In April 2014, the Wuxi Intermediate People’s Court ordered a company to pay severance to an employee who refused to report to work after the company unilaterally changed his position from a warehouse worker to a cross-linking machine operator.
The employee joined the company in 2010 as a warehouseman on a fixed-term contract, which provided that the company could adjust the employee’s position based on its operational needs. In December 2012, the company transferred the employee to operate the cross-linking machine in a workshop even though the employee did not have the skill or experience in operating a cross-linking machine. Unable to reach an agreement with the company on his position adjustment, the employee refused to report to work, and asked to terminate his contract and demanded severance payment. Three days later, the company unilaterally terminated the employee’s employment for unauthorized absenteeism. The employee then claimed that the company wrongfully terminated his employment and demanded double severance.
While the employee was originally awarded double severance, on appeal, the Wuxi Intermediate People’s Court ruled that the employee had asked to terminate his contract and demanded severance before the company unilaterally terminated his employment, and therefore only normal severance instead of double severance should be awarded.
According to the judge at the Wuxi Intermediate People’s Court, even though a company usually has the discretion in managing its business operations, it does not have the absolute right to adjust an employee’s working conditions or compensation. Such adjustment should made through mutual agreement or through other “lawful procedures”. The judge suggested that courts should focus on the following two factors when deciding whether a company has lawfully adjusted an employee’s position: (i) whether the employment contract or company policy includes a provision on position adjustment; and (ii) whether the adjustment is reasonable.
This case shows that an adjustment of an employee’s job position has to be reasonable in order to justify any disciplinary action against an employee for not accepting the adjustment. Otherwise, the employee may be able to terminate his/her contract and demand for severance according to Article 38 of the PRC Employment Contract Law.