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Leaving the square mile – should I stay or should I go?

Posted on 12th January 2017

Much has been made recently about plans being underway in the international banks to move employees out of London fearing a hard Brexit. The worst case scenario predictions fuelling the relocation chatter is that the UK leaves Europe’s single market and the loss of pass-porting rights prevents financial services firms from being to operate in Europe without authorisation.

The employment law implications of relocating employees will need to be thought through carefully though. In my experience, overseas relocations are not always hugely popular with employees. No doubt a generous relocation package could help sweeten the pill. But this has to be balanced against the reality that bankers like living in London and moving families and children out of school is not exactly a thing to look forward to.

Employment contracts and mobility clauses

The starting point will be to look at whether employment contracts contain mobility clauses. I would expect this to be the case in a banker’s contract but even so, this does not give employers a “carte blanche” to require employees to relocate offices. Banks will need to consult with employees well in advance of any move and act reasonably by giving plenty of notice.

If there is no mobility clause at all, consultation with employees is likely to be even more important to bring them on side to consent to the move so that employment contracts are varied.

In my experience, employees tend to react better when they can understand the business rationale for a relocation and where their concerns are heard. There is certainly a right and wrong way of doing things when changing things at work are on the agenda. The wrong way could lead to resignations and claims for constructive dismissal. Where a group of employees walks out, the downside of mass litigation does not need to be spelt out.

What if the business case stacks up and it is the bank that feels that the banker is being unreasonable in refusing to relocate? In this situation, it may be fair for an employee to be dismissed for redundancy if the employer has ceased to carry out business in the place in which the employee works. Alternatively, any dismissal could be fair for “some other substantial reason” if the employer has acted reasonably and the commercial relocation rationale makes sense.

Bring on 2017 and the changes ahead!

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