Mobility clauses and redundancy

Kellogg Brown Ltd v Fitton

An employer can rely on a mobility clause in its employees’ contracts where there is a potential redundancy situation – but it must be very careful when it does so, as this decision usefully illustrates.

Mr Ewer and Mr Fitton had worked for KB at its Greenford office for 11 and 25 years respectively. Their contracts included a mobility clause which stated that KB could require them ‘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’ and that they agreed to comply with this requirement ‘unless exceptional circumstances prevail’. KB decided to close its Greenford office. It told staff that they’d have to move to its Leatherhead office. When Mr Ewer and Mr Fitton refused to move because of the substantial increase in travelling time they were called to a disciplinary hearing and summarily dismissed.

A tribunal held that they’d been dismissed for redundancy and were entitled to statutory redundancy payments. It also held they’d been unfairly dismissed. KB appealed. It gained a somewhat pyrrhic victory.

The EAT said the tribunal had got it wrong when it said the employees had been dismissed for redundancy. The reason for dismissal hinges on what the employer genuinely believed at the time. Here the tribunal found that KB believed it had a right to instruct the employees to relocate under the mobility clause - and it was their refusal to obey that instruction that led KB to decide they should be dismissed. Since the real reason for dismissal was not redundancy but conduct, the employees weren’t entitled to statutory redundancy payments.

But in practical terms this didn’t help KB. In any conduct dismissal the employer has to show that in the circumstances of the case, it has acted reasonably in treating this reason as a sufficient reason for dismissal and on that basis the EAT went on to uphold the tribunal’s finding that the dismissals were unfair because KB had acted unreasonably when dismissing the employees for refusing to move in accordance with the mobility clause. The following factors were crucial:

  • The mobility clause lacked certainty and was very widely drafted and KB had allowed for little or no individual difficulties with complying with it.
  • The instruction to relocate was unreasonable for both employees because of the greatly increased travelling time. The limited steps KB had taken to alleviate some of the disadvantages of a longer commute (e.g. by providing a contribution to offset increased travel costs and reducing core hours to allow travel outside of peak times on the M25) were of no significance in these employees’ cases.
  • In Mr Ewer’s case, the proximity to retirement, the increased travelling and his links to Leatherhead meant his refusal was not unreasonable.

Link to judgment: http://www.bailii.org/uk/cases/UKEAT/2016/0205_16_2111.html

Comment

If you are closing a workplace then this falls within the definition of redundancy. If you want to move staff to another location then you can either take advantage of a clear, express, contractual mobility clause or you can suggest that the new location is a suitable alternative position and redundancy is not available. If you go down the latter route then the test is entirely subjective, i.e. is it suitable for this particular employee taking into account their personal circumstances. If you want to rely on a mobility clause then bear the following in mind:

  • Choose one approach from the outset – either the redundancy route or the mobility clause route. Make it clear to staff which avenue you’re pursuing. Don’t flip flop between the two seeking the most profitable approach. If you start with a redundancy process and then later on try to argue you’re entitled to require staff to move under a mobility clause, case law has confirmed it will be an unfair dismissal.
  • When consulting with staff about the relocation, consider individual employees’ specific circumstances and issues. Don’t take a blanket approach.
  • Give reasonable notice before exercising the power to transfer staff.