Will your summer hols inspire you to relocate business and home to the beach?

SME Publications/ SME XPO 2024

By lawyers Rebecca Roberts (Corporate specialist), Stephen Jennings (Employment) and Joshua Gilbert (Rural Property), all partners at South West regional law firm Tozers LLP

Legal points to consider, to make your dream come true!

Rebecca Roberts

You’ve had a wonderful break, relaxing on the beach after months of hard grind and stress (as a business owner the ‘buck’ always stops with you at the best of times – and in the current economic climate these times are probably not the best!)  As you’ve finally reconnected with family and friends, your thoughts are turning to how you could make this new calm you’ve found a permanent feature.  ‘How could you make a real change?’ you’re thinking.  ‘Could I possibly relocate my business and home closer to the beach and enjoy my life as well as my work?’  ‘Would it cause too much disruption and risk, or could I really make this work?’

We advise many business owner-managers all around the country on just this sort of change. And their stories often start exactly like this. The short answer is: yes, you can make exactly this sort of move for the better. Pay attention to a few legal points, and your dream of a better work/life balance, and tea on the beach every day after work, really could come true.

The trickiest points to navigate will be the people issues in your business.

Stephen Jennings

Employment contracts need to state the place of work. Whilst contracts can sometimes include mobility clauses, allowing the employer to require the employee to work from other places, these tend to be quite limited and need to be applied reasonably. It is unlikely in most cases to be reasonable to require an employee to move across the country. Even if there is an enforceable mobility clause, many employees will have established roots and may prefer to find other employment rather than move. A business owner needs to consider not just the legal position but how likely it is in practice that employees will be prepared to change their place of work. And of course, you need to be realistic about whether the business can still function if lots of them refuse.

This assumes working from a particular base is necessary, as would be the case for e.g., factory workers. However, many jobs can be done remotely, particularly these days, so you would need to consider whether staff could be retained by allowing / requiring home working. This needs thinking through; not all employees will want to work from home and there can be issues around loss of productivity, poor training, loss of morale etc. if employees are no longer working in the same place. Plans will need to be put in place to manage the downsides and maximise the advantages.

Josh Gilbert

Where employees can’t or won’t relocate, the onus would then be on the employer to make them redundant. This can be costly (redundancy payments, the risk of legal claims, recruitment costs, loss of productivity whilst new staff come online). And as you know, if 20 or more are proposed for redundancy, collective consultation rules apply, which can create unhelpful uncertainty amongst the workforce.

If the business owner decides to keep the employees where they are, whilst relocating themselves, that can sometimes work but issues may arise around exercising appropriate management control / supervision. And perhaps it goes without saying, but any relocation would be best to remain within the UK; otherwise, there can be all sorts of legal and practical complexities that would need working through from insurance to parallel legal/tax systems through to data protection.

Corporate and commercial law considerations are much more straightforward. Aside from the obvious commercial points – finding appropriate suppliers and trusted advisers in your new locale, building trust with a new customer base, getting to understand any regional nuances and taking time to assess the competition – there’s not much from a ‘corporate law’ standpoint that you need to concern yourself with. The only point is that you may need to change your company’s’ registered office with Companies House, (but this is a minor administrative task and quite straightforward).

Property matters, however, will require careful thought, especially if you are aiming to make a significant change rather than simply replicate what you have in your existing location. You will need to consider how you are tied in to your current premises.  This may affect your timetable for the move as from a cashflow perspective you will want to minimise any time spent paying for surplus space. If you have a lease you need to exit from, when does its term expire and/or when does the next break right arise? Most break clauses require at least six months’ advance notice to be given so time may be of the essence. If there is no imminent ability to exit from your lease, what restrictions are there on you assigning the lease or sub-letting to a new tenant and how practical is it to do that?  Whatever way you exit your existing lease arrangement it is invariably best to seek legal and surveyor input well in advance, including regarding any dilapidations to the premises that you could be liable to remedy.

Looking ahead to your future space requirements, would you prefer to go straight into leased premises or to move (perhaps only initially) into more flexible serviced offices? To give yourself the best chance of finding somewhere suitable it would be sensible to appoint a commercial property agent to help you think through your needs, scour the market to find somewhere on your behalf and negotiate basic lease terms.

It is important to consider the rent provisions – particularly if there is any rent-free period, when rent  is reviewed and if any rent deposit or personal guarantees will be required as security for the new lease. As regards the physical space, does the Landlord need to carry out any works before you move in? You will need to obtain advanced approval for any fit-out works which you wish to carry out. What scope is there for future expansion? Does the authorised planning use cover your proposed use or would a change of use application be required? It is always prudent to carry out a survey on the new space so that you are fully informed about your liabilities.

A fine balance also needs to be achieved when it comes to the lease, between giving you the longer-term security you need whilst also giving sufficient scope to exit the arrangement if you need to do so. It is best to discuss any heads of terms for a new lease with your agent and solicitor before agreeing to them.

At the same time as relocating the business you will of course want to be thinking about a new home, potentially including a home office element, possibly even one that staff can work from. Any planning restrictions or restrictive covenants affecting the title to your new home must be carefully reviewed in this context.

Take time to consider all the above, with help from trusted advisors who know the area well, and you can make a success of an ambitious move – and make your dream of a better work and home life come true!

SME Publications/ SME XPO 2024