* City workers start contacting lawyers
* Financial firms could be exposed to litigation
* Restructuring more likely than relocation
By Sinead Cruise and Anjuli Davies
LONDON, Oct 11 As Britain heads for the EU exit,
financial firms intending to move London-based jobs to
continental Europe face a costly choice: offer generous
relocation and redundancy packages, or expect a flood of
lawsuits from disgruntled staff.
Employment lawyers say some worried City workers have
already been in touch to clarify their rights if banks, asset
managers and other businesses decide they need new homes in the
euro zone for operations hit by Brexit uncertainty.
While the terms of Britain's exit remain unknown, many firms
operating in the City of London are intent on protecting their
right to sell financial services throughout the European Union
under its "passporting" rules. This is likely to mean setting up
shop in a centre still in the bloc, such as Paris or Frankfurt.
But lawyers told Reuters this option could expose employers
to legal action if workers in love with London life, or who have
pressing family reasons to stay in the British capital, don't
want to move or feel under-compensated for their troubles.
"The practical logistics of moving lots of people are
complex and the legal side will also be very complex," said
Crowley Woodford, partner at law firm Ashurst. "It will be very
hard for banks to avoid constructive dismissal lawsuits. There
will be the headache of litigation coming out of this."
Prime Minister Theresa May said last week she would trigger
what is likely to be a two-year process to leave the EU by the
end of March.
This heightened a sense of urgency among financial services
firms to decide which parts of their businesses need to be
moved, to where, and when, industry sources said.
Investment banks have already warned they could move
thousands of jobs if the City loses access to the EU's single
market, while the European Central Bank has signalled it could
force euro trading out of London, the world's largest foreign
Many bankers are reluctant to go. One told Reuters that
being forced to relocate would make his life very difficult. "I
am working for a European bank which might or might not decide
to move out. It would be difficult to uproot my family and
children to a new country," he said, speaking on condition of
Bank chiefs acknowledge any shift must be done with great
care. Alex Wilmot-Sitwell, who heads the European business of
Bank of America Merrill Lynch, likened moving operations -
including staff - to handling hazardous materials.
"The materials that are being moved are risky materials, and
you don't move nuclear waste in a race," he told a parliamentary
committee last month. "You do it in a very carefully coordinated
and managed process."
HSBC is already shifting 1,000 jobs from London to
a new commercial and retail banking headquarters in the city of
Birmingham, about 160 km (100 miles) away. While unrelated to
Brexit, this move within the same country and currency zone will
take three years to complete.
Before Britons voted on June 23 to leave the EU, HSBC Chief
Executive Stuart Gulliver estimated that around 20 percent of
his 5,000 London staff who work in global banking and markets
would move to Paris in the event of Brexit, depending on the
The stakes are high. Britain's financial industry could lose
up to 38 billion pounds ($48 billion) in revenue if it ends up
with restricted access to the EU single market, according to a
report commissioned by an industry group.
Banks have been quick to quash any media reports that they
have already decided how many employees to relocate.
But consultancy firm Oliver Wyman estimated that if finance
firms lose the right to sell their services freely across
Europe, 75,000 jobs in Britain may disappear.
Those jobs wouldn't necessarily all reappear in other EU
countries, as banks may decide that the difficulty of relocation
makes some parts of their business unviable.
Nevertheless, analysts at JP Morgan have estimated
that eight major U.S. and European banks face a combined $7.5
billion bill in the next five years if they need to move capital
markets operations out of London.
Under British law, an employer cannot force workers to move
abroad without risking a breach of their contracts, giving staff
the opportunity to claim constructive or wrongful dismissal.
Even those firms which have negotiated clauses theoretically
allowing them to transfer staff to a location of their choice
may find it hard to enforce such provisions at tribunals that
handle employment disputes.
"Tribunals are very sensitive about whether it is reasonable
to enforce these clauses on any employee because of their own
circumstances. They may have children in schools, partners who
work for other firms who might not be able to relocate," said
Kevin McCavish, who heads the employment team at Shoosmiths law
"Exercising those clauses must be done in a reasonable
fashion - giving employees adequate advance notice and
consultation, giving relocation packages etc," McCavish said.
RELOCATION OR REDUNDANCY
Many employers must decide whether to move London-based
staff or pay them off and hire new workers where any new foreign
operation is set up. Neither option will be cheap and both carry
significant legal risk.
"For many operations, with the exception of key personnel,
(redundancies) might be their preferred choice. It probably
would be cheaper and that would give the bank the flexibility to
recruit in other jurisdictions," McCavish said
McCavish has already received inquiries from worried
employees. "Their concerns are mainly about the financial
packages that the bank is proposing for them. They are concerned
the bank isn't actually considering relocating their jobs - it
is more a question of the bank making everyone redundant at
their place of work in the UK," he said.
UK legislation gives employees the right to keep their jobs
if they are willing to follow the business of their team abroad
on at least the same terms and conditions as in London.
But Ashurst's Woodford estimates that nine out of 10 of any
potential 'transfers' will involve redundancies with packages
that are so generous that staff members waive these rights and
opt against suing the bank.
For those who do take legal action, compensation for unfair
dismissal in Britain is capped at around 79,000 pounds
($101,000), a relatively modest sum when legal costs are
Some bankers might be persuaded to move but want to keep
their big city life, meaning the quieter charms of Germany's
financial capital are less attractive.
"I would consider relocating to Paris but not Frankfurt.
Very few people would go to Frankfurt," said another banker.
"Paris is a large metropolitan centre with lots of culture and
things to do."
However, some senior staff might remain based in London and
commute to Paris by high-speed train, he said, adding: "If my
family weren't happy, I wouldn't move."
($1 = 0.7837 pounds)
(editing by David Stamp)