Relocation or Redundancy?

As we emerge from the pandemic and businesses look towards reopening, the key issue for employers will be sustaining their business and trading out of the economic difficulties faced in the past year. This may involve negotiating lower rents and perhaps a change in business premises. However, what employers may not realise is that, notwithstanding a mobility clause in the contract of employment, a change of location can give rise to a redundancy situation, by virtue of Section 7 2(a) of the Redundancy Payments Acts 1967, as amended (the ‘1967 Act’).

(2) For the purposes of subsection (1), an employee who is dismissed shall be taken to be dismissed by reason of redundancy if for one or more reasons not related to the employee concerned the dismissal is attributable wholly or mainly to—

(a) the fact that his employer has ceased, or intends to cease, to carry on the business for the purposes of which the employee was employed by him, or has ceased or intends to cease, to carry on that business in the place where the employee was so employed, ….

As to whether the role at the new location will then amount to a suitable alternative to redundancy, has been the subject of many claims under the 1967 Act.

The legislation does not define what is a suitable “alternative” role. Therefore, it is largely left up to each individual case as to what might or might not be deemed a suitable alternative to redundancy. Generally, the WRC and the Labour Court will examine whether the location, working hours, salary, benefits and level of responsibility are of a similar nature to the previous role. Suitable alternative employment does not need to be an exact match to a previous position. In the current climate, many employees are accepting positions even where there is a distinct difference in their terms and conditions of employment. However, both the previous role and the proposed alternative should be assessed by employers to ascertain whether, on balance, it can be said that the new position is not substantially different or on less favourable terms than those attaching to the previous role.

If an employee refuses suitable alternative employment, then section 15 of the 1967 Act provides that an employer can refuse to make a statutory redundancy payment.

Change of location has been a particularly contentious issue in determining whether the redeployment is suitable. Earlier cases leaned towards determinations that even slight changes of location rendered an offer unsuitable. For example, in Early v Floorstyle Contract RP 382/2003 it was found that Skerries was not a suitable alternative where the complainant had been previously located in Swords. In Heavey v Casey Doors Ltd RP 1040/2013, the Tribunal found it was not unreasonable for the complainant to decline relocating to Balbriggan from Baldoyle.

However in the case of Dillon v Kavanagh Construction the respondent ran a construction maintenance business. The complainant was offered an alternative at the Beamish and Crawford site in Cork with the same hours and rate of pay. The offer also included a travel allowance. The complainant complained that no parking space would be provided and also stated that the new position would involve more manual work. It was held that the new offer constituted suitable alternative employment.

However, in more recent years the focus has shifted to the personal circumstances of the employee, and consideration of issues such as childcare, or the practicalities of traveling to a new location having regard to commuting times.

In the recent WRC decision in A Former Project Co-Ordinator v A Utility Services Company the Adjudication Officer, in finding that the employee had not been unreasonable in refusing an alternative position, considered the way in which such a case should be assessed:

“I must assess the factual matrix subjectively to determine whether the Complainant’s refusal . . . was reasonable. This requires consideration of the matter from the Complainant’s point of view taking into account the factors personal to him as outlined in his evidence above, to determine whether his refusal was a reasonable response.”

In Cambridge & District Co-operative Society Ltd v Ruse [1993] I.R.L.R. 156 the English EAT, when considering similarly worded provisions of English legislation, indicated that the question of “the suitability of the employment is an objective matter, whereas the reasonableness of the employee's refusal depends on factors personal to him and is a subjective matter to be considered from the employee's point of view”. This decision was followed in Cinders Ltd v Byrne RPD 11/2018 where the Labour Court found that the complainant's refusal to transfer from the Merrion Centre in Dublin 4 to the Blanchardstown Centre in Dublin 15 was not unreasonable but that her refusal to transfer to Wicklow Street in Dublin 2 was unreasonable given that she would not have suffered any disadvantage with regard to her commute between her home and place of work had she accepted that option.

More recently in Cosy Tots & Co. Ltd V Bernadette Conn [2021] RPD219, the complainant, refused to move in her role as a Cook from Rathfarnham, Dublin 14 to another of the employer’s premises in Barrow St., Dublin 2. The complainant did not consider this alternative to be suitable for her due to increased commuting time and the impact this would have on her ability to also care for her granddaughter. The complainant sought to be made redundant however the respondent believed that in offering an alternative position with the same terms and conditions, they had met their obligations to the complainant under the Act.

The WRC found that a redundancy situation arose as a result of the change of location and the matter was appealed to the Labour Court. The Court was of the view that, in the circumstances of the city, the issue is less about the physical distance between the two locations, Rathfarnham and Barrow St, than about the length of time it would take to cover that distance. It is this factor that made the Court take the view that it was reasonable for the complainant to decide that the offer made was not one that constituted suitable alternative employment. Therefore, it held that the complainant was entitled to a payment under the Redundancy Payments Act.

The case of A Social Worker v A Mental Health Facility ADJ-00027212, although a claim under the Industrial Relations Act; involved a unilateral change of location. The complainant was employed as a social worker in the provision of mental health services to the public. The respondent was based at two distinct locations in the same metropolitan area however the complainant was based exclusively at one of those sites for over 19 years. In 2019, without any prior notice or engagement, the complainant was informed that she would be transferred to the other site. The work at this site involved providing services to a different cohort of the public and was over 11 kilometres further away from the site where the complainant had previously been stationed. The respondent submitted that staff frequently moved between the sites depending on the clinical requirements of the organisation and such a move was permissible under the complainant’s contractual terms.

The complainant attempted to engage with the Employer’s HR department to resolve the issue without success and the complainant moved under protest to the alternative site.

The Adjudication Officer stated that the proposed relocation to another site, whilst potentially necessary for clinical reasons, would represent a significant alteration to the complainant’s working patterns and would understandably constitute a legitimate source of concern for the complainant. The Adjudication Officer noted that it was apparent that the respondent did not resile from this position but simply re-stated the outcome. In this regard, the location of employment is a core term of employment for a complainant and to unilaterally decide to change the same without any form of consultation cannot be said to be reasonable in the circumstances. Accordingly, the Adjudication Officer awarded the complainant the sum of €5,000 in compensation.

It is also worth noting that similar issues may arise where an employer decides to close their physical premises, in response to the pandemic and have their employees work exclusively from home, particularly where the employee does not have a permanent designated office and have been working in a temporary makeshift workspace, for the purposes of complying with public health guidance.

In summary, employers should be aware that a change of location may give rise to a redundancy situation, particularly where the new location does not suit the personal circumstances of an individual employee. In all of the circumstances, employers should engage with their employees and allow for information and consultation with employees, in order to address any concerns. The grievance process is also recommended to allow employers give consideration to the individual circumstances of the employee and seek to alleviate and address those concerns, failing which a redundancy situation may arise.