Legal consequences of relocation
As businesses adapt to a changing economic environment, an employer cannot always predict with certainty the location it will require employees to work during their employment. Commercial necessity may require individuals, departments, or the entire business to be relocated, sometimes a few blocks away and sometimes much further.
Relocating employees can have a myriad of legal consequences, particularly where employers are required to balance the family responsibilities of their employees with the commercial realities of business. Following the direction to relocate, employees have brought unfair dismissal, breach of contract and discrimination claims.
The cases discussed below offer an insight into the different approaches employers have taken in balancing their business's need to relocate, with employees' family responsibilities.
A case where the relocation was reasonable because all reasonable efforts were made
In AS Webb v Australian Customs Service an employee brought an unfair dismissal application in the AIRC against his employer, the Australian Customs Service.
The Commission found the direction by Customs to relocate from Cairns to Brisbane was reasonable. Customs had tried to accommodate Mr Webb's family commitments, but Mr Webb had not accepted the reasonable alternatives that were offered.
The order of events in this case are useful to know
In February 1998, Mr Webb was employed in a position equivalent to that of a Customs Officer Level 3, in the Cairns District Office. Ordinarily the employee would complete three years in Cairns and then relocate to Brisbane.
Mr Webb wanted to stay in Cairns to be near his children. He undertook a number of internal review and appeal processes, in an attempt to stay in Cairns permanently, all of which were unsuccessful. Mr Webb then sought to revert to a lower level of employment, which would allow him to remain in Cairns. This was rejected.
Customs then offered Mr Webb a job based in Cairns at Level 1 (a demotion), but paid at the top of the range for Level 2 for 12 months. Alternatively, he could move to Brisbane as a Level 3, and be provided with airfares back to visit his children plus help in getting a public sector job in Cairns. This was rejected by Mr Webb. Customs then made a final offer, a position at Level 2 in Cairns for a year, and then reverting to a Level 1, with the opportunity to apply for alternative employment, or any Level 2 positions that arose. Mr Webb rejected this as well. Customs then directed that Mr Webb relocate to Brisbane, he failed to do so, and his employment was terminated.
Why the employer's steps were acceptable
The AIRC found that:
- The final offer of Customs was fair and reasonable. It addressed the primary concern of Mr Webb in that he could remain with his children.
- Customs still had a service to run and budgets to meet. While family responsibilities of employees are important matters to be considered, they are not the only matters.
- Customs had considered the competing interests, and in its final offer, produced a balance that was about right.
- Mr Webb was unreasonable in refusing the final offer.
- The direction to return to Brisbane, in the context of the unreasonable refusal by Mr Webb to accept alternatives, was a reasonable direction.
- As Mr Webb refused to comply with Customs' direction to relocate to Brisbane, there was a valid reason for termination.
- Mr Webb was notified, and given an appropriate opportunity to respond to the reasons relating to his conduct.
- Customs had met its obligations regarding its employee's family responsibilities.
Employer was unsuccessful because the relocation was unreasonable
In Han Jian Liu v NHP Electrical Engineering Products Pty Ltd the AIRC found the requirement for the employee to relocate was effectively a repudiation of his employment contract by the employer, having the effect of making him redundant.
The NHP Manufacturing and Warehouse Division located in Richmond, Victoria was relocating to a new facility at Laverton. All of the employees were promised employment continuity in the same work at the new facility at Laverton.
Mr Liu had significant family responsibilities to his children and his elderly mother which made it impossible for him to relocate. He alleged that because his job at Richmond was no longer required to be performed, and as he was not offered suitable alternative employment, he had been made redundant.
NHP alleged that the position was not redundant, and Mr Liu was required by his contract to relocate to Laverton, or that the requirement to relocate was reasonable.
NHP attempted to cater for Mr Liu's family responsibilities. They provided a relocation payment of $650 and free bus transport to assist employees. NHP offered to adjust the employee's working hours, and also offered to cover on a per session basis the cost of his 7 year old daughter's after school care.
AIRC Commissioner Hingley found that the contract of employment implied that the job was to be performed at Richmond, and there was no implied term that entitled the employer to relocate the employee. Also, because of the employee's family responsibilities, the job offered to him was neither directly comparable, nor acceptable. He would not be able to perform the requirements of the contract due to the extra travel distance and the adverse impact on his family responsibilities. Accordingly, it was found that his position was made redundant, entitling him to a redundancy payment under the certified agreement.
Deciding why relocation was reasonable
Gardiner v WorkCover Authority of NSW is another example of an employer seeking to balance the requirements of relocation with the family responsibilities of employees.
Here, the employer was found to have reasonably required relocation.
Ms Gardiner was the mother and carer of two young children. She was employed by the NSW WorkCover Authority. The WorkCover head office, at which she was stationed, was relocated to Gosford.
WorkCover made a number of offers to assist those affected by the relocation, including special assistance in relocating their residence or in obtaining other employment in the public or private sector. None of these were accepted by Ms Gardiner.
WorkCover made it clear to Ms Gardiner that, while her needs as a carer of young children would be accommodated as far as possible, they were firm in their decision to move her position to Gosford. WorkCover offered Ms Gardiner a number of options to assist in managing her family responsibilities, including permission to start at a later time than other staff. Ms Gardiner was the only team manager with responsibilities for the care of young children.
Ms Gardiner claimed that WorkCover's conduct amounted to unlawful discrimination on the grounds of carer's responsibilities under the Anti-Discrimination Act 1997 (NSW). She also claimed that WorkCover's conduct amounted to indirect discrimination on the grounds of sex.
However, if WorkCover's request to move was "reasonable" the employee would have no cause of action. In determining what a reasonable requirement was, the Tribunal noted that "a requirement or condition is not to be regarded as "reasonable" merely because it is convenient". In order to be reasonable, the conduct does not need to be necessary or essential, but the reasons underlying the requirement or condition must, in the circumstances, be objectively justified.
Other factors in determining whether a requirement was reasonable include:
- the size and nature of the employer
- the nature of the operational requirements and duties performed by the employee
- where the duties may be performed
- the employer's policies and procedures
- assessment of individual circumstances
- the rational for the requirement
- the nature and effect of the requirement on the individual
- the consideration, assessment and availability of less or non-discriminatory methods to achieve the same objective, and
- the cost or financial imposition created by the requirement.
The Tribunal found that the requirement for Ms Gardiner to relocate was reasonable and rejected the claim. The decision was based on the following grounds:
- From a management viewpoint it was more effective and efficient for Ms Gardiner to be based in Gosford
- WorkCover had made considerable efforts to accommodate Ms Gardiner's family responsibilities, and
- Ms Gardiner had been on notice regarding the move to Gosford and had accepted a permanent position knowing that it was probable that she would be relocated to Gosford.
Checklist for employers when relocating
- Employers should ensure that in contracts of employment, awards, certified agreements and all other industrial instruments, wherever possible, there is an express provision for the position to be relocated, with relocation not amounting to repudiation of the contract.
- Location should expressly be stated not to be a term or essential element of the contract.
- When relocating employees, employers need to ensure that the requirement to relocate is reasonable, in all the circumstances. Employers should ensure that the reasons behind the relocation are reasonable, taking into consideration factors such as the size of business, requirements of the business, effects on employees.
If the direction to relocate is reasonable, relocation is provided for in the relevant industrial instruments (if possible) and employers make reasonable efforts to reduce the impact of the relocation on employees, by assisting them to manage their family responsibilities, it is likely that they will have a strong defence in the event that an employee does bring a claim.
Thanks to Eliza Morgans for her help with this article.