How should businesses handle employee relocation?

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With some banks planning to move staff abroad we look at the legalities of relocating employees

Banks are currently confirming plans to move parts of their British business to set up European bases in countries such as Brussels and Dublin.

The news is no surprise following predictions made after the vote to leave the European Union. But businesses relocate every day for a number of reasons. Some choose to be closer to a customer base while others do it for financial reasons. Whatever the case, relocation can be a tricky area for employers to get right.

The first check employers need to carry out is whether there is a mobility or relocation clause in the employees’ contracts of employment. Most standards contracts will contain a mobility clause that outlines the employee’s agreement to move locations within a certain time or distance of their normal work location.

Having a clear contractual clause, however, does not mean that the employer can move the employee anywhere because the request has to be reasonable. Reasonableness will look at the distance the employee has to travel to the new location, the time it takes for the employee to travel, the notice given to the employee, and the seniority and position of that individual.

It is more likely to be reasonable to expect a very senior manager to relocate further away from their original workplace than one of the admin staff. Employees who do not have a mobility clause in their contract, or if the request for relocation is unreasonable, can choose whether they wish to relocate or not.

A potential way for businesses to smooth over any issues is to consider offering relocation packages or compensation to affected employees. There is no legal obligation to provide compensation but there may be a contractual right to receive it. Financial offerings can take the form of a one-off payment, covering extra travel costs for a fixed period of time, or providing moving costs such as a transport or decorating budget.

Financial offerings are not only designed to resolve any issues but to help incentivise the relocation to those who will be moving. Although the number of staff affected may make this an expensive practice, it can be less expensive than having to recruit and train a new workforce if current employees choose to leave rather than relocate.

Alongside offering financial incentives, another way for businesses to get employees on side is to talk through their needs with them. Best practice requires employers to notify the employees in writing about the proposed move and the business reasons for it. Going one step further and having an open and honest conversation is likely to bring employees around to the idea; being transparent about the reasons and what could happen if relocation does not take place could help.

Employers can take the extra step of putting in place a written relocation agreement that explicitly sets out the terms that will apply once relocation has taken place. This is more useful where relocation happens abroad as matters such as currency of pay and domestic benefits will need to be addressed.

Ultimately, if employees are adamant that they do not want to relocate businesses may need to consider whether they wish to force a move. If the reason for relocation is that work is no longer being carried out at the original business location then employees may be made redundant.

A dismissal for some other substantial reason may also be possible where the reason for the move relates to business needs. In both circumstances the fairness and reasonableness of the process seeking relocation will be important when determining whether a dismissal is fair.

Peter Done is managing director at Peninsula

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