The Korean Labor Standards Act mandates that employees under “contract” or “regular employees” may only be terminated for “justifiable reason attributable” to the employee or “urgent managerial necessity” after the completion of the employee’s probationary period.
Both Korean employment law standards are, often, difficult for an employer to meet without the professional structuring of HR policies and procedures and a nuanced approach to the termination of employees in Korea.
FYI – Company executives/directors are, normally, not considered company “employees” and thus do not benefit from most of the protections afforded by the Korean Labor Standards Act. However, if the company in Korea is operating as a subsidiary in Korea and is not maintaining the appearance of a unique legal entity, Korean courts have been increasingly willing to deem, even a director, an employee.
Please see an Article on the issue of Representative Directors as Employees at: Employment Termination of Representative Directors in Korea. Also, please see: Korean Independent Contractor Employment Risks for an explanation of the basics of Korean law on this regularly developing area of Korean law.
Justifiable Reason for Dismissal of an Employee in Korea
The Korean Labor Standards Act places the burden on the employer to prove a “justifiable reason to terminate.” According to the Korean Supreme Court, the reason must be “directly attributable to the employee.” Stealing, missing an excessive number of days of work, and violating laws related to the job, have all been deemed sufficient to terminate. In most cases, Korean courts shall look to whether the employee was given adequate notice of deficiencies prior to determination and if the employees were provided the resources to improve.
Managerial Reasons for Laying off an Employee in Korea
The Korean Labor Standards Act places the burden on the employer to prove that an “urgent managerial necessity exists” before an employee is laid off. The Korean Supreme Court has interpreted this to mean that a company should prove that without the layoff, the company in Korea would have extreme difficulty in maintaining operations. The standard is interpreted strictly. Prior to layoffs, the company should prove that it has exhausted all other remedies including offering voluntary retirements. The layoffs, also, must be conducted based on a “fair and reasonable” standard. The Korean courts have noted that the time of service, age, performance records, and technical skills may be factors in determining layoffs. Additionally, employees or the trade union must be consulted fifty days before the layoffs.
We highly recommend consulting with an employment law attorney in Korea before firing or laying off a Korean employee. Too many companies have found themselves in courts in Korea over improperly following procedures and the lack of a little Korean-nuanced strategy.
If you would like a free consultation with a lawyer, you may schedule a no-charge Initial Consultation at: Schedule a Call with a Lawyer.
- Terminate/Layoff an Employee in Korea: Terminating an Employee in Korea
- Is a Non-Registered Company Director in Korea an Employee under Korean Labor Law
- Laying off an Employee in Korea: Korean Law on Corporate Downsizing & Redundancy
- Can you claim severance pay from a Non-Korean Employer?
- What Constitutes an “Employee” under Korean Law?
- “Cause” Needed to Terminate During Probationary Period in Korea?
- English-Speaking Korean Labor & Employment Lawyers in Korea
- Wrongful Termination in South Korea
- What Do You Need To Know About Severance Pay in South Korea?
- Unfair/Wrongful Dismissal of Foreign Executives under Term Contract with Korean Chaebols & MNL in Korea