Termination of Employee in Korea for Taking Company Property in Violation of Work Rules Deemed by Korean Court an Unfair Dismissal

The Seoul Administrative Court ruled that it is an unfair dismissal in violation of Korean labor law for a car dealer Employer to fire an employee for taking mugs and calendars (customer gifts). The case is a lesson for employers who wish to terminate employees. The best practice for terminating an employee is to provide multiple notifications of fault and implement progressive disciplinary actions. IPG Legal advises, before terminating any employee in Korea, to discuss the matter with an experienced attorney in Korea. Losing a case can lead to reinstatement, fines, and back pay. For a practical guide to terminating an employee for cause, please see: Practical Guide to Firing an Employee in Korea for Cause.

Background

Employer, an automobile dealer, held a disciplinary committee meeting and decided to dismiss the Employee. The Disciplinary Committee concluded that the Employee had stolen five mugs and a calendar from the Employer and failed to follow instructions. The Employee worked for the Employer for nearly a decade.

The Employee filed a petition with the Chungnam Regional Labor Relations Commission, claiming unfair dismissal. The Chungnam Regional Labor Relations Commission accepted the Employee’s complaint and ruled that the disciplinary action of termination was not justified and thus an unfair dismissal under Korean Labor Laws. Thus, the Employee was reinstated with back pay.

The Employer appealed to the Central Labor Relations Commission. The Central Labor Relations Commission dismissed the Employer’s appeal, noting that the disciplinary action was “too severe” and thus an unfair dismissal. The Employer filed an appeal to the Seoul Administrative Court.

Seoul Administrative Court Ruling

The Seoul Administrative Court ruled that “According to [Employer’s] employment regulations, taking company items out of the company without permission is prohibited, so [Employee’s] unauthorized removal of five mug sets can be seen as an act in violation of company regulations . . . It is acknowledged that the unauthorized removal delayed the gift of the mug sets to the customer by about a month, causing some disruption to the company’s work.”

However, the Court noted that “it is difficult to see that [Employee] had the intent to acquire the property illegally, as he had already given two of the five mug sets to customers and kept the remaining three to give to customers and then returned them to the company,” and “in a criminal case where [Employer] filed a criminal complaint against [Employee] for theft [Employee] was not indicted.”

The Court opined that the actions of the Employer “considering the financial value of the mugs, [Employee’s] intention to take them, and the extent to which they interfered with [Employer’s] business operations, the unauthorized removal of the mug set may be grounds for disciplinary action, but dismissal for this reason is an excessive measure.”

Sean Hayes 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, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw, and IPG Legal is consistently ranked Top Dispute Resolution Law for our litigation services.

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