dismissed shall be taken to be dismissed by reason of redundancy if[…] the dismissal is attributable wholly or mainly to the fact that the requirements of that business for employees to carry out work of a particular kind in the place where he was so employed have ceased or diminished or are expected to cease or diminish.”

Key Points

• Include a carefully drafted mobility clause in all employment contracts of employment. You never know when you might need to rely on it;
• If the business is relocating, consider whether requiring all employees to relocate is reasonable in light of the distance and employee’s personal circumstances.
• Consult with the affected employees in good time before the proposed relocation to identify personal circumstances which might impact on whether employees will relocate and whether they are entitled to a redundancy payment;
• Consider the likely cost to the business of relocating including the potential for redundancy costs.

For further information on this topic, please contact Laura Graham at lgraham@reddycharlton.ie