New Rulings In Beijing - Will They Make Restructuring More Difficult?

On 24 April, the Notice on Answers of Several Issues on the Application of Law in the Trial of Labor Dispute Cases (the New Rulings) was issued by Beijing High People's Court and Beijing Municipal Labor Arbitration Commission jointly.  The New Rulings, came into force on 24 April 2017, are intended to unify the standard of law enforcement in contentious employment issues in Beijing.

One of the matters dealt with by the New Rulings are the circumstances under which an employer can dismiss an employee the Article 40 (3) of Employment Contract Law (ECL)  on the basis of a "major change".

Under Article 40 (3), an employer can terminate an employee unilaterally by giving 30-day's notice in advance, or after it pays the employee an extra month's wages, if there is a "major change" in the objective circumstances on which the conclusion of the employment contract is based.  Article 40 (3) can be invoked where the "major change" results in the contract becoming incapable