A business may wish to move from one location to another for many reasons, such as the need for expansion into a new or larger site, a desire to relocate to a site that has easier access to alternative transport routes or the tough economic climate may force a business to move to locations where cheaper rental rates are available.

Regardless of the reason behind the relocation, the likely impact on employees should be considered at the outset, as it is to be expected that employees will seek some form of compensation as a result of a relocation of the business. Therefore before finalising any decision to move the employer should consider the costs and timing implications that employee issues are likely to involve as a result of a proposed change in location.

To ensure all employee views are obtained and to assist in agreeing a suitable and realistic compensation package from the employees and the employer’s perspective, it would be advisable to enter into discussions or consultation with the employees or their representatives prior to the implementation of any proposed relocation. This would involve consideration of the likely impact of the relocation on employees.

This consultation process could involve consideration of the following:

  • The direct impact the relocation will have on each employee. In particular issues such as whether the move will involve longer travelling times to and from work, the additional travel costs employees are likely to incur, any car parking difficulties at the new location, the likely disruption to personal and family arrangements;
  • Whether it was agreed by employees in their terms and conditions of employment that they could be required to work at different locations;
  • Employees are likely to refer to any precedent that exists within the Company or the group or the industry in general in relation to the type or amount of relocation payments made in relocations of a similar type or distance;
  • Whether there are improved facilities at the new location, which may offset the inconvenience of the move;
  • What sort of compensation package (if any) the Company can afford to make in order for the relocation to be viable;
  • Whether there are alternatives to cash payments that could be considered, such as free or subsidised transport or payment of public transport costs for an agreed period;
  • Whether an improvement in existing terms and conditions could be agreed to compensate for the move, such as improved sick pay arrangements, increased annual leave or more flexible working arrangements;
  • Whether any cash payment agreed could be phased over an agreed period;
  • Whether it is agreeable that if an employee left his or her employment within a specified time frame after any cash payment, that the Company could reclaim a portion of any payment made
  • Whether the same relocation package is available to all staff, including those with company cars and members of management.

The employer will also need to consider whether the relocation may result in an entitlement to a redundancy payment for employees. There are no specific rules which determine when a relocation will result in a redundancy entitlement for an employee and the facts of each case would need to be considered. A relocation of in excess of 20 miles may be perceived as significant and is likely to be perceived by the employee as a change in the terms and conditions of his or her employment. Such a change in an employee’s terms and conditions may entitle the employee to argue that he or she has in effect been made redundant and therefore is entitled to a redundancy payment.

In order to deal with such issues many relocation agreements provide for voluntary severance for those employees who would find the move difficult as well as a package for those employees who are willing to relocate. It is important that the Company is clear in relation to the terms applicable to any voluntary severance available.

It is also possible that an employee may argue that the relocation left him or her with no option but to leave employment and therefore there is a possibility of a constructive dismissal claim. Having a clear consultation process where all issues are considered and a voluntary severance package available where appropriate, will assist in dealing with this issue.

It is important for an employer to ensure that where compensation is paid, that it is paid on the basis that full cooperation is obtained from the employees in relation to the relocation and in full and final settlement of any claims the employees may have in relation to the relocation. It is evident from industrial relations disputes brought in relation to relocations that employees may seek compensation even where the relocation is of a relatively short distance such as half a mile and employers should be prepared for this type of approach by employees. If resolution cannot be reached between the parties, it is likely that conciliation at the LRC and possibly a full Labour Court hearing will be required if no progress is being made.

As can be seen from the above, it is therefore important for employers to factor into any relocation plans they may have, the timing and the cost implications of dealing with employees, and to plan for the likely implications of same in advance.