According to Article 17 of the Labor Contract Law, clause related to location of work is an essential clause in an employment contract entered into by and between an employer and an employee. Such a clause in employment contract, in general, often is explicit and specific and stipulating a city as the location of work is usually seen. Due to the needs of business development and characteristics of employees’ jobs, however, in some companies, working in several cities is required and such companies may stipulate a nationwide work location with their employees in the employment contract. Some companies are hoping that they could change their employees’ working city or district without going through negotiation and obtaining employees’ consent in the future with the work location clause, so that they could achieve their aims of changing employees’ workplace unilaterally.

As per analysis of cases in Beijing, Shanghai, Guangdong, it should be noted that courts have different opinions on the nationwide work location clause. Please see the following cases from the courts of Beijing, Shanghai, Guangdong or Shenzhen and the abstracted key points thereof.

Key Points of the Judgment

Beijing: Even if a nationwide location of work is stipulated in the employment contract, an employer shall not change the work location unilaterally without negotiating with an employee.

In Beijing Xifeng Alcohol Trading Co., Ltd v. Li Guo[1] Case, the People’s Court of Beijing Chaoyang District as a court of first instance held that although the employment contract of the two parties stipulated a nationwide work location, the work location was company’s Hunan Office at the time that the employee, a Hunan resident, accepted the job offer. Hunan Office was then removed and the company asked the employee to work in Beijing. This situation shall constitute a significant change in the objective circumstances relied upon at the time of conclusion of the employment contract and made it impossible for the parties to perform the contract continually. Since consensus was not reached, the company shall pay severance to the employee.

In the course of the second instance, the Third Intermediate People’s Court of Beijing held that the company had no legal justification to terminate the employment relationship with the employee based on the long-term absenteeism which violated the Employee Handbook and the employment contract. Facts were clear and laws and regulations were correctly applied in the original judgment and it shall be sustained. The company was held to pay severance to the employee for terminating the employment relationship.

Shanghai:Although the Employment Contract stipulated that the employer was entitled to relocate the employees unilaterally and the employee shall agree, since the relocation concerned change of work location, consensus shall still be reached.

In Yichuang Xinxing (Shanghai) Computer Technology Co., Ltd v. LI Runfeng Appeal Case,[2] the Third Intermediate Court of Shanghai held: Though the employment contract stipulated that the company was entitled to relocate the employees according to its operational needs and employees’ performance within the company and employees should comply with such arrangements unconditionally, consultation and consensus were still necessary because relocation involved a variety of changes related to salary, work location and job duties. In addition, the company shall have justified reasons for the change of the work location. In January, 2014, the Company moved the employee to work in Shanghai without a prior mutual consensus and justified reasons for the relocation. Therefore, it was not reasonable for the company to exercise its discretionary power and transfer the employee to Shanghai without any mutual agreement. As a result, the company should pay severance to the employees for terminating the employment relationship.

Guangdong: Since the employees signed the employment contracts voluntarily, they shall be bound by the nationwide work location clause and they shall not refuse to continually perform the employment contract because of change of work location.

In the retrial of the case of WENG Shifeng v. Shenzhen Annil LLC[3], the High Court of Guangdong held that pursuant to Article 29 of the Employment contract Law, the employer and the employee shall fully perform their respective obligations in accordance with the terms of the employment contract. A nationwide work location was stipulated in the employment contract. The employee as a person had full capacity for civil conducts, duty of care and foreseeable ability. Meanwhile, the employee failed to prove that such a clause was concluded by use of fraudulent or coercive tactics or taking advantage of his/her weak position, and also failed to demonstrate that the scope of company’s production and business was only in Shenzhen City. The Employee refused to continually perform the employment contract due to change of work location and it breached the principle of good faith and was not one of the circumstances under which the employers shall pay severance to employees. The Court rejected the application of retrial of the case eventually.

Shenzhen: Since a nationwide work location was stipulated in the employment contract, the employer was entitled to relocate the employee within the nation according to its operational needs.

In the decision of Shenzhen Yingshitong Car Rent Service Company v. WU Yan Appeal case [4], the Intermediate Court of Shenzhen held that the nationwide work location was stipulated by both parties in the employment contract, and therefore the company was entitled to relocate employees within the nation based upon business conditions. Employee’s refusing to register and work in the new work location may constitute absenteeism, entitling the company to unilaterally terminate the employment contract. Hence, the company did not breach the laws and the employment contract, and did not need to make severance payment.

Analysis on the Judgments of the Cases

Two opposite decisions abstracted from the judgements of the aforesaid four cases represent two different opinions in practice.

As to the first opinion (Beijing and Shanghai), even a nationwide work location is written in the employment contract or the condition that an employer is entitled to relocate an employee according to its operational needs is stipulated, the employer would not be entitled to change the work location of employees or require them to work in a new location. If an employer changes the work location of an employee, this change will have a great influence on the employee’s life and work. The change shall constitute a significant change in the objective circumstances relied upon at the time of conclusion of the employment contract and the employer shall consult with the employees about the change. If an employee disagrees with the change, the employer shall pay severance when terminating the employment relationship.

As to the second opinion (Guangdong and Shenzhen), an employer is entitled to satisfy their needs of relocating employees nationwide by stipulating a nationwide work location. There is no effective law or regulation expressly prohibiting nationwide work location clause. The workers are people with full capacity of civil conducts, and in the circumstance that workers voluntarily signed the work location clause, the clause would be a reflection of their true intention. It is reasonable and lawful for an employer, based on needs of its business operations, to manage and adjust a worker’s work location.

Conclusion

The reason why work location, labor remuneration are essential clauses in employment contract, and require a consensus for an effective change, is due to that the Employment Contract Law intends to restrict the right of unilaterally altering a contract. In practice, some companies may need to manage their employees who often go on business trips to different cities for its business development and a fixed work location would not be possible. Under such circumstances, we suggest that companies may stipulate the registered place, the place of business or the place where employees make social security payment as the location of work. It could be further stipulated that the employer is entitled to assign the employee to take business trips, and will provide corresponding allowance. If a company has to stipulate a nationwide work location in an employment contract, we suggest that the company shall negotiate with the employee on the change of work location and try to obtain a written consent of the employee, in order to reduce legal risks.