What happens when a workplace closes?

It was recently announced that three UK Amazon warehouses were facing closure (Doncaster, Hemel Hempstead and Gourock) putting over 1,200 jobs on the line, with some workers having to relocate. We are seeing many reports of companies restructuring, closing workplaces, consolidating, or in the worst cases, going bust.  What is the legal position for employees in these circumstances?

Contractual position and relocation clauses

You should start with the terms of your contract of employment.  Does the contract contain a ‘mobility clause’?

All contracts should state your normal place of work but many contracts these days require that you should be flexible about your location. Where there is a contractual requirement for flexibility, your employers should act reasonably if they decide to exercise their right to ask you to move. The existence of a mobility clause in your contract might well determine whether you are technically redundant or not. If there is no mobility clause, the employer’s rights to insist on flexibility as to location are limited.  Often if your workplace closes or if there is insufficient work at your usual workplace, a redundancy situation will arise. However, even where there is no mobility clause, it might be reasonable for an employer to ask you to move if the distance and the associated commute are reasonable.

Genuine redundancy situation

If a workplace closure or change gives rise to a redundancy situation, the employer should engage in a formal consultation process.  Where 20 or more employees are affected at a single workplace, this must involve a collective consultation, i.e., with the recognised trade union, if there is one, or with elected employee representatives, if not. As part of the process, the employer should look at ways of avoiding redundancies, reducing the number of redundancies or mitigating the impact of them.  An employer should always look to offer you a suitable alternative role if one is available. If redundancies are unavoidable, the employer must adopt a fair procedure for selection for redundancy.  The employer may establish ‘pools’ for selection and should set out clear, objective and transparent criteria.  A fair process is essential.  If the employer doesn’t act fairly, that can give rise to claims for unfair dismissal.

A fair redundancy process

A fair process is likely to involve:

  • Private meetings with your manager or HR team whether in person or via telephone or online.
  • The employer should take into account your representations about how to avoid redundancy or any challenges you make to the procedure or selection process, before making a final decision.
  • If there is a collective consultation process, the employer should seek to agree the procedure, the criteria and the relevant pools for selection, with the unions or employee representatives and should look to agree ways to reduce or avoid redundancies.
  • The employer should provide information to individuals, unions and employee representatives, who may ask questions about the redundancy process.
  • If redundancies are confirmed, employees should be given the right to appeal their dismissal.  An appeal might involve a challenge to the decision to put an employee at risk of redundancy or the methods of selection and the process used.

Consideration of alternative roles

If the employer identifies suitable alternative employment, redundancy might of course be avoided. If there are more employees being made redundant than there are suitable alternative roles, the employer must again undertake a fair selection process.  The process might include competitive interviews. If the role is not suitable for you, you are not obliged to take it.  Sometimes there can be a dispute about the suitability of the role (or, e.g., its location) and you should seek advice in those circumstances.  It is not always easy to determine whether a given role will be suitable or whether, even if it is, you might be entitled reasonably to turn it down.

If you unreasonably turn down an offer of suitable alternative employment, you can put your right to a redundancy payment at risk. Sometimes a suitable alternative will carry with it a 4 week ‘statutory trial period’ – seek advice in those circumstances since the rules are complex.

Getting the right advice

Redundancy situations are often complicated and stressful.  It is always best to get advice at an early stage, once you know that you might be at risk of redundancy. At Morrish, we can help guide you through the process and provide you with the advice you need to negotiate the best terms possible, whether you remain in employment or need to look to negotiate an exit package.

For more information on redundancy and other employment rights issues, contact our employment rights team.

Author: Paul Scholey, Consultant, Employment