It is well known that the Korean labor law provides the employees with generous protections when it comes to the matter of disciplinary measures taken by the employer.  In this article, we explain what protection is given to foreign employees in the area of termination and other disciplinary actions.

Employment Is Not “At-Will” in Korea

Unlike many other foreign legal regimes, Labor Standard Act of Korea (LSA) requires the employer having five or more employees to establish a just cause in order to exercise dismissal and any other disciplinary actions.  In other words, employment is not “at-will” in Korea.  (Note:  There is a legal concept of no-fault dismissal based on the managerial hardship under the LSA, which requires very strict requirements to execute.  This will be the subject of our upcoming article) 

Foreign Employees Can Be Protected By the Korean Labor Law Even If the Labor Contract  Says Korean Labor Doesn’t Apply

This rule of labor laws shall equally apply to the employment contract between Korean employers and Foreign employees in Korea, and vice versa.

More importantly, this is the case even when the employee working in Korea agrees in his employment contract that the Korean labor law does not apply.  That is because the Private International Act of Korea which provides the general principles for the choice of law enables every Korean and foreign employee working in Korea to enjoy the protections under the mandatory rules of the Korean labor law.

Therefore, it is highly advisable that any foreign employee working in Korea and a multinational which has employees in Korea must understand how the Korean labor law regulates the dismissal and under what situation the dismissal becomes a wrongful termination.

What is the Just Cause for Dismissal in Korea?

The LSA does not provide what the just cause exactly means.  It is up to the court’s review and interpretation.  In this regard, it is firmly established in the Supreme Court’s precedent that the just cause is established only when the employee violates the employment rules and contract to the extent which makes it reasonably impossible for the employer to maintain the employment relationship.

This means the provisions of employment rules or labor contract are not decisive.  Even though the employer’s rules of employment or employment contract explicitly states that certain types of breach of contract by an employee shall result in immediate dismissal, that dismissal is still subject to the judicial review for the finding of the just cause.

For example, in a case where an employee had allegedly violated certain labor contract clauses such as reproaching the CEO, disclosing confidential information, taking wrongful reimbursement of expenses and unauthorized absence for 2 months, the Supreme Court of Korea ruled that even if the employee breached the employment contract as the employer alleged, those are not sufficient to reasonably believe that it is impossible for the employer to keep the employment relationship.

How Does the Korean Court Review the Existence of Just Cause?   

In determining whether or not a just cause for dismissal exists, the court takes into account the totality of circumstances such as object and nature of the business, situation of workplace, position and role of the employee, motive of the misconduct, past workplace attitude and the perils of workplace ethics.  The burden of proof of the existence of just cause for dismissal is on the employer.

Also, the Korean court has long held the opinion that the employer’s termination must be the last resort among the disciplinary actions.  If there exists any other disciplinary measure which is less harmful to the employee but at the same time can fix the problem, the employer must take that less harmful measure first.  Otherwise, it constitutes a wrongful termination.

How about the Dismissal Procedure?

Under the LSA, the employer must give the employee at least 30 days prior written notice (or in lieu of the prior notice, a 30 days’ wages) in order to fire the employee.

The notice must specify the grounds for dismissal and the effective date of the dismissal.

If there is any internal regulation of the employer pertaining to the dismissal procedure, such as a disciplinary committee hearing process, it must be duly observed.

In this regard, the Korean court is very strict in interpreting the procedural compliance.

For example, one of the most litigated issues in the wrongful termination case is whether the employer’s notice of termination includes sufficient information for the employee to defend himself.  Some employers send a notice which only includes a list of the articles that the employee is alleged to violate.  Almost always this sort of notice is struck down by the court because the court requires the notice to be fully informative to the extent it specifies the substantial facts and evidence as to the accusation so that the employee can grasp the nature of the accusation and defend himself.

If the employer has not followed the dismissal procedure prescribed in the LSA and his internal regulations, the dismissal itself becomes void.

How to Appeal the Unjust Dismissal

When the employee objects to the employer’s dismissal based on its unjustness, he can file a petition with the Labor Relations Commission within 3 months of the dismissal.

The employee may alternatively file a civil lawsuit against the employer at any time to nullify the dismissal.

What Is the Legal Effect and Compensation When the Appeal Is Upheld

When the wrongly fired worker wins, the employment contract is reinstated and the employee is entitled to the back pays.

Furthermore, if it turns out that (i) the employer maliciously terminated the contract for the sole purpose of eliminating the employee from the workplace without any cause or (ii) the employer’s unjust dismissal was made knowingly or recklessly while any ordinary person would find that it did not fall within the violation of the employment rules and contract at all, the employer’s act constitutes a tort and therefore he must pay consolation money to the employee in addition to the back pays.

If you have any questions about this article, please visit our Legal Consultation center or send your inquiry email by clicking here.  Our Korean licensed lawyer will answer your inquiry.

© 2014 Wonil Chung, a Korean Licensed Lawyer, Chung & Partners, a Korean Law Firm.  All rights reserved.