The provision of Article 40 (3) of the Labor Contract Law is what we usually refer to as "the termination of the labor contract due to significant changes in objective circumstances". The employer shall terminate the labor contract with the employee in accordance with this regulation, and the following legal conditions shall be met and legal procedures shall be followed:

1. There has been a significant change in the objective circumstances based on which the labor contract between the labor and management parties was concluded. It should be noted here that the objective situation based on which the labor contract is concluded not only requires significant changes, but also requires a certain degree of requirement, which not only requires significant changes in the objective situation, but also requires "making the labor contract impossible to perform". Here, objective circumstances usually refer to the occurrence of force majeure or other circumstances that make it impossible to fulfill all or part of the terms of the labor contract. This mainly includes enterprise migration, enterprise restructuring, departmental mergers and acquisitions, significant adjustments in business direction or strategy, and adjustments to the product structure of the enterprise. It should be emphasized that the occurrence of objective circumstances leads to the inability to perform the labor contract. If the degree of "inability to perform" is not reached, the performance should continue and termination cannot be applied. What kind of objective conditions lead to the inability to perform the original labor contract needs specific analysis. For example, a company moved from Luwan District to Huangpu District. Although the worker's workplace has changed significantly, this change is not enough to lead to the inability to perform the original labor contract, so this provision cannot be applied. For example, when a company moves from Shanghai to Nanjing, it is also a change in workplace. However, the distance between Shanghai and Nanjing is so far that the original labor contract cannot be fulfilled, so this provision can be applied.

2. After consultation between the employer and the employee, the content of the labor contract is changed. In practice, the way employers negotiate with workers to change the content of labor contracts is usually by negotiating with workers to change the workplace and job position. In some cases, the change in job position will also result in corresponding changes in labor remuneration. If the employer and the employee reach an agreement on changing the labor contract, both parties shall fulfill the changed labor contract according to the new agreement. In practice, many employers believe that after an objective situation occurs that makes the original labor contract unable to be fulfilled, the negotiation between the employer and the employee is difficult to be effective, so they are unwilling to negotiate with the employee and directly terminate the labor contract; Some employers also believe that failure to negotiate means failure to negotiate. Therefore, in the event of objective circumstances that prevent the original labor contract from being fulfilled, the procedure for changing the labor contract without consultation can directly terminate the labor contract. Both of these are misconceptions that employers have fallen into. According to the legislative spirit of Article 40 (3) of the Labor Contract Law, in the event of objective circumstances that prevent the original labor contract from being fulfilled, the law does not encourage employers to directly terminate the labor contract with the worker. In order to maintain the stability of labor relations, the law imposes an obligation on employers and workers to negotiate and change the original labor contract, This is a legal obligation of the employer. If the employer terminates the contract without going through the negotiation process, it constitutes an illegal termination and needs to bear the corresponding legal consequences.

3. The employer shall notify the employee in writing 30 days in advance or pay an additional month's salary to the employee. After an objective situation occurs that makes the original labor contract unable to be fulfilled, and the employer and the employee cannot reach an agreement on the modification of the labor contract, the employer can terminate the labor contract with the employee by notifying the employee in writing 30 days in advance or by paying an additional month's salary to the employee. The one month salary here, also known as the "proxy payment", requires two points of attention, namely the selection of the proxy payment method and the determination of the proxy payment amount. Firstly, regarding the selection of payment methods for proxy transactions. Whether to terminate the labor contract with the employee by paying the agent's payment or by giving one month's notice, the choice lies with the employer. That is to say, employers can choose to pay one month's salary as a proxy payment without notifying workers one month in advance; Employers can also notify workers in writing one month in advance without paying a proxy fee. Secondly, regarding the determination of the amount of proxy funds. In accordance with the provisions of Article 20 of the Regulations for the Implementation of the Labor Contract Law of the Labour Contract Law of the People's Republic of China, the payment for transfer shall be determined according to the salary standard of the last month when the worker was terminated.

The reason for terminating a labor contract was clearly stipulated in the 1994 Labor Law, which states that the objective circumstances on which the labor contract was concluded have changed, making it impossible to perform the contract. After the promulgation of the Labor Law, the Ministry of Labor of the country at that time formulated the "Explanation on Several Articles of the Labor Law" to guide the labor departments of various counties, cities, and autonomous regions to correctly implement it. Among them, Article 26 provides the following explanation for "objective circumstances": "objective circumstances" refer to the occurrence of force majeure or other situations that make it impossible to fulfill all or part of the labor contract terms, such as enterprise relocation, merger The transformation of enterprise assets, and the exclusion of objective circumstances listed in Article 27 (Economic layoffs) of the Labor Law.

From the perspective of judicial practice, objective circumstances generally refer to unavoidable circumstances such as force majeure or changes in enterprise conditions. They should also include the modification or abolition of the laws and regulations based on which labor contracts are signed, and the result of changes in the objective circumstances based on which enterprises adjust their business strategies or product structures, adjust production tasks or production and operation projects according to market changes, Causing the inability to fulfill all or part of the terms of the original labor contract. There is a legal cause and effect relationship between the objective situation based on which the labor contract is concluded and the fact that the original labor contract cannot be continued to be performed.

In order to facilitate the adjustment of employees' work content based on changes in objective circumstances, explicit and detailed provisions can be made in the company's rules and regulations or labor contracts with employees regarding significant changes in objective circumstances, such as:

1. Reasons for the employer: (l) The production and work positions determined in the labor contract disappear due to the employer's cross regional migration, merger, division, joint venture, conversion (transformation), production transfer, major technological transformation, etc; (2) The closure, bankruptcy, dissolution, or expiration of the business term of the employer results in the disappearance of the production and work positions determined in the labor contract.

2. Reasons for the worker: (1) The worker is unable to engage in the work stipulated in the labor contract due to their own physical reasons; (2) Employees who retire or wait for employment within the employer due to their own reasons; (3) The qualification of a worker to engage in a certain position is lost. (4) The labor conditions agreed upon by both parties, such as working hours and places, have changed.

3. Other reasons: (1) Changes in national policies, laws and regulations make certain provisions of the labor contract unsuitable for social development; (2) Other force majeure factors.

The employer shall list the above situations in the rules and regulations or in the labor contract, so that once the above situations occur, the employer can negotiate with the employee to make changes to the labor contract.

The termination of a labor contract due to significant changes in objective circumstances is the legal right of the employer to unilaterally terminate the labor contract. However, the use of this right has strict legal conditions and procedural requirements, and enterprises should comply with it. Guoling Law Firm will fully leverage its professional advantages to effectively help enterprises prevent relevant legal risks; We will also provide more forms and diverse legal service projects for enterprises based on industry development and actual conditions, guiding scientific decision-making and standardizing development.