How to avoid "business relocation blues"

A growing workforce, strategic expansion, or the end of a lease can sometimes force businesses to relocate their premises or and employees. While these changes are often positive, relocation can pose a number of practical and legal issues that need to be carefully negotiated to minimise disruption to the business and employees, and reduce exposure to employment-related claims.

Two recent unfair dismissal decisions provide some useful guidance on the dos and don’ts of relocationbusiness relocation.

What are the risks to employers during a workplace relocation?

Employees may not always be happy with a geographical change to the workplace. It may impact on their daily commute, living arrangements, or carer's responsibilities. A direction to relocate may prompt an employee to bring the following types of claims:

1. Unfair dismissal on the basis that the direction to relocate forced their resignation.

2. Breach of contract and claims for redundancy pay on the grounds that the relocation repudiated their employment agreement.

3. Discrimination, e.g. the requirement to relocate amounted to unlawful discrimination on the grounds of a person's sex/carer's responsibilities.

Case studies

1) Relocation did not amount to constructive dismissal

(Ghate v Winder Controls Australia Pty Ltd [2017] FWC 5831)

An employee argued in the Fair Work Commission that she was forced to resign after her employer moved its Sydney operations 34 kilometres from Macquarie Park to Glendinning.

In making her case, the employee referred to her additional travelling time, as well as the impact on her work/life balance, personal well-being, and health.

The Commission dismissed the application on the following grounds:

• The terms of the employee's employment agreement allowed for relocation, provided 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".
• The employee had been willing to relocate on certain terms, e.g. being provided with a company car for her exclusive use. In the Commission's view, this undermined her 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.

2) Unfair dismissal for refusing to move from Byron Bay to Sydney unfair

(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 had been 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 working from home arrangement, the employer directed the employee to return to Sydney. When the employee refused, his employment was terminated the next day, effective from the day before.

In defending the unfair dismissal application, the employer argued 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 not reasonable in the circumstances.

The Commission found that that while the employer's Chief Operating Officer (COO) may have said to 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 said:

"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 said a more prudent course would have been to inform the employee that he had a reasonable period of time to indicate his preparedness to move, "say two weeks", subject to an agreed timetable and suitable relocation expenses such as penalties for breaking his existing rental lease and removalist costs.

The employee was awarded $8,350.38.

Tips for employers to minimise the risks associated with business relocation

• Employees’ contracts should accurately reflect their location and provide for reasonable flexibility regarding location.
• Relocation is likely to be regarded as a major workplace change, triggering consultation obligations under applicable modern awards or enterprise agreements. Employers should be aware of 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 if any reasonable adjustments can be made to accommodate people who possess a particular protected attribute protected by anti-discrimination laws, such as parents and carers.