★Nutshell
Mr Zhang works in Shanghai for Company A as a warehouse keeper from the year 2000, whose major business is auto parts production, and he entered into an open-ended contract from 2010. In March, 201, as the production scale expends, the original warehouse can no longer meets the production need, therefore the company decided to move to Suzhou, Wujiang. On March 15th, 2015, the company posted the notice that it would start to move from March 16,2015, all the staff shall go to the assigned place to register. Plan A is the staff move to the new factory meanwhile the labor relation stays in Shanghai Company, dormitory will be provided without severance. Plan B is the staff go to work in a medical facility company affiliated to Company A in another district in Shanghai while the labor relation stays in Shanghai Company, shuttle bus will be provided without severance. Plan C is that the company pays the severance based on one month salary for each working year and 1month extra in lieu of notice on termination. If none accepted, the staff shall register personal information for interview.
Mr Zhang did not register within the assigned time. On March 25th, 2015, the company informed Mr Zhang for negotiation but no agreement is concluded on change or termination of the labor contract. On March 27, 2015, the company terminates the labor contract with the severance and extra month based on Art 40 (3).
Mr Zhang then raised the labor arbitration for illegal termination damages.
★Issue
The issue of this case lies in whether relocation fits the major objective change in Art 40 of Labor Contract Law?
The company thinks the factory moves from different provinces, Shanghai to Wujiang, Suzhou, resulting in major change of work place, which satisfied the requirements of an objective change , therefore the termination is legal after the required process is went through.
Mr Zhang thinks relocation is a subjective act not caused by objective factors, therefore the company shall pay damages based on illegal termination.
★Judgment
The labor arbitration ruled after hearing that according to the Labor Contract Law, a major change in the objective circumstances relied upon at the time of conclusion of the employment contract renders it unfulfillable and after consultation, the employer and the employee are unable to reach agreement on amending the employment, under such circumstance, an employer may terminate an employment contract by giving the employee himself 30 days prior written notice, or one month wage in lieu of notice. In this case, the company factory is relocated to a different province, a major change took place and no agreement was reached regarding on amendment. Zhang’s claim is not supported for the reason that the company can terminate under this situation.
★Comment by Lawyer Tang
Many change would take place during operation of a company such as shareholders, legal representative, business, business place, etc, what kind of changes on earth conform to the major objective changes in Labor Contract Law greatly affects on the legality of termination by the company.
Therefore we derive our judgment from actual performance and honesty.
Take change in shareholders, legal representative or name of the company for exchange, changes as it may in the actual controller, the employees can keep doing their original job in the original place as the business, work place or content of work usually do not change. The above changes, big as they seem, won’t affect the employee to fulfill the contract, therefore they are not considered as major changes.
Take another example that the company is not satisfied with several employees, therefore decide to remove the positions and shift the work to other staff. It seemed that the positions are removed, but the customized remove breaches the honesty and faith policy for it is specially made to certain employees.
Relocation in this case, though a subjective decision of the company, is not specially tailed for certain employees and affects the fulfillment of the whole staff, therefore is an objective major change.
On general, the employer shall strictly hold on to the legality and reasonability of major objective change when terminates based on this clause.
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