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How to Realize Flexible Adjustment of Position and Salary

2018-01-25


Position transfer and salary adjustment are common issues of enterprise employment, which not only are frequently seen in personnel management, but also give rise to an increasing number of labor disputes due to employees' vital interests involved. The author will analyze, from a legal perspective, how to process flexible position transfer and salary adjustment, and put forward suggestions on operation for the sake of helping HR practitioners.

  1.   The common scenes of position transfer and salary adjustment

  Position transfer and salary adjustment refer to a change in position or salary, which in essence fall within the scope of labor contract modification. According to the PRC Labor Contract Law and other relevant laws and regulations, the labor contract modification can be divided into the following circumstances: 1) the employer reaches an agreement with an employee through consultation; 2) the employer unilaterally makes change based on the legal provisions, e.g. position transfer due to employee's "incompetence", position transfer due to "expiration of medical treatment period", positions transfer for female employees during pregnancy, position transfer due to work-related injury or occupational disease, etc.

  With the development of market economy and the rapid change of social environment, the above-mentioned circumstances for labor contract modification cannot fully meet the demand of enterprises to reallocate the human resources, stemming from the objective needs of production and operation. Driven by the demand of production and operation, employers' desire for position transfer and salary adjustment to enjoy their employment autonomy is especially pressing. At the same time, since position and salary are considered as the vital interests of employees, employees often disagree with the enterprises on position transfer and salary adjustment for the sake of protecting their own interests.

  In addition to change via consultation, statutory circumstances are applied to unilateral change, is there any other approach that employer may depend on to take a unilateral decision on position transfer and salary adjustment? The answer is positive. Although the laws and regulations have not elaborated the other circumstances, the local judicial opinions did manifest some applicable situations with reference to the local conditions where the arbitration committees and courts have certain discretions.

  In 2017, the Beijing High People's Court and the Beijing Labor Arbitration Committee have jointly issued the Interpretation of Several Issues on the Application of Law in the Trial of Labor Dispute Cases, which stipulates that the employer may agree on position transfer subject to circumstances of production and operation. Such position transfer should be within a rational scope and the employer should prove the fact of change in circumstances. If the employee accepts the position transfer but not salary adjustment, the employer should explain the reason. Whether the position transfer violates the legitimate rights and interests of employees should be judged by the material situation of the employer, the nature of the new position and the content of the agreement reached between the parties.

  Guangdong High People's Court and Guangdong Labor Arbitration Committee stated that, in the 2012 Meeting Minutes, position transfer is based on the employer's autonomy of employment and provided the following requirements for enterprises to rationally exercise the right of position transfer: 1) position transfer should be based on the needs of production and management; 2) remuneration before and after position transfer should be comparable; 3) position transfer should not be used for insulting and punitive purposes; and 4) the position transfer shall not violate other laws and regulations.

  The 2017 Meeting Minutes II of the six departments of Chongqing High People's Court provided that the legitimacy of position transfer should be comprehensively judged from different perspectives such as whether it is necessary for production and operation, whether it obviously reduces employee's remuneration and impairs working conditions, whether it has a significant influence over employee's work and life, and whether it is insulting or discriminative to workers.

  In the light of local judicial practices, we can find that enterprises may keep certain flexibility in the unilateral change of position and salary, which we may call it flexible adjustment of position and salary, to protect their employment autonomy.

  2.   Key points to handle flexible adjustment of position and salary

  A combination of legal requirements and judicial practice suggests that enterprises are required to plan ahead in order to realize flexible adjustment of position and salary, and to pay attention on the following key points, so as to maximize the effects of flexible adjustment.

  a)   Establish the source of authority for position transfer and salary adjustment via agreement or rules and regulations

  i.    Through labor contract. The source of authority is the foundation of employer's unilateral decision on position transfer. Therefore, by virtue of the principle of the autonomy of the will in civil law, the enterprise can reach an agreement with the employee on the basis of the spirit of contract to specify the circumstances under which it may unilaterally change the employee's position and salary. The author thinks that, in such an instance, such agreement should be considered valid as it can serve as a legal basis for the adjustment.

  ii.   Through rules and regulations. Employers can also make a unilateral adjustment of salary based on the production needs or other conditions prescribed in the rules and regulations. The provisions of the rules and regulations may endow the enterprise with the rights to change employee's position and salary, provided that the rules and regulations have undergone the democratic and publication procedures according to the law and have been brought to actual knowledge by the employees. If necessary, the enterprise should create a cross reference between the labor contract and the rules and regulations to reinforce the legitimacy of authority for position transfer and salary adjustment.

  b)   Evaluate the necessity of position transfer and salary adjustment with regard to the facts

  Once the enterprise has established the basis for unilaterally changing the position and salary, it should pay attention on whether it is supported with facts. Specifically, it should evaluate whether there is an objective need for production and operation, and whether it is necessary to make changes to employee's position and salary.

  Although the judicial branches of some local regions will take into account the "production and operation demand", no further clarification on what constitutes "production and operation demand" or "change on production and operation situation " is given.

  The author believes that the following three points should be taken into consideration: (1) the starting point is the production and management decision (the "decision") in which constitute the prerequisites of unilateral position transfer, such as mergers and acquisitions, merging or elimination of departments, product line adjustment, business separation, etc.; (2) the decision should be dominated by the enterprise; and (3) whether there is a direct causal relationship between the decision and the position transfer. We should further examine whether there is a direct causal relationship between the decision and an individual employee's position transfer and whether the decision will inevitably affect the position of an individual employee.

  In addition, whether the enterprise has alternative approaches and whether it is necessary to change the position and salary should also be considered when exercising the rights.

  3.   Increase the reasonability of position transfer and salary adjustment with regard to the content changes

  The content changes can be regarded as the core part of handling the position transfer, and the reasonability should be determined by comparing the new and the original position in terms of similarity, salary, work content, qualification, work place and environment, work time, etc.

  a)   Salary. From the perspective of employee benefits protection, if the salary level is maintained or increased, the position transfer is likely to be deemed reasonable. Yet it is not necessary to be unreasonable if the salary level is decreased. It will be determined by whether the enterprise has an integrated salary system and whether the salary level of the new position was strictly determined according to the salary system.

  b)   Work content and qualifications. The similarity of work content should be comprehensively judged by the scope of work, the nature of work, the assignments and job responsibilities between the new and the original positions. At the same time, enterprises should also evaluate the adaptability and cohesion degree of the employee to the new position according to their own knowledge, skills, abilities, personality, physical status and other aspects of the situation, by reference to the job descriptions.

  c)   Work place and environment. If there is a considerable difference in the location and environment between the new and the original positions which brings significant impacts on the employee such as increasing the time costs and economic costs of work, such transfer is more likely to be deemed unreasonable unless the enterprise has provided transportation subsidies, shuttle buses or other means in minimizing the impacts.

  d)   Working hours. Whether there are big differences in the working hours system or the shift system that may be difficult for the employees to adapt to and to accept, the intensity of overtime work in the new position compared to the original position, etc. should also be considered in a comprehensive consideration of relevant factors.

  4.   Increase the reasonability of position transfer and salary adjustment in term of procedures

  Since position transfer and salary adjustment relate to the vital interests of employees, the employer should fully communicate the reasons, responsibilities, wages, benefits and other details to the employees by meeting, one-on-one explanation, etc. It should deliver the written notice of position transfer and job responsibilities to the employees through EMS, email, etc., and ensure that the employees are informed by acknowledging the receipt of it.

  At the same time, the employer should give employees appropriate consideration periods, take their advice and give necessary response and assistance, such as granting a certain period of adaptation and protection, appropriately lowering the assessment criteria, arranging new job training, etc.

  In conclusion, enterprises should, by reference to different circumstances, adopt multiple approaches such as changes via consultation, statutory unilateral change and flexible modes of position transfer and salary adjustment by incorporating the corporate culture and the internal operation process, to end up in achieving the principle of legitimacy and reasonability and realizing the flexible adjustment of position and salary.

 

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