Question

 Is an employee entitled to a job loss allowance if they are reassigned to a new position during a corporate restructuring?

Answer

Generally, the answer is no.

Under Clauses 1 and 3, Article 42 of the Labour Code 2019, where an employer restructures its organization, adopts technological changes, or faces economic difficulties, it may terminate employment only after preparing a labor utilization plan in accordance with Article 44 and giving priority to retraining or reassigning employees to suitable positions where possible.

This reflects the principle that maintaining employment is the primary objective, while termination of employment is considered a last resort when no suitable position is available.

Accordingly, if an employee is reassigned to another position and the employment relationship continues through the amendment of the employment contract under Article 33 of the Labour Code 2019, the employee is not considered to have lost their job. Therefore, no job loss allowance is payable under Article 47 of the Labour Code 2019.

Employers should also ensure that any reassignment genuinely reflects the restructuring process. If an employer terminates an employment contract, pays a job loss allowance, and then immediately rehires the same employee for a substantially similar position, the competent authorities may examine the substance of the arrangement rather than its form when assessing the legality of the termination.

Conclusion

 A job loss allowance is payable only where the employment contract is genuinely terminated due to organizational restructuring, technological changes, or economic reasons. If the employee continues working in a suitable reassigned position, the employer is generally not required to pay a job loss allowance.

If your business requires legal advice on corporate restructuring, workforce restructuring plans, redundancy allowances, termination of employment contracts, or other employment law matters, please contact SB Law. Our experienced lawyers and legal professionals are ready to assist you in developing practical and legally compliant solutions while helping minimize legal risks throughout the restructuring process.