Compensation when employer relocates | Fin24

Compensation when employer relocates

Aug 06 2015 14:59

A Fin24 user wants to know if he could claim compensation from his employer for extra transport costs due to a relocation. He writes:

My place of employment is currently situated in Cape Town. Since my fiancée also works in Cape Town. We travel together using a single car.

However, my work has recently decided that they are moving premises to a location 25km further from the current location.

The impact of this is that my fiancée and I can no longer travel together as we will no longer share a common route.

So, the first point is that we would need to incur the additional expense of buying a second car. Then there is the question of our current fuel bill more than doubling along with all maintenance related expenses for the second car.

My work has offered affected employees an additional R500 per month for the next three months, but it will terminate thereafter. Many of us have raised issues about the move, but the attitude is simply "tough luck".

My question is: What alternatives do we have, since our monthly expenses are now going to increase to about R6 000 extra per month and my travelling time is going to be approximately two to three hours per day, depending on traffic.

As I understand it, the employer is basically changing the conditions of employment and I would like to see some form of actual remuneration for the massive additional expense, which we can ill afford.

Brian Patterson, director of employment at ENSafrica, South-Africa's largest law firm, and Aslam Patel a candidate attorney in the employment division of ENSafrica, respond:

The question relates to whether the change of location by the reader’s employer of some 25km further away than its current location, is a change in terms and conditions of employment for which the reader must be compensated.
An employer’s location is often a material term of an employment contract and should be provided in writing to an employee at the commencement of employment. This is required by Section 29 of the Basic Conditions of Employment Act, act 77 of 1997 (BCEA).

Whether an employer can unilaterally change location is dependent on the written contract of employment or what was agreed to orally between the parties at the time of commencing employment.

It is not unusual for employers to reserve their right, in employment contracts, to determine the place of work, subject to the employer’s operational requirements. This will permit the employer to unilaterally change location. It is always good HR to consult on such matters.

Where there is uncertainty as to the interpretation of the employment contract, or the employment contract is silent on the employer location, the courts will normally have regard to what is reasonable in the circumstances associated with the relocation.

Reasonableness is objective, but the outcome will differ from position to position. Therefore, what is reasonable for senior employees who may have a company car and fuel, paid for by the employer, may not be reasonable for junior or entry level employees, who may live far away from the work place and have to endure hardship in ensuring that they arrive at work on time.

A change in location of a mere 25km, therefore, may not result in a unilateral change in terms and conditions of employment for the senior employee as oppose to the junior or entry level employee.

The employer is not under an obligation in law to provide an employee with additional remuneration in order to compensate for any additional expenses incurred by the employee in ensuring that they make themselves available to render their services, unless the employment contract makes provision for such additional remuneration.

However, most employers, where such change of location does occur, would offer employees some compensation, on a limited basis, in order to obtain the employees' agreement. An employee is not obliged to agree (when such change is not in compliance with the employee's contract) and can try and negotiate a more favourable compensation package from the employer in order to agree to the relocation.

If no agreement is reached, in the absence of a contractual right to change location, this may result in the employee’s position possibly becoming redundant, because the job at the current location no longer exists.

This could result in retrenchment in terms of an operational restructuring and the payment of severance pay if applicable. This may not be in the best interest of both parties in that the employee will potentially be unemployed and the employer will potentially lose key employees. Therefore, the parties sought to reach a compromise.

In all circumstances whereby an employer contemplates changing its location, it should engage with the registered trade unions, employee representatives and/or the employees in order to reach an agreement.

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