Kellogg Brown & Root (UK) Ltd v (1) Fitton UKEAT/0205/16 and (2) Ewer UKEAT/0206/16, 21 November 2016.
This case concerns the EAT considering whether an employment judge, in two separate decisions, had erred in finding that employees who had been dismissed for refusal to relocate under a mobility clause when their office closed, had been unfairly dismissed for redundancy.
In a redundancy situation where there is a closure of a workplace, and an employer is entitled to exercise a contractual mobility clause e.g. to move an employee to an alternative location, then the employee is not redundant and no dismissal takes place. However, an employer cannot exercise its discretion in such a way as to make the performance of the employee's duties impossible e.g. by giving the employee inadequate notice of the relocation. It must also consider the impact of exercising an express contractual obligation on the implied duty to maintain trust and confidence.
Kellogg is an engineering, construction, technology and services company mainly working in the oil and gas industry with offices in Greenford and Leatherhead. Mr Fitton and Mr Ewer worked at Greenford. The mobility clause in their employment contracts provided that:
"The location of your employment is ... but 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 failure to carry out reasonable instructions was an example of misconduct in Kellogg's disciplinary procedure.
During 2014, due to workload and office capacity Kellogg decided to close the Greenford office but retain Leatherhead. In April 2015, employees were told that Greenford was to close at the end of June and that they were transferring to the Leatherhead office. A number of employees with childcare and elderly parent caring responsibilities left under the "exceptional circumstances" exception to the mobility clause and received a redundancy payment.
Mr Fitton objected to the transfer because he could either walk to work or take the tube, which took about 20 minutes. Although able to drive he did not have a car; he told Kellogg that he had been legally advised that he was redundant, entitled to a redundancy payment and that the mobility clause was unenforceable. He was not routinely required to travel and it was not a true condition of his employment. Kellogg stated that there was no entitlement to a redundancy payment and refusal to relocate could lead to dismissal for refusal to comply with employment terms. Mr Fitton failed to transfer to Leatherhead and following a disciplinary hearing for alleged unacceptable conduct he was summarily dismissed for unauthorised, unpaid absence. His internal appeal was unsuccessful. He issued tribunal proceedings for unfair dismissal and a statutory redundancy payment.
Mr Ewer took legal advice and questioned Kellogg about the validity of the mobility clause, setting out what he considered to be his own exceptional circumstances: after 25 years' service and approaching retirement he should be easing off daily stress rather than turning a daily commute of 18 miles each way into one of 47 miles each way. Kellogg considered that requiring Mr Ewer to move to Leatherhead was reasonable on the basis that it was within the ambit of the mobility clause and measures were in place to assist. Neither Mr Ewer's long service nor his age constituted exceptional circumstances. After he failed to attend the Leatherhead office, Mr Ewer was invited to a disciplinary hearing for alleged unacceptable conduct, was summarily dismissed and his internal appeal was unsuccessful. Mr Ewer also issued tribunal proceedings for unfair dismissal and a statutory redundancy payment. Kellogg argued that given the claimants' refusal to relocate and obey a lawful and reasonable instruction, misconduct or some other substantial reason (SOSR) was the reason for dismissal.
Their claims were dealt with by the same employment judge but at separate hearings and he issued separate decisions. He held that, as a matter of fact, Mr Fitton and Mr Ewer's place of work was Greenford. Mr Fitton had been asked to work elsewhere during his employment but had not been required to do so and Mr Ewer had never been asked to work anywhere else. The mobility clause was very widely drafted and lacked certainty. The reason for the dismissals was redundancy because the claimants' place of work had closed; not for misconduct or SOSR. The disciplinary process was procedurally flawed, given that the reason for the dismissals was redundancy, so the dismissals were unfair.
There were also some alternative findings on the question of fairness by the employment tribunal: if in fact the Respondent was correct and the reason was conduct or SOSR then the instruction to work in Leatherhead had been unreasonable given the greatly increased travelling time. While the steps Kellogg had taken to alleviate the longer commute might have assisted some employees, they were of no significance to Mr Fitton and Mr Ewer. In particular, Mr Ewer's refusal to move was not unreasonable given the proximity of his expected retirement, the substantial increase in his travelling time and his lifelong connection to where he was living.
Kellogg appealed the judge's decisions and the cases were
joined for hearing before the EAT. The EAT allowed the appeal
against the findings that Mr Fitton and Mr Ewer had been dismissed
for redundancy. It held that the reason for their dismissals had
been their alleged misconduct. However, it dismissed the appeal
against the findings that the dismissals had been unfair.
The EAT decided that in this case the employment judge had erred by identifying a redundancy situation as being the reason for dismissal. He should have asked what Kellogg genuinely had in mind – in both cases the company believed that it could rely on the mobility clause and that the instruction to move to Leatherhead was a reasonable instruction. It was the failure to comply with this instruction that resulted in the decision to dismiss.
In Mr Ewer's case, the judge had considered whether the instruction to move to Leatherhead was a valid contractual requirement and reasonable and had concluded that it was not. He had then considered whether Mr Ewer's refusal to work from the Leatherhead office had been reasonable and had concluded that it was. These were sufficient findings in respect of a conduct dismissal to support a conclusion that the dismissal had been unfair. Similar findings had been made in Mr Fitton's case.
What to take away
This decision reminds employers of the issues which may arise when a business seeks to rely on a contractual mobility clause in a redundancy situation. Although invoking a mobility clause may avoid dismissals for redundancy employers must consider both the ambit of the mobility clause and the manner in which they seek to invoke it to avoid an unfair dismissal.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.