A growing workforce, strategic expansion or the end of a lease can force businesses to relocate their premises or employees. While such changes are often positive, relocation can pose a number of practical and legal issues that should be carefully negotiated in order to minimise disruption to the business and employees and reduce exposure to employment-related claims.
Two recent unfair dismissal decisions provide useful guidance on business relocation.
Employees may be unhappy with a geographical change to the workplace. It may affect their daily commute, living arrangements or carer responsibilities. As such, a direction to relocate may prompt employees to bring claims including:
- unfair dismissal on the basis that the direction to relocate forced their resignation;
- breach of contract and claims for redundancy pay on the grounds that the relocation repudiated their employment agreement; or
- discrimination (eg, the requirement to relocate amounted to unlawful discrimination on the grounds of a person's sex or carer responsibilities).
Relocation did not amount to constructive dismissal In Ghate v Winder Controls Australia Pty Ltd (2017 FWC 5831) an employee argued before the Fair Work Commission that she was forced to resign after her employer moved its Sydney operations 34 kilometres from Macquarie Park to Glendinning.
The employee referred to her additional travel time and the effect on her work-life balance, personal wellbeing and health.
The commission dismissed the application on the grounds that:
- the terms of the employee's employment agreement permitted relocation, providing that her principal place of work would be "Macquarie Park, or such other location in the greater metropolitan area of Sydney as the Company reasonably directs"; and
- the employee had been willing to relocate on certain terms (eg, receiving a company car for her exclusive use).
In the commission's view, the latter point undermined the employee's argument about the unreasonableness of the employer's expectation that she should relocate, particularly when the employer had proposed alternatives such as covering certain costs (at least as an interim measure) through the payment of road tolls and fuel in connection with use of her private vehicle.
Unfair dismissal for refusing to move from Byron Bay to Sydney In Parkes v Fat Prophets Pty Ltd (2017 FWC 6121) a sales representative had moved to Byron Bay from Sydney after his wife secured a job in the region. It was agreed that he would temporarily work from home, ahead of the planned opening of a Gold Coast office, to which he would then commute.
However, the proposed Gold Coast expansion was abandoned and, following a review of the arrangement to work from home, the employer directed the employee to return to Sydney. When the employee refused, his employment was terminated the following day, effective from the previous day.
In defending the unfair dismissal application, the employer argued that the employee had been dismissed for failing to follow a lawful direction. The commission found that while the direction may have been lawful, it was unreasonable in the circumstances.
The commission found that while the employer's chief operating officer (COO) may have told the employee that he could have time to discuss a move with his wife and that the company would consider a relocation timetable, the COO regarded the employee's blanket refusal to leave Byron Bay as rendering these steps unnecessary. The commission stated:
"I consider [the employer's] hasty jump to a conclusion that such steps would not alter the [employee's] resolve was unreasonable… From an objective standpoint, giving an employee little or no notice of a work relocation, some 772 kilometres away from where the employee had lived and worked for six months, is manifestly unreasonable."
The commission held that a more prudent course would have been to inform the employee of a reasonable timeframe (eg, two weeks) in which to indicate his preparedness to move, subject to an agreed timetable and suitable relocation expenses (eg, penalties for breaking his existing rental lease and removal costs).
The employee was awarded A$8,350.
The following tips can help employers to minimise the risks associated with business relocation:
- Employees' contracts should accurately reflect and provide for reasonable flexibility regarding their location.
- Relocation is likely to be regarded as a major workplace change, triggering consultation obligations under applicable modern awards or enterprise agreements. Employers should acknowledge these requirements and engage genuinely in a consultative process.
- Employers should provide employees with a reasonable period to consider any proposed relocation.
- Care should be taken to ensure that any direction to relocate is reasonable in all the circumstances. This may involve considering whether any reasonable adjustments can be made to accommodate employees with particular attributes protected by anti-discrimination laws (eg, parents and carers).
For further information on this topic please contact Neil Napper at Lander & Rogers' Sydney office by telephone (+61 2 8020 7700) or email ([email protected]). Alternatively, contact Emma Purdue at Lander & Rogers' Melbourne office by telephone (+61 3 9269 9000) or email ([email protected]). The Lander & Rogers website can be accessed at www.landers.com.au.
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