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Dismissal in Korea

31 May 2018

1. Overview

"Work or employment relationship" means a legal relationship between an employee and an employer established pursuant to the conclusion of an employment contract, and "dismissal" refers to the act of an employer to terminate the employment contract with its employee unilaterally, regardless of how it is being called at the workplace.

Employment contracts can be freely canceled subject to certain requirements or damages in accordance with the doctrine of freedom of contract. However, if an employer in an economically and socially superior position than an employee is allowed to freely and unilaterally dismiss according to the doctrine of freedom of contract, a social issue or problem may arise where an employee who has to rely mainly on wages is obliged to provide work to the employer in an unstable condition.

To overcome this social issue/problem, the Labor Standard Act restricts the reason for the dismissal, timing of dismissal, and dismissal procedures in regard to the unilateral dismissal by an employer.


2. Statutory requirements for the dismissal

(1) The need for Justifiable reasons

An employer may not dismiss an employee or take a disciplinary measure against him/her, without giving reasonable justification. The definition of “reasonable justification” can be interpreted in light of the fact that an employer may dismiss an employee or take a disciplinary measure against an employee, only when he/she can give a societally acceptable reason for doing so.

Examples of justifiable reasons for dismissal are as follows:

  • Difficulty in providing work due to other health conditions such as injury or illness of workers
  • Criminal offenses outside workplace
  • Poor performance at work
  • A company that has declared bankruptcy dismisses workers in the process of liquidation to abolish the business
  • Failure to follow instructions on job or personnel management
  • Early-leaving without approval, negligence, unauthorized absence
  • Obstruction of business, violation of the company rules
  • Undermining the company’s reputation
  • If an urgent management need is recognized and the requirements of the Labor Standards Act are met.

Also, dismissal on grounds of sex, sexual harassment claims, parental leave, reduction of working hours due to childcare, participation in labor unions, whistle-blowing of unfair labor practices, persons with disabilities, and age are strictly forbidden


(2) Dismissal Notice

An employer who intends to dismiss his/her employee shall give a 30-day notice to the employee or pay him/her 30 days’ ordinary wage (payment in lieu of notice of dismissal).

However, the employer is not obligated to give the above-mentioned prior notice to the following employees:

  • A worker who has been employed on a daily basis for less than three consecutive months
  • A worker who has been employed for a fixed period not exceeding two months
  • A worker who has been employed as a monthly-paid worker for less than six months
  • A worker who has been employed for seasonal work for a fixed period not exceeding six months
  • A worker in a probationary period not exceeding three months

Besides, an employer is exempted from the obligation to give 30-day prior notice in the following cases:

  • It is impossible for the employer to continue his/her business due to national disaster, war or any other unavoidable reason.
  • An employee has caused the employer a severe business problem or a massive property loss on purpose by taking actions prescribed in the Article 4 of the Enforcement Rules of the Labor Standards Act such as disclosing business secrets to competitors, stealing products or materials, etc.


(3) Procedures for Dismissals

An employer who intends to dismiss his/her employee should make a written notice on the reason for dismissal, the date of dismissal, etc. If the 30-day advance notice is given in writing and includes the date of dismissal and the reason for dismissal, it is deemed that the employer has given a written notice of dismissal.

If the employer dismisses the employee without giving such written notification, the dismissal shall be rendered null and void, and notification via e-mail, text message from mobile phone, etc. may not be recognized as legitimate written notification pursuant to the Labor Standards Act.

In addition, the Supreme Court considers that dismissal in violation of procedural rules established by collective agreements or employment rules is, in principle, void, except in exceptional circumstances.


3. Implications

Dismissal is the act of an employer to terminate the employment contract with its employee unilaterally irrespective of the will of the employee and it is highly likely that it would harm the economic stability of employees. The Labor Standards Act severely restricts the reason, timing, and procedures of dismissal, and dismissal that does not meet the requirements may be invalid and void.

The bottom line is that employers are required to conduct legal review to ensure dismissal reasons and procedural legitimacy, and also employees who have been unfairly dismissed may seek for legal/equitable remedies such as filing an unfair dismissal remedy or filing dismissal invalidation suit with the Labor Relations Commission. Therefore, it is highly recommended that both employers and employees who are planning or facing dismissal consult with professionals in advance.

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