In this case, the employer succeeded in an argument that two employees who refused to move offices upon a workplace closure were dismissed by reason of conduct and not redundancy.
However, the dismissals were ultimately held to be unfair. Although the contract contained a mobility clause which purported to allow the employer to relocate employees, it was too widely drafted. This meant that the instruction to relocate was unreasonable and the Claimants' refusal to move was reasonable. This was the case despite a number of supportive measures offered by the employer such as assistance with travel costs and a reduction of core working hours. As such, the Claimants' dismissal for misconduct were unfair (Kellogg Brown & Root (UK) Ltd v (1) Fitton & (2) Ewer).
For a fair dismissal, the employer must establish that it believed it had a fair reason, and that it acted reasonably in treating that reason as sufficient to dismiss (effectively, that there was a fair procedure). When considering the reason, the Tribunal must have regard to the employer's belief and not substitute its own after-the-fact belief.
Where the employer chooses to exercise a valid contractual mobility clause in order to avoid a workplace closure redundancy, there will be no dismissal and, therefore, no redundancy. However, mobility clauses must be exercised reasonably and not so as to breach the implied term of mutual trust and confidence.
Mr Fitton and Mr Ewer (Claimants) had long service with Kellogg Brown & Root (Company), working in their office at Greenford in North-West Greater London. The Company decided to close the Greenford office and move all the employees to their other office, at Leatherhead in South-West Greater London. This was around 30 miles away.
The Company told employees it had the right to move them, because of a contractual mobility clause which stated: "…the company may require you to work at a different location including any new office location of the company either in the UK or overseas either on a temporary or permanent basis. You agree to comply with this requirement unless exceptional circumstances prevail."
The Company gave staff two months' notice of the move, reduced core hours to allow for an earlier finish time (to beat the traffic), and agreed a six-month compensation scheme for additional travel costs. It agreed that employees in "exceptional circumstances" (including childcare and elderly care responsibilities) could be dismissed by reason of redundancy instead of relocating.
The Company did not agree with the Claimants' arguments that having a dramatically increased commute, not owning a car, being near to retirement or having long service amounted to "exceptional circumstances". When the Claimants refused to move to the Leatherhead office, they were summarily dismissed for unacceptable conduct. They brought claims for unfair dismissal and redundancy payments.
The Tribunal decided that the real reason for the Claimants' dismissal was redundancy, and that the dismissals were unfair as no redundancy process had been followed. The Company appealed.
The EAT disagreed about the reason for the Claimants' dismissal. It emphasised the need to consider what the Company believed to be the reason at the time of dismissal. In this case the Company believed it was dismissing the Claimants for failure to follow what it believed was a reasonable management instruction under an enforceable mobility clause, despite the wider redundancy context. The Company's appeal on this point succeeded and the Claimants were not entitled to a redundancy payment.
However, the Company's appeal against the findings of unfair dismissal did not succeed. The EAT decided that the instruction to move to Leatherhead was not a valid contractual requirement, nor was it reasonable, and that the Claimants had acted reasonably in refusing to comply. The steps taken by the Company to mitigate the impact on the employees were insufficient. As such, it could not be fair to dismiss the Claimants for refusing to move, so the Claimants were entitled to compensation for unfair dismissal.
Employers must never take the black letter of the contract at face value. Unlike in many areas of law, in employment law contractual terms are always supplemented by the implied term of mutual trust and confidence, and the Employment Tribunals' general propensity to require employers to behave reasonably towards their employees. With mobility clauses, this means employers must assess the impact on the workforce of exercising the clause and seek to mitigate this impact. The decision in this case feels tough given that the Company had offered support to the employees.
Employers should ensure contractual terms are as clear and specific as possible. Although it may feel attractive to draft a mobility clause widely, as the Company did here, where it is so wide as to be uncertain and/or unreasonable the Tribunal will resist enforcing it.
Employers should take legal advice when seeking to rely on a mobility clause in a redundancy context. The overlap between these two areas is complex and requires tailored consideration in the circumstances of each particular case.