Mobility Clause

Welcome back to your weekly case law update, last week we had our February newsletter which covered the Trade Union Act and minimum wage offenders. Prior to that, your last instalment of case law concerned employment status and discrimination.

This week we shall be looking at whether employees can be dismissed for misconduct for refusing to transfer to another site when there is a mobility clause in their contract. The employer dismissed for misconduct, namely failure to obey a lawful instruction to transfer to a different site.

Thus, today’s question is:

Can employees be dismissed for misconduct for refusal to obey a mobility clause in their contract?

In general, an express mobility clause in a contract of employment if reasonably drafted can provide flexibility to an employer as it can allow an employer to ask an employee to work in a different location. However such flexibility must be exercised reasonably.

The employers originally operated from two sites, but decided to rationalize to just one, this involved closing the site at which the claimants (two long standing employees) had always worked.

Their contracts included a widely drafted mobility clause which the employers invoked, ordering the claimants to transfer. They objected due to the significant increase in travelling, refused to go, and were dismissed for misconduct.

They claimed a redundancy payment and unfair dismissal. The Tribunal upheld both claims stating that there was clearly a redundancy situation through the closure of the workplace and the dismissal was unfair because exercise of the mobility clause was unreasonable. The employers appealed.

The EAT allowed the appeal against the redundancy payment. The EAT held that although there was a redundancy situation as defined in order to qualify for a redundancy payment an employee has to be dismissed for redundancy.

In this case the employers reason was the perceived misconduct in refusing to obey the contractual order to move and so this requirement was not met.

With regard to the second point of unfair dismissal the EAT dismissed the employers appeal for three reasons:

1.    The mobility clause was wide and vague.

2. The employers had behaved unreasonably in exercising it in the way they had.

3.  The employees had reasonably refused to move.

The win for the employers on the redundancy payment point was a pyrhhic victory as a basic award for unfair dismissal is exactly the same as a statutory redundancy payment.

The Takeaway Points:

1. That a mobility clause in a contract must be reasonable in distance and not too widely drafted. An employer must exercise the flexibility within a mobility clause reasonably as per United Bank Ltd v Akhtar. If it exercises a mobility clause unreasonably it runs the risk of an unfair dismissal.

2. The existence of a redundancy situation on its own is not enough to result in a redundancy payment the dismissal itself must be by ‘reason of redundancy’.

If you enjoy our case law updates and would like to find out more about cases that have a practical impact on HR then please attend our free seminar.

There will also be sessions on exiting directors, taxing settlement agreements, the apprenticeship levy and gender pay gap reporting as well as free bacon sarnies.

Book your place now, we look forward to seeing you there.