The Sunday Times - Business Doctor: The cost of relocation

Peter Done: Managing Director and Founder

October 10 2016

LK writes: We are looking to move business premises in order to reduce costs. If the premises are a greater distance from staff's homes than previously, do we have any duty to recompense them for the relocation? Businesses can find themselves considering a relocation for a number of reasons. Lower rent costs are an important factor for employers, however, any costs of compensating staff for relocating may need to be weighed against the benefits of the relocation. Employers need to check the relocation clauses contained in each individual’s contract of employment. Most contracts will contain a mobility clause which specifies the employee agrees to move locations within a certain time or distance of their normal place of work. So long as the request for relocation is reasonable, an employee with a mobility clause has to move locations. Employees without a mobility clause in their contract can choose whether they relocate or not. Any requirement to compensate staff for relocation will usually be stated in the mobility clause or a standalone relocation clause. If relocation compensation is included in the contract, it will be a breach of contract to not pay. Not only will staff be able to make a claim for breach of contract to recover the compensation they should have been paid but, if they resign in response to this breach of contract, they may bring a claim of constructive dismissal which can include a basic and compensatory award of damages. Where relocation compensation is not specified in the contract, there is not duty to compensate for the move. Although the employer may not have a duty to pay these costs, they could consider a one-off payment to staff. This payment can be useful as it might help smooth the way if there’s any dispute or unrest regarding the relocation and will help to incentivise the decision to move. Depending on the number of staff relocating this might be a large one-off sum but, on balance, it is likely to be less expensive than having to reemploy if current staff wish to leave rather than relocate. If this payment is offered to staff, it will set a precedent that the payment will be offered on every future relocation so employers should consider their future plans when deciding whether to provide a one-off payment or not.

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