Aug 4, 2017

Termination after Childcare Leave in Korea: Childcare Leave Law in Korea

Korea's generous Childcare Leave Law poses difficulties to many smaller employers in Korea.  The Childcare Leave Law, in Korea, allows for a one year period of leave per child under the age of seven. These employers, often, are required to hire a replacement employee when the employee departs for this childcare leave.  This situation, often, leads to an employee returning to employment with little to no work to do.

So can an employer, in Korea, layoff the returning Korean worker for the lack of a position for the worker?

The answer is, typically, NO.  Notwithstanding, the issue of tenure and the selection criteria for layoffs, the law specifically notes the following.

I. Childcare Leave Law: Prohibition of Termination of Employee based on Childcare Leave
Equal Employment Opportunity and Work-Family Balance Assistance Act Art. 19 notes:
(3)"No employer shall dismiss or take any disadvantageous measure against a worker on account of childcare leave or dismiss the relevant worker during the period of childcare leave." 
(4)"After a worker completes childcare leave, the employer shall reinstate the relevant worker in the same work as before the leave or any other work paying the same level of wages."
Thus, employers must grant "childcare leave" and must reinstate, in short, the employee after childcare leave to a job of the same pay.  Employers, however, are not required, in most cases, to return the employee to the same position as when the employee departed for the childcare leave.

II.  Dismissal of a Worker in Korea based on "Urgent Managerial Necessity" 
An employer may dismiss and employee for an "urgent managerial necessity" or for "justifiable cause." Again, notwithstanding the issue of the selection criteria for layoffs - an employer may terminate an employee for "urgent managerial necessity" or for "justifiable cause."  "Justifiable cause" was discussed in numerous prior blog posts including a post concerning the dismissal of foreign executives in Korea. 

Korean Labor Standards Art. 24 notes: "Where an employer intends to dismiss a worker for managerial reasons, there must be an urgent managerial necessity. In this case, it shall be deemed that there is an urgent managerial necessity for the transfer, merger, or acquisition of the business in order to prevent managerial deterioration."  The law, facially, has no definition of "urgent managerial necessity."

The Supreme Court of Korea, however, recently elaborated on this "urgent managerial necessity" standard by noting that:
"'Urgent Managerial Necessity' is one of the requirements for planned layoffs, and includes, but is not limited to, avoiding bankruptcy and downsizing to prepare for possible crises in the future; however, such downsizing should be acknowledged as reasonable from an objective perspective. In determining an 'urgent managerial necessity,' an entity's overall business status should be reviewed rather than solely relying on the profit figures of an entity's division or place of business, excluding exceptional cases where: (i) the entity's division is independent of an and separate from other divisions in terms of workforce, logistics and location; (ii) the entity's financing and accounting operations are segregated; and (iii) the entity's division operates under business conditions different from those of other divisions" (2012DU25873 Decided May 28, 2015).
This test places a significant burden on the employer in proving the "urgent managerial necessity." It is possible that the worldwide company situation of a multinational may even be considered in the determination of the "urgency" of the alleged "necessity."
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, by AsiaLaw for Korea, as one of only two non-Korean lawyers as a Top Attorney. Sean is known for his proactive New York-style street-smart advice and his aggressive and non-conflicted advocacy. Sean works with some of the leading retired judges, prosecutors and former government officials in Korea.

Sean's profile may be found at: Sean C. Hayes