How to terminate the labor contract if there is a major change in the objective situation

So, how should we understand the phrase "objective circumstances that make it impossible to perform the labor contract" in this clause? Mr. He is a front-line employee in the production department of a paper mill in a city, and has signed a five-year labor contract with the company. During the performance of the labor contract, due to the impact of the local ** plan to increase the protection of natural heritage, the production department of the enterprise had to be relocated from City A to City B, and only the sales department remained in City A.

The enterprise solicited Mr. He's opinion and hoped that Mr. He would continue to engage in his original job in City B, while Mr. He hoped to stay in City A based on various considerations. After negotiation, the two parties could not reach an agreement, so the company made a decision to terminate the labor contract on the grounds that "the objective circumstances on which the parties entered into the labor contract have changed significantly, and the two parties have failed to reach an agreement after consultation". He believed that the company's decision infringed on his rights and interests, so he filed a complaint with the Labor Dispute Arbitration Commission.

After the trial, the labor dispute arbitration commission upheld the company's decision to terminate the labor contract and ruled that the enterprise should pay He the severance for the termination of the labor contract. In this case, the relocation of the enterprise due to the first plan is a situation where there is a major change in the objective circumstances on which the labor contract is based at the time of conclusion, resulting in the inability to perform the labor contract. Therefore, the enterprise and Mr. He could not reach an agreement on the modification of the labor contract, and the act of terminating the labor contract in accordance with the law was in accordance with the law.

According to the Explanation of the Ministry of Labor on Several Articles of the Labor Law of the People's Republic of China, "objective circumstances that make it impossible to perform the labor contract" refers to the occurrence of force majeure or other circumstances that make it impossible to perform all or part of the terms of the labor contract. It mainly includes: enterprise relocation, asset transfer, enterprise restructuring, department merger, major adjustment of business direction or business strategy, adjustment of enterprise product structure, etc.

Here, it should be emphasized that the key to the application of Article 40 of the Labor Contract Law lies in the fact that "the occurrence of objective circumstances makes it impossible to perform the employment contract". If it does not reach the level of "impossibility of performance", performance shall continue and the provisions of this article shall not apply. For example, although the change of the name or legal representative (person in charge) of the employer, the internal contracting, the division or merger of the enterprise is a "major change in the objective circumstances", it does not necessarily lead to a change in the performance of the employment contract.

In addition, when there is an objective circumstance that "makes it impossible to perform the labor contract", the employer cannot directly terminate the labor contract, but should negotiate with the employee to change the labor contract, and only after negotiation can the two parties fail to reach an agreement can the labor contract between the two parties be terminated in accordance with the regulations. Various circumstances may arise at any time during the performance of the employment contract, and the employer shall flexibly apply the applicable laws and regulations and correctly apply the rights granted by the law.

How to terminate an employment contract due to a major change in the objective situation

Paragraph 3 of Article 40 of the Labor Contract Law stipulates that if there is a major change in the objective circumstances on which the labor contract is concluded, resulting in the inability to perform the labor contract, and the employer and the employee fail to reach an agreement on changing the content of the labor contract after consultation, the employer may terminate the labor contract after giving 30 days' written notice to the employee or paying the employee an additional month's salary.

The following conditions are required for the arbitration institution and the judicial department to terminate the labor contract if it is determined that there has been a major change in the objective situation:

First, the employer must provide evidence to prove that there has been a significant change in the objective circumstances, which makes it impossible to perform the employment contract.

Second, the employer must provide evidence to prove that it has negotiated with the employee to change the content of the contract, such as adjusting the place of work, adjusting the position, etc.;

Thirdly, if the employer and the employee cannot reach an agreement on changing the content of the contract, the employer shall give 30 days' notice to terminate or pay the payment in lieu of payment.

"Objective circumstances" refer to the occurrence of force majeure or other circumstances that make it impossible to perform all or part of the terms of the labor contract, such as the relocation of an enterprise, the merger, the transfer of enterprise assets, etc.

In judicial practice, the major changes in the objective circumstances determined by arbitration institutions and judicial departments also refer to the objective conditions necessary for the performance of the original labor contract, such as market conditions, production equipment conditions, product sales conditions, labor safety and health conditions, relocation of business premises, poor business conditions, etc., which cause the production and employment positions determined in the labor contract to disappear due to force majeure or the occurrence of other circumstances, resulting in changes sufficient to make the original labor contract impossible to perform or unnecessary performance. Therefore, it is important to note that subjective employment changes cannot be regarded as objective changes in circumstances.

In the event of the above-mentioned circumstances, in order to continue to perform the labor contract, the parties must negotiate the modification of the contract according to the objective situation after the change until an agreement is reached. If the employee does not agree to change the employment contract, there is no need for the employment relationship established by the original employment contract to exist, and in this case, the employer can only terminate the employment contract.

If there is a major change in the objective circumstances on which the labor contract is based at the time of the conclusion of the labor contract, resulting in the inability to perform the labor contract, and the employer and the employee fail to reach an agreement on changing the content of the labor contract after consultation, the labor contract may be terminated in accordance with the law. Many employers terminate employment contracts with employees for this reason, but they suffer from the lack of direct and strong evidence and regulations as legal support. The employer may list in the employment contract or rules and regulations the circumstances of "significant changes in objective circumstances", such as force majeure natural conditions, relocation of the employer to other places, revocation of the employee's department, etc.

Risk Warning: When an enterprise lays off personnel on the grounds of major changes in the objective situation, the enterprise shall give priority to retaining the following personnel: (1) Entering into a fixed-term labor contract with the unit for a longer period; (2) Entering into an indefinite-term labor contract with the unit; (3) There are no other employed persons in the family, and there are elderly or minors who need to be supported.

Article 40 of the Labor Contract Law stipulates that under any of the following circumstances, the employer may terminate the labor contract after giving 30 days' written notice to the employee or paying the employee an additional month's wages: (1) The employee is sick or injured not due to work, and is unable to perform the original job or work arranged by the employer after the expiration of the prescribed medical treatment period; (2) The worker is not competent for the job, but is still incompetent after training or job adjustment; (3) There is a major change in the objective circumstances on which the labor contract is based at the time of conclusion, which makes it impossible to perform the labor contract, and the employer fails to reach an agreement on changing the content of the labor contract after consultation with the employee.

A major change in the objective situation is one of the reasons for the termination of the labor contract between the employer and the employee. It usually occurs in the legal relationship of the labor contract originally established between the employee and the employer, and there are force majeure or other circumstances that make it impossible to perform all or part of the terms of the labor contract, such as the relocation of the enterprise, the merger, the transfer of enterprise assets, etc.

Article 35 of the Labor Contract Law of the People's Republic of China The employer and the employee may change the content of the labor contract if they reach a consensus through consultation. Modification of the labor contract shall be in written form. The amended labor contract shall be held by the employer and the employee.

Article 40 of the Labor Contract Law of the People's Republic of China In any of the following circumstances, the employer may terminate the labor contract after notifying the employee in writing 30 days in advance or paying the employee an additional month's salary: (2) The worker is incompetent for the job, and is still incompetent for the job after training or job adjustment; (3) There is a major change in the objective circumstances on which the labor contract is based at the time of conclusion, which makes it impossible to perform the labor contract, and the employer and the employee fail to reach a consensus on changing the content of the labor contract after consultation.

No. The law stipulates that if there is a major change in the objective circumstances on which the labor contract is based at the time of conclusion, which makes it impossible to perform the labor contract, and the employer and the employee fail to reach an agreement on changing the content of the labor contract after negotiation, the employer has the right to terminate the labor contract and dismantle the labor contract. However, in the course of the performance of the labor contract of labor dispatch, if the employer is unable to perform the labor contract due to the above-mentioned circumstances, it will not affect the performance of the labor contract between the employee and the labor dispatch unit, and the labor dispatch unit may dispatch the employee to another employer to work after reaching an agreement with the employee.

Article 40 of the Labor Contract Law stipulates that under any of the following circumstances, the employer may terminate the labor contract after giving 30 days' written notice to the employee or paying the employee an additional month's salary: (1) The employee is sick or injured not due to work, and is unable to perform the original job or work arranged by the employer after the expiration of the prescribed medical treatment period; (2) The worker is incompetent for the job, and is still incompetent for the job after training or job adjustment; (3) There is a major change in the objective circumstances on which the labor contract is based at the time of conclusion, which makes it impossible to perform the labor contract, and the employer and the employee fail to reach an agreement on changing the content of the labor contract after consultation.