HR 31 March 2017

How to handle a business relocation with employees

Employers are not obliged to pay business relocation costs unless this is included in the employees? contracts
Here, Peter Done, founder of Peninsula HR, provides advice for smaller employers for handling a business relocation, following the news that many city firms have responded to Article 50 by movingabroad.

A growing number of leading City firms have revealed they are now laying the foundations for an exodus of thousands of jobs from London after Britain’s vote to leave to EU.

Just days after Theresa May formally triggered the process for Brexit it was confirmed that the insurers Lloyd’s of London are setting up subsidiaries outside the UK, while the investment banks JP Morgan andcitigroup are actively exploring the business relocation of key operations.

So how should a small employerhandle business relocation with their employees?

The location where an employee carries out their work is a term of employment which makes up part of the contractual arrangements between employer and employee. To change that location can mean that employers are changing a term of the employee’s contract and this requires agreement from the employee.

To effectively force an employee to relocate in an unreasonable manner could potentially allow them to resign and claim constructive dismissal.

The first step employers should take is to look at the existing contracts of employment for a mobility? clause. A mobility clause reserves the right for the employer to enforce relocation on employees.

Where the employee has signed their agreement to their contract of employment, this will mean that employers are entitled to invoke this clause and expect that staff will move within the limits stipulated in the mobility clause.

However, mobility clauses must be drafted within the realms of reasonableness if they are to have any power, and the geographical location stipulated within a mobility clause will have an impact on this.

Asking employees to move a distance that is outside of the radius in the mobility clause such as aboard or wanting the employee to move where there is no mobility clause in operation would constitute a variation to the terms and conditions of their employment.

This can only be effected where there is agreement from the employee so a process should be used to obtaining. Employees should be consulted with so that they are aware of what the employer is planning, giving them opportunity to consider the proposals and approach the employer with any concerns.