China: Beijing High People’s Court: Employer can Terminate if Reasonable Job Change is Refused
Beijing High People’s Court held that where an employer adjusts an employee’s position due to objective business and operational needs, if such adjustment is consistent with the employment contract, does not reduce the employee’s remuneration, and is reasonable, the employee’s refusal to assume the new position may be deemed a serious violation of labour discipline if it breaches the employer’s rules and regulations. In such circumstances, the employer may lawfully terminate the employment contract.
Zhang had been employed by a company since 2008 as the manager of its Western restaurant. In 2017, the company underwent a business transformation, converting its operations from a five-star hotel into an office building. In 2018, the company proposed to terminate Zhang’s employment contract through mutual agreement under a severance plan equivalent to “N+4”, but no agreement was reached. The company then arranged for Zhang to attend nominal training sessions while continuing to pay her salary. On 27 August 2020, the company issued a Position Adjustment Notice, proposing to reassign Zhang to the position of restaurant supervisor with no change in remuneration. Zhang refused to accept the reassignment and continued to clock in at her original position.
On 6 January 2021, the company terminated Zhang’s employment contract on the grounds that her unexcused absences from work between November and December 2020 constituted a serious violation of disciplinary rules. Zhang subsequently applied for labour arbitration and later filed a lawsuit, alleging that the termination was wrongful and claiming compensation for wrongful termination as well as unpaid salaries.
The key issue of the case is whether the company’s adjustment of Zhang’s position due to business transformation was lawful. The court held that the employment contract between the parties expressly provided that the company had the right to adjust Zhang’s position if, due to business needs or changes in objective circumstances, her original position or duties ceased to exist. As the company’s business transformation resulted in the elimination of Zhang’s original position, the company accordingly adjusted her work assignment. The new workplace, a restaurant, was adjacent to her previous one, and the change in location did not cause Zhang any inconvenience. Her position was adjusted from Western Restaurant Manager to Restaurant Supervisor, which were similar in nature, and Zhang was capable of performing the new duties. Moreover, the adjustment explicitly stated that her remuneration would remain unchanged. Therefore, given that the business transformation rendered Zhang’s original position unavailable, the company’s adjustment of her position was deemed proper.
Key Action Points
In judicial practice, courts generally assess the legitimacy of a position adjustment by comprehensively examining three aspects: reasonableness of purpose, procedural propriety, and fairness of outcome. In this case, as the position adjustment was because of elimination of the original position by business transformation, the company issued a formal notice before implementing the position adjustment, maintained the employee’s salary and work location, and clearly stated the reasons for the change, the adjustment was deemed lawful.
To meet these standards, employers are advised to include reasonable adjustment clauses in employment contracts. Before implementation, employers should duly fulfil their obligations of prior notification, consultation, and written notice, and retain complete records of communications and internal approval documents to serve as evidence in case of disputes. Furthermore, employers should ensure that key employment conditions such as salary level, social insurance contributions, and work location remain substantially unchanged before and after the adjustment, so as to demonstrate the reasonableness and good faith of the position adjustment.
