Mobility Clauses – How useful are they?
Employers have a legal obligation to provide employees with details of their place of work. But what if you want to change an employee’s location of work in the future? This could arise where:
- You have multiple sites and may need an employee to work across site
- You require an employee to work across multiple client sites
- You move premises and want some or all of the staff to move with you
- You want employees to be based at home for some or all of their time.
The coronavirus pandemic resulted in many employees working from home and employers were able to justify the change in location of work because of government guidance designed to protect the health and safety of the population. Having tried and tested homeworking many businesses intend to continue with homeworking and hybrid working arrangements into the future. This will result in a need to make a more permanent change to the employee’s contractual place of work.
A change to a contractual location of work is a change to terms and conditions of employment. A contract can only be amended in accordance with its terms or with the agreement of all parties.
When making a change to a place of work an employer should first consider whether the existing terms of the contract permit the change, which can happen in two ways:
- Existing terms on location of work are sufficiently broad to accommodate the proposed change, or
- There is already an express contractual right to vary the contract in respect of the place of work.
A clause that permits a change to an employee’s location of work is often referred to as a “mobility clause”. If, within the contract’s terms, the employer is permitted to make the change, they will be able to do so without obtaining the employee’s express agreement.
However, if there is no existing right to make the change, the consent of the employee will be required.
Even if there is a mobility clause in the contract, that does not mean that an employer can make that change with impunity. An employer’s right still has to be exercised in a way that is reasonable. That means that the employer still needs to balance the reasons for the change, the extent of the change and the impact on the employee to ensure that the change is a reasonable. If it’s not reasonable, even if there is a contractual right to make the change, it could still breach the implied term of mutual trust and confidence, which would give the employee the right to resign and claim constructive unfair dismissal.
Clauses, such as mobility clauses, are interpreted restrictively by the courts and any ambiguity or if it is drafted too widely it will be interpreted in a way that is beneficial for the employee.
The British Chamber of Commerce have recently indicated that around one in five businesses are planning to make redundancies once the furlough scheme ends in September 2021. Redundancy can arise where an employer proposes to cease carrying out a particular kind of work in a particular location. As such, it covers circumstances where a business wishes to move employees from one location to another if the driver for that is a decision to stop doing certain kinds of work, or any work, on a particular site or premises. This may lead employers to consider whether they can utilise contractual mobility clauses to require the staff to move to new premises or whether they need to implement a redundancy procedure.
If a mobility clause is included in a contract of employment and is sufficiently clear to allow an employer to change an employee’s location of work on a permanent basis, within a reasonable radius of their existing workplace, it may be possible to rely on a mobility clause to move staff rather than implement redundancies.
However, the courts do interpret mobility clauses restrictively and take the view that, if a redundancy situation arises because of a change in location of work, the fact there is a mobility clause does not automatically mean that there’s no redundancy. One judge put it very clearly “… if an employee has worked in only one location under their contract of employment for the purposes of the employer’s business, it defies common sense to widen the extent of the place where he was so employed, merely because of the existence of a mobility clause…. It would be unfortunate if the law were to encourage the inclusion of mobility clauses in contracts of employment to defeat genuine redundancy claims.”
With that in mind, an employer needs to make a decision at the outset about whether they are going to rely on a mobility clause or instigate a redundancy procedure. They are two very different processes and it is not generally permitted to start one and then change to another if it doesn’t work.
In addition, if any changes in location will affect 20 or more employees, there will also be an obligation to collectively consult with affected employees for at least 30 days. A failure to collectively consult can result in a claim for a protective award, which is 90 days pay per employee. As such, it may be better to make the change through redundancy consultation to ensure compliance with procedures as the financial penalty for failing to do so is significant.
Mobility clauses are useful when proposing to change the location of work of individual or limited numbers of employees for business reasons as long as the move doesn’t cause any significant detriment to the employee. However, if you’re proposing to move premises on a larger scale, you are likely to be better following due redundancy process rather than exercise a mobility clause.
Author: Sarah Edwards, Senior Employment Law Advisor at Howarths