An employer's guide to mobility clauses

What is a mobility clause in employment contracts?

There are a number of common clauses which an employer may insert into an employee’s contract of employment to provide a degree of flexibility in respect of the employee’s duties. Typically, such flexibility clauses concern an employee’s place of work (mobility clauses), job content and/or hours of work.

Employers can use such clauses to reserve the right to make relevant changes without having to reach a new agreement with the employee. These types of clause must be specific written terms in the contract.

However, even where they are put in writing, there are ways in which the law may limit an employer’s ability to unilaterally make changes using flexibility clauses. These include:

• Where there is doubt, flexibility clauses will be given a restrictive interpretation by Employment Tribunals; 
• Some of the key implied terms which exist within every employment contract may limit the scope of any express flexibility clause; and
• Unjustified clauses may amount to indirect discrimination in some cases.

Are mobility clauses legal?

Any ambiguity in the wording and scope of a mobility clause will be decided in favour of the employee. Although each case will turn on its facts, widely drafted clauses of a non-specific nature cannot be relied on to make unilateral changes. The more detrimental the change to the interests of the employee, the harder it will be to rely on the clause. 

In the absence of an express mobility clause, a power allowing the employer to vary the employee’s place of work will rarely be implied. Terms may be implied into a contract because they can logically be deduced from the conduct of the parties or in order to make the contract workable — the so-called "business efficacy" test. An example would be the fact that an HGV driver will be required to hold a valid current HGV licence. However, it will be rare that the conduct of the parties will give the employer any basis for implying a mobility clause in the interests of business efficacy.

In certain limited circumstances though, some implied terms giving flexibility have been implied into an employment contract:

• It is likely that an employee can be expected to move their place of work, provided that the new location is still within reasonable travelling distance of their home;
• It is likely that an employer can require an employee to transfer to other suitable work, where the particular business circumstances require such a move, provided it is on a temporary basis and there is no diminution in wages.

In reality, however, employers will be far better off if they include an express written mobility clause into any contracts where it may be necessary to make changes. It is important to note though that employers should be wary of including such clauses into all contracts as a matter of course, if the requirement for mobility is highly unlikely to ever occur.

How can implied terms restrict specific flexibility clauses?

Employment Tribunals will use the existence of implied obligations in the employment contract to limit the way in which a flexibility clause can be operated.

Case law has further defined the way in which flexibility clauses can be used. In one leading case, an employee was instructed to transfer from his current place of work in Leeds to a branch in Birmingham. His employer sought to rely on the mobility clause in his contract which, on the face of it, gave the employer a right to require him to relocate on either a temporary or a permanent basis. However, he received little notice of the move and his employer also refused to exercise its express contractual discretion to meet his relocation expenses. It was found that the employer's actions amounted to a breach of three implied terms of the contract, namely that the employer:

• should give reasonable notice of any transfer, notwithstanding the scope of the mobility clause;
• should not exercise its discretion to provide relocation expenses in a way which makes the employee's performance of their obligations under the employment contract impossible; and
• should not act in such a way so as to damage the relationship of trust and confidence which exists between an employer and its employee.

Mobility clauses and redundancy

Whilst there is a general principle that implied terms cannot override the express terms of an employment contract, the above case illustrates that, rather than override the express mobility provision, implied terms can restrict the way in which the employer can operate an express term. So whilst employers are not in principle prevented from imposing changes provided for in a mobility clause against an employee's will, the employer should nevertheless act reasonably in the way in which it seeks to rely upon the mobility clause. This means that employers should, as a minimum:

• consult with the employee, explaining the reasons for the change in workplace;
• give them reasonable notice of when the change will take effect; and
• consider whether it is reasonable to offer any assistance (financial or otherwise) to the affected employees in order for them to adapt to the change.

This should help avoid a finding that the operation of the mobility clause by the employer has rendered the employee's performance under the contract of employment impossible.

Where an employer is relocating or closing a particular site, the employer needs to decide whether the employees based at that site are in a redundancy situation. This, in turn, requires the consideration of the ‘place’ where the employees in question can be said to work:

• is this the place of work identified in the employees’ employment contract (the "contract" test) – in which case, uncertainty might arise where an employee’s contract contains a mobility clause requiring them to work at more than one site; or
• should it be the place where the employee actually works (the "factual" or "geographical" test)?

Workplace closures — where there is no mobility/flexibility clause

The factual test is the one which takes precedence on the basis that:

"... 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."

However, the existence of a mobility clause can still be taken into account when determining the place of work when the employee works or has worked in more than one location.

The existence of a mobility clause may also mean that the employer is able to offer “suitable” alternative employment at a different location. However, if the employee refuses to accept this alternative, the existence of a mobility clause will not prevent them from claiming a redundancy payment if their refusal is based on reasonable grounds.

In the absence of an enforceable mobility clause, an employer is not prevented from reaching an agreement with an employee about their relocation. In such a case, the parties may agree to vary the employee's contract; the employee is not dismissed and so there is no dispute about redundancy.

Indeed, in order for a redundancy dismissal to be procedurally fair, an employer should consider whether there are any suitable alternative vacancies for redundant employees at the same site or other sites. As before, if the employee unreasonably refuses such an offer, then they may lose their entitlement to a redundancy payment.

If an employer insists that an employee relocates, despite not having a contractual mobility clause and against the employee’s wishes, then this potentially puts the employer in fundamental breach of contract and gives the employee the right to resign and treat themselves as constructively dismissed. In such cases, and also in cases where the employer expressly dismisses the employee for refusing to comply with the relocation requirement, the dismissal may be by reason of redundancy. The matter of whether the dismissal was fair or unfair would depend upon the circumstances, including the reasons for the relocation and the degree of consultation that had taken place. 

Where a redundancy situation arises out of the closure or relocation of a workplace, employers cannot argue that the mere existence of a mobility clause means that employees are not redundant if their workplace closes; as explained above, the "workplace" for redundancy purposes is usually where the employee actually works, not where they can be required to work.

However, where there is a mobility clause and where there is work available at another location, an employer may choose to invoke the mobility clause instead of making the employee redundant. Equally, an employer may rely on contractual flexibility to redeploy the employee to a new role, or change their duties, hours or working methods, in order to avoid the need for dismissal. If the employer can rely on the clause in question and the employee complies, then there will be no need to dismiss the employee and there will, therefore, be no right to a redundancy payment. 

Can an employee refuse to relocate?

If the employee refuses to relocate without good reason, the employer may be able to fairly dismiss them for misconduct (a failure to obey a reasonable instruction) and avoid making a redundancy payment. If you think this applies to your business situation, you should seek further advice from your HR Rely advisor.

Where an employer decides to invoke a contractual mobility clause rather than following a redundancy procedure, it is important to do so clearly and transparently. An employer: 

• must weigh up the options at the outset;
• decide to invoke the mobility clause; 
• make it clear to staff that it is invoking the mobility clauses in their contracts and will not be following a redundancy procedure; and
• ensure that invoking the mobility clause will not cause indirect discrimination to any particular group of employees by imposing a provision, criterion or practice they might find it disproportionately difficult to meet.

The employer will need to operate the clause "reasonably", that is, with reasonable notice, so as not to breach the implied term of trust and confidence. A term may also be implied to the effect that the employer must not exercise the mobility clause except in a manner which renders its performance feasible.