How Should We Handle Employee Relocation When Some Are Unwilling to Move?

I am working for a company (Manufacturing Unit) as a Unit Head. The management has now decided to shift the company from one state to another and is asking all the employees to relocate, some of whom are not willing to move.

Relocation Challenges and Employee Concerns

What can we do in the above situation, and what will be the circumstances if somebody doesn't want to relocate?

Regards,
Vishal

Your options are few. Since you can no longer maintain even a smaller office at the current location, you may either offer your employees benefits to shift into the new location or outplace them. What are your challenges towards compensating them to move? What are their reasons for not shifting to a new location?

I am sure this didn't happen overnight. How have you been communicating with your employees since the planning for the new location started? If the reasons are dire, the employees might just not shift. In that case, you can decide upon a temporary transfer for a fixed duration.

A fresh talent hunt and training them might cost you both time and revenue. Please consider compensating the existing ones until the time they can stay in the new location and you can find a new batch of employees.

Communicating the Shift of Manufacturing Unit

Your manufacturing unit has been shifted to another location. You can communicate this to all employees in writing if you require their presence at the new location. It is important to note that the cost of living will vary from location to location. Therefore, you must take this into consideration and provide adequate benefits such as relocation allowance, cost of living allowance, and more. Engage with employees, build their confidence, and motivate them for this new experience and challenge.

Handling Employee Reluctance to Relocate

If employees are unwilling to relocate, you should send a letter instructing them to shift to the new location; otherwise, their service will be terminated. Please bear in mind that hiring and training new employees will incur costs and take time. The transition phase will be crucial for you as the unit head.

We are ready to provide all the allowances and benefits. However, if an employee fails to show up, what actions can be taken? Will such actions incur the wrath of the labor union or the Labor Commissioner, considering the transfer clause in their appointment letters?

Regards,
Vishal

Furthermore, can we terminate their services or simply ask them to leave? If we terminate, what compensation do we need to give?

I believe your unit is covered under the Factories Act. There are legal implications, and you need to inform the labor department a few days prior to shifting. I don't remember the exact number of days. There are policies and procedures laid out for this, so you may consult with the labor department.

If you don't clear the Full and Final (F&F) settlement of workmen, you may be sued in labor court. If you want to retrench them, you need to pay 15 days' salary for every completed year, notice pay, gratuity, bonus, etc., as applicable.

Give every employee a letter mentioning that their new assignment will be at [location name] from [date]. If they disagree, they will reply, and this is a violation of the employment contract. Then you may terminate their services as mentioned in the employment contract.

I have not been working in industrial relations for more than two years, so I may be wrong in some cases. Seniors, please guide us.

Retrenchment for Employees Unwilling to Relocate

All those who do not want to shift to the new state will need to be retrenched. You need to follow the procedure under the Industrial Dispute Act.

As stated above by Abdeen, you will need to pay retrenchment compensation.

I haven't worked in a factory, hence can't share the operational details regarding retrenchment. Here's what I found to be followed during retrenchment as mentioned under the provisions of the Industrial Disputes Act, 1947. It's a detailed account of what needs to be considered and implemented.

Researching Retrenchment Provisions

To research further on it, you may consider reading Chapter V-A and V-B [Industrial Dispute Act 1947 - Retrenchment](https://www.citehr.com/6149-industrial-disputes-act-1947-termination-employment.html)

Regards.