The limits of an employer's autonomy in employment: job reassignment as a test case

Abstract: taking the practice of job reassignment as its point of departure, this article examines the limits within which an employer may exercise its autonomy in employment. By reviewing judgments of the Shanghai courts, it identifies the points the courts examine when they review a reassignment. The results show that the courts generally uphold reassignment where there is a clear contractual or statutory basis, but require that it not significantly reduce the employee's remuneration, that it be neither demeaning nor discriminatory, and that the necessary procedure be followed. An employer's autonomy in employment should therefore follow the principles of legality, reasonableness and proper procedure, so as to balance the interests of both sides and build harmonious employment relations.

Keywords: autonomy in employment; job reassignment; review of legality; review of reasonableness

The difficulty of employment autonomy

(1) Defining employment autonomy

Employment autonomy is an important concept in labor law, yet scholarship has not settled on a single clear definition. The reasons are several. Labor law has long been seen as a law protecting employees, so scholarship and the public have concentrated on employees' rights and neglected those of the employer. Employment autonomy is mainly exercised in the performance of the employment contract, but the current legislation on performance and on the parties' rights and obligations is general, and does not define its content or limits. Research has also tended to discuss institutions rather than analyse legal relationships, so the legal status of the employer's autonomy lacks theoretical support.

The present legal system refers to employment autonomy only here and there. Article 8(1) of the Employment Promotion Law of the People's Republic of China provides that employers enjoy the right to employ independently, and Article 7 of the Guiding Opinions of the Supreme People's Court on the Trial of Labor Dispute Cases under Current Conditions provides that the courts must also respect the employer's autonomy in employment and prevent dishonest resignations from disrupting the employer's normal operations. What autonomy covers and where it ends, however, remains undefined, so that it has become a blurred area of labor law; some courts have gone so far as to hold that a matter falls within the employer's autonomy and outside the scope of a people's court's review.

Against that background, a precise definition will need further work from all sides, but the sub-rights it contains can be sketched out: (1) the right to organise and direct, under which the employer may direct and manage employees in the course of work according to the needs of its operations; (2) the right to deploy human resources, under which the employer may optimise the allocation of labor within the enterprise according to its needs and make normal job adjustments in accordance with the law and the contract; and (3) the right to control the order of production and operations, under which the employer may adopt work rules, discipline and other internal regulations through day-to-day management to maintain normal order. Those rights have limits: the deployment right cannot replace the statutory rules on varying an employment contract, the right to direct cannot be used to order operations in breach of safety rules or to work in hazardous conditions, and the law and collective contracts must not be breached.

(2) Why employment autonomy is necessary

First, it follows from the market. In a market economy the employer is an independent producer and trader whose activities, including the use and movement of labor, are governed by the market. It has the right and the duty to organise its business according to demand, to respond quickly to changing supply and demand, and so to adjust its organisational structure and workforce in order to survive competition.

Second, it is required by modern large-scale production, which needs both a relatively stable workforce to keep operations running and the ability for labor to enter, leave and move as needed, so that the employer can adjust promptly to market changes and feedback.

Third, it is required by China's economic reform. The Private Economy Promotion Law of the People's Republic of China, in force from 20 May 2025, affirms the place and positive role of the private economy in reform and opening up and in socialist modernisation, and provides that the State encourages, supports and guides its development in accordance with the law. The Law states that the personal rights, property rights and operational autonomy of private economic organisations and their operators are protected by law and may not be infringed by any unit or individual. An employer's proper exercise of employment autonomy is therefore protected by law and forms part of the policy of consolidating the public sector and encouraging, supporting and guiding the non-public sector.

(3) Disputes arising in practice

Employers adjust employees' posts in ever-changing ways. Reassignment, which embodies the right to deploy human resources, is the core of employment autonomy, because a change of post brings major changes in the employee's rights and obligations, and the two sides often fall into protracted conflict over it. The limits of reassignment thus determine, to a considerable extent, the scope of the employer's autonomy.

Employment autonomy as the courts see it: reassignment as the entry point

To establish the standard the courts apply, the author reviewed more than 30 Shanghai judgments found in the PKULaw database using "autonomy in employment" and "reassignment" as keywords.

(1) Reviewing legality

First, the three statutory situations in Article 40 of the Labor Contract Law: illness or injury outside work, incompetence for the position, and a major change in objective circumstances. Where, for example, a business adjustment such as the abolition of a department, a change of business or a force majeure event such as the pandemic makes the original post untenable, reassignment is necessary. In (2024) Hu 0116 Min Chu No. 4906, the original post disappeared because of operating difficulties and the abolition of the department, so reassignment was necessary. In (2023) Hu 02 Min Zhong No. 11284, reassignment during pandemic restrictions fell within a reasonable range, and the employee's refusal to attend amounted to absence without leave.

Second, a basis in the employment contract or the internal rules, as where poor performance leaves surplus staff and the business requires adjustment. Generally, where the contract expressly allows the employer to adjust posts according to production and operational needs and the adjustment stays within the agreed scope, including the nature of the post and the level of pay, the courts uphold its legality. In (2024) Hu 0109 Min Chu No. 10449, the contract gave the defendant the right to adjust the post according to the claimant's ability; the reassignment conformed to the contract and the claimant's refusal was a breach of discipline. In (2024) Hu 01 Min Zhong No. 3669, the contract gave the employer the right to reassign and required the employee to accept reasonable working arrangements.

Third, deemed consent under Judicial Interpretation (I). The Answers of the Shanghai High People's Court on Several Issues in the Trial of Labor Dispute Cases provide that, on adjusting the content of work and remuneration, where the parties have a clear written agreement, or where there is no such agreement but the original contract has in effect been varied through performance, the parties are deemed to have agreed the change. In (2023) Hu 0109 Min Chu No. 1028, the company moved a sales manager to a trade union post and the employee refused to attend on the ground that she had not been notified. The court found that the company had notified her several times by EMS and that she had handed over her work, so she knew of the reassignment; her refusal to attend was absence without leave and the termination was lawful.

Fourth, special situations such as an agreement on a declassification period. During that period the employer must usually move the employee to a post that does not involve classified information, which involves changes to post and pay and therefore amounts to varying the contract, requiring agreement. Employees rarely agree to a pay cut, and cases in which they claim the difference as an unlawful deduction are common. Shanghai practice tends to accept that the employer may reassign and reduce pay, but fairness requires that the new post and pay be reasonable: the pay should match the standard for a post that does not involve classified information and must not be reduced excessively. In (2018) Hu 01 Min Zhong No. 8168, Mr Hu resigned and was in a declassification period from 20 June to 13 September 2016, and claimed that the bank's reduction of his bonus because of the change of post was unlawful. The court of first instance held that the third quarter fell within the declassification period, which differed from the period in which he performed his normal duties, and the appeal court confirmed that, since he had resigned, the bank's arrangement of other work to implement the declassification period was proper; the nature of the work differed greatly from his former duties, so his claim for a quarterly bonus at the former rate had no basis.

(2) Reviewing reasonableness

The Answers of the First Civil Division of the Shanghai High People's Court on Several Issues in the Trial of Labor Dispute Cases (2002) provide that where the contract allows the employer to adjust the content of work or the post at any time according to production and operational needs and a dispute arises, the employer must prove that the reassignment is fully reasonable; if it cannot, the original contract must still be performed. Reasonableness is therefore also a focus of review.

First, whether pay and conditions are clearly worsened. Pay must not fall significantly after reassignment, as where a fixed salary becomes commission with no base, failing which the reassignment is unreasonable. In (2024) Hu 0117 Min Chu No. 4445, the claimant was moved from an on-site post to that of courier and his pay changed from a fixed salary to commission with no base; the reassignment was unreasonable and the termination unlawful. In (2023) Hu 0104 Min Chu No. 23659, the employer moved a sales manager to a waiter's post with a large pay cut and no consultation, which was an abuse of autonomy.

Second, whether the change of duties and location is reasonable. The new post should be similar in nature, and a change of location must not place a significant burden on the employee, so that a cross-provincial reassignment requires agreement. In (2024) Hu 0114 Min Chu No. 7719, the claimant recalled the defendant, who had long been posted to Wuhan, to Shanghai and withdrew his home-working arrangement; the cross-provincial reassignment exceeded a reasonable range, seriously affected his life and was not agreed. In (2023) Hu 0105 Min Chu No. 29144, the claimant moved the defendant from senior sales general manager to city manager and cut the base salary from RMB 20,000 to RMB 15,000, without agreement or procedure, and shifted the commission risk to the employee.

Third, whether the change is punitive or demeaning. Reassignment must not be used to force a resignation, as where a managerial post is changed to cleaning or portering. In (2024) Hu 0104 Min Chu No. 3041, the claimant moved a sales representative to a porter's post in the operations department, which plainly changed the nature of the post and was a demeaning adjustment made without agreement.

(3) Allocating the burden of proof

The employer must prove that the reassignment is reasonable, for example that it is operationally necessary and that pay is unchanged, while the employee must show the harm it causes, such as a pay cut or worse conditions. In (2024) Hu 0106 Min Chu No. 14636, the new post was similar in nature to the old, and although the employee claimed the reassignment would reduce his pay, that claim was not borne out by his pay records and he produced no other evidence, so the court did not accept it. In (2023) Hu 02 Min Zhong No. 8924, the evidence showed that after the employee's department and post were abolished the company transferred him to another location, and on his refusal terminated the relationship, in breach of the contractual term that a change of location required his prior consent and a posting agreement; the termination was therefore unlawful.

(4) The consequences of refusing a reassignment

First, where the reassignment is lawful and reasonable and the employee refuses without proper reason and stays away, the employer may terminate under Article 39(2) of the Labor Contract Law. In (2024) Hu 0105 Min Chu No. 1511, the company terminated for serious breach of discipline on a contractual and factual basis. In (2023) Hu 0109 Min Chu No. 5749, the company made clear that the reassignment was temporary and that pay and conditions were unchanged, and the employee's refusal was a failure to accept management amounting to serious breach of discipline.

Second, where the reassignment is unreasonable, as where pay drops sharply or the change is demeaning, the employee may claim compensation for unlawful termination. In (2024) Hu 01 Min Zhong No. 9014, the company did not establish the necessity of the reassignment, so the termination was unlawful and compensation was payable.

A theoretical analysis of employment autonomy: reassignment as the entry point

The Labor Contract Law divides variations of an employment contract into those relating to the employer and those relating to the agreed content of the contract, and reassignment plainly falls within the latter. The question is whether, where the parties cannot agree a variation, a unilateral reassignment infringes the employee's rights. Article 3(1) of the Labor Law lists the rights an employee enjoys, but it does not provide a right to work in accordance with the agreed content of the contract, and Chinese scholarship has given the point little attention. In comparative law, the German right to actual employment (Beschäftigungsanspruch) includes a right to be given the work agreed in the contract, so that the employer cannot reassign at will. Where the employer asks the employee to perform other tasks or to work elsewhere, it must be asked whether the change falls within the scope of the contract. If it does, the employer has a right of direction (Direktionsrecht) and the employee must comply provided the direction is exercised at equitable discretion (nach billigem Ermessen). If it does not, the employer cannot change the post by unilateral decision, and if no agreement on a variation can be reached it can only achieve its aim by a dismissal by way of variation (Änderungskündigung).

On 12 December 2023 the Supreme People's Court published the Judicial Interpretation (II) on the Application of Law in the Trial of Labor Dispute Cases (Draft for Comment), Article 20 of which set out the standard for reviewing a unilateral change of post or place of work by an employer. Although the draft did not answer the question above and appeared deliberately to avoid characterising the legal nature of reassignment, it was a step forward. Against a background in which the Labor Contract Law and the Labor Law say nothing about unilateral reassignment, it would for the first time have established the employer's right to reassign in a legal instrument and answered the question of legality by excluding unlawful cases, so that the basis of the right would no longer rest on the declaratory provisions of the Employment Promotion Law and judicial practice would be more workable. Regrettably, the final version did not retain the provision.

Even so, in the author's view the six unlawful scenarios listed in Article 20(2) of the draft, though not exhaustive, are the most typical, and the discussion below is organised around them.

(1) Not in accordance with the employment contract or the employer's internal rules

The post is a mandatory term of the employment contract. To reassign lawfully, the employer must first see whether the contract, the job description, the collective contract or the internal rules say anything specific about the post and the content of the work, and must define what counts as an "adjustment of the post". Where the written documents are silent, a reassignment should not be read as any change in the content of work but as a change in the nature of the post brought about by a substantial change in that content, since it is the nature of the post that expresses the value the employer sought when it engaged the employee. If the nature of the post does not change substantially and only the specific tasks are adjusted, without fundamentally altering the appraisal standards or the direction of the employee's professional skills, the change is not readily treated as a change in the "content of work"; but if it does affect those main elements, it should be treated as a reassignment. Whether the specific tasks of the old and new posts overlap does not affect the characterisation. Where the written documents are specific, a change that alters the content of the employee's core work may be treated as a reassignment even if the nature of the post does not change greatly.

The conditions for a lawful reassignment must also be clear. Under Article 35 of the Labor Contract Law the parties may reassign only by agreement, which requires the employee's consent or at least the absence of objection. That may take the form of a specific agreement on the reassignment, or of a positive provision in the contract, collective contract or internal rules, or the absence of any contrary provision. Three points follow. First, where the documents give the employer the right to reassign according to production and operational needs and the employer proves that the need is objective and reasonable, arbitration and adjudication bodies will generally respect it. Second, where the employment contract makes an exceptional or negative provision on reassignment, they will generally uphold the contract whatever the collective contract says. Third, where internal rules adopted through the democratic procedure allow reassignment for a reasonable cause, they will generally respect those rules.

(2) Not for the objective needs of the employer's operations

As noted above, where the documents allow reassignment according to production and operational needs and the employer proves that the need is objective and reasonable, arbitration and adjudication bodies will generally respect the decision, because adjusting the organisation and posts in response to the market is an expression of autonomy that they will not interfere with. But where the employer reassigns unilaterally for reasons other than objective operational need, or cannot prove such a need, it may bear adverse consequences.

Practice also produces the following situation: a change in the objective circumstances on which the contract was based makes the contract difficult or impossible to perform in full, or makes performance unbalanced between the parties; no agreement on reassignment can be reached; and the employee insists on attending the original post and refuses the new one, whereupon the employer terminates for serious breach of discipline. In that situation it must first be recognised that the parties need to negotiate an adjustment of part of the contract; otherwise, where the contract no longer matches reality, continuing it may harm the legitimate interests of the parties. Secondly, some arbitration and adjudication bodies hold that where a major change in objective circumstances makes continued performance impossible and agreement cannot be reached, the employer may terminate unilaterally; in that case, requiring the employee to take the new post has no reasonable basis and a finding of serious breach of discipline is inappropriate, so a unilateral termination on that ground is unlawful. Practice must therefore distinguish an "objective operational need" from "a change in the objective circumstances on which the contract was based", and choose the appropriate route for each.

(3) An adverse change in wages or other working conditions without necessary assistance or compensation

An adverse change does not mean that wages stay exactly the same; it means that the basic terms attached to the post do not change, while those attached to the particular post may vary with it.

Where an adverse change is objectively unavoidable, the employer must provide necessary assistance or compensation. Note, however, that in adjudication some employers argue on the one hand that there is no adverse change in conditions and on the other that, if the employee cannot adapt to the new conditions, the employer will provide induction training, which contradicts and in substance undermines the argument that no adverse change exists.

(4) Discrimination or demeaning treatment

In the wider social sense no post is superior or inferior. But for a particular employee, if a reassignment would adversely affect how others see him or her, his or her own expectations of a career or the view of colleagues, it may breach the anti-discrimination principle established by the Employment Promotion Law, amount to discrimination or demeaning treatment, and make the reassignment unlawful.

Conclusion

Reviewing Shanghai case law, the author finds that in practice an employer that avoids the six scenarios in the draft judicial interpretation greatly reduces the risk that a unilateral reassignment will be found unlawful.

Labor law differs from ordinary private law in that, as part of social law, it pursues its own purpose: to balance the rights and obligations of employer and employee while protecting the employee's lawful interests, and so to build harmonious employment relations. Apart from unilateral reassignment, other situations in which an employer exercises autonomy in employment are not clearly regulated by law, but in substance they all follow the three principles of legality, reasonableness and proper procedure, and arbitration and adjudication bodies review them in much the same way.