CONTENTS
- 1. Labor Standards Act Litigation, the Detailed Background
- - Labor Standards Act Litigation, the Relevant Statutes and Concepts
- 2. Labor Standards Act Litigation, the Determination of the Lower Courts
- 3. Labor Standards Act Litigation, the Determination of the Supreme Court
- 4. Labor Standards Act Litigation, Daeryun's Strategy
1. Labor Standards Act Litigation, the Detailed Background
This litigation began when a domestic large corporation dismissed Employee A on the ground of “poor performance.”
A had joined the corporation and had worked there for more than 20 years.
After being promoted to a managerial position, A received a low grade in the company’s personnel evaluations continuously for 10 years.
The corporation had been conducting a training program targeting managerial employees who fell within the bottom 1 percent based on the cumulative results of personnel evaluations over a three-year period.
A had been selected as a participant seven times during the eight years after this program was created.
A had also been subjected to disciplinary action amounting to suspension on three occasions, on the grounds of poor work performance and a poor work attitude.
Accordingly, the corporation resolved to carry out an ordinary dismissal of A.
The internal rules of employment for managerial staff provided that a person “deemed, under generally accepted social norms, to be unable to continue working” could be dismissed(ordinary dismissal).
In addition, another provision in the same rules also included a clause stating that a person “deemed to have a poor work attitude or poor work performance with no room for improvement” could be subjected to “disciplinary dismissal.”
A immediately objected.
Claiming that the dismissal had been carried out without justifiable cause, A filed an application for remedy with the Regional Labor Relations Commission, and the application was granted.
The Regional Labor Relations Commission gave as its reasons that “the plaintiff’s (the corporation’s) choice of an ordinary dismissal appears to be a means of circumventing a disciplinary dismissal, whose justification would be difficult to prove, and that there appears to be room for improvement in the employee’s work attitude and performance.”
The corporation sought reconsideration, requesting that the facts be reviewed again, but its request was dismissed, and it then filed a lawsuit seeking revocation of the reconsideration decision.
Labor Standards Act Litigation, the Relevant Statutes and Concepts
Before introducing the statutes and precedents relevant to this case, there is a matter that should first be understood.
This concerns the types of “dismissal” and their respective characteristics.
Dismissal is generally classified into three broad categories: “ordinary dismissal,” “disciplinary dismissal,” and “dismissal for managerial reasons.”
Ordinary dismissal refers to a dismissal based on grounds personal to the individual employee.
Disciplinary dismissal refers to the termination of the employment relationship on the ground of the employee’s conduct, and these “conduct-based grounds” are generally set out in the rules of employment or a collective agreement.
Finally, dismissal for managerial reasons, as the term itself indicates, refers to a dismissal carried out due to urgent managerial necessity.
The current law provides that an employee may not be dismissed without justifiable cause.
Article 23 of the Labor Standards Act (Restrictions on Dismissal, etc.)
: An employer shall not, without justifiable cause, dismiss, lay off, suspend, transfer, reduce the wages of, or otherwise impose any punitive measure (懲罰) on an employee.
The Supreme Court has likewise issued a precedent on “grounds for dismissal.” Its content is as follows.
“Where an employer dismisses an employee pursuant to rules of employment or the like that provide that an employee may be dismissed when the employee is unable to perform their duties due to poor work performance or work ability, the dismissal is recognized as justified only where the evaluation forming the basis for the employer’s judgment that the employee’s work performance or work ability is poor was conducted according to fair and objective standards, and, further, where the employee’s work performance or work ability is not merely relatively low compared with other employees but falls short of the minimum generally expected over a considerable period, with little likelihood of improvement in the future, such that, under generally accepted social norms, the employment relationship cannot be continued. Whether the employment relationship cannot be continued under generally accepted social norms must be determined reasonably by comprehensively considering various circumstances, such as the employee’s position and the content of their assigned duties, the degree of performance or expertise required accordingly, the degree and duration of the employee’s poor work performance or work ability, whether the employer provided opportunities to improve work performance or work ability through training, reassignment, and the like, whether the employee’s work performance or work ability improved after such opportunities were provided, the employee’s attitude, and the circumstances of the workplace.” (See Supreme Court, Decision of February 25, 2021, 2018 Da 253680)
2. Labor Standards Act Litigation, the Determination of the Lower Courts
The courts of first and second instance found that the dismissal decision made by the corporation was unlawful.
The reason was that the interpretation surrounding a person “deemed, under generally accepted social norms, to be unable to continue working,” as set out in the rules of employment, must be applied strictly.
That is, dismissal may be considered not merely where the work attitude or performance is poor, but only where it is objectively impossible or significantly difficult for the employee to perform the duty to provide labor under the employment contract, or where the employee clearly has no intention to work.
The lower courts also explained that “where the plaintiff carried out an ordinary dismissal of A pursuant to Article 32 of the rules of employment, citing the ground that A was ‘deemed to have a poor work attitude and performance with no room for improvement,’ this corresponds to a ground for ‘disciplinary dismissal’ set out in Article 42 of the same rules, and therefore it is difficult to conclude that the reconsideration decision was erroneous in finding that the plaintiff carried out an ordinary dismissal in order to avoid the burden of proving the grounds for a disciplinary dismissal.”
3. Labor Standards Act Litigation, the Determination of the Supreme Court
Unlike the courts of first and second instance, the Supreme Court ruled in favor of the corporation.
The Court first pointed out that the lower courts had accepted, without modification, the Labor Relations Commission’s finding that the corporation had “carried out an ordinary dismissal in order to avoid the burden of proving the grounds for a disciplinary dismissal.”
The Supreme Court determined that, where a ground for disciplinary dismissal also constitutes a ground for ordinary dismissal, choosing an ordinary dismissal, which is more favorable to the employee, without taking the form or relying on the regulatory basis of a disciplinary dismissal falls within the “employer’s discretion.”
Because a disciplinary dismissal has a punitive character, being imposed when an employee has committed misconduct that seriously violates workplace order, it is necessarily relatively disadvantageous to the employee, and therefore choosing an ordinary dismissal, which is somewhat more favorable to the employee, is lawful.
The Supreme Court further found that there was also justifiable cause for the dismissal of A.
The Court found that A had held a managerial post for more than 10 years and, although the performance and expertise corresponding to that position and career were required, A did not possess these abilities.
The Court also noted that A had long been evaluated as not communicating smoothly with the relevant departments and team members, that A had given themselves a low grade in their own self-evaluation, and that, although the company had provided A with opportunities for job retraining on seven occasions, the situation had not improved at all.
On the basis of these facts, the Supreme Court explained that, since A appeared to be in a state in which the employment relationship could not be continued under generally accepted social norms, the justification for the dismissal was recognized.
It then reversed the lower judgment, which had found the dismissal unjustified, and remanded the case to the lower court.
4. Labor Standards Act Litigation, Daeryun's Strategy
Disputes between labor and management over what constitutes a “justifiable ground for dismissal” have long continued.
In this judgment, the Supreme Court stated that the lower court’s view, namely that the justification for a dismissal is recognized only where the employer has made every effort to maintain the employee’s employment or to avoid dismissal, was based on a “mistaken premise.”
The Court also determined that the dismissal of an employee who has received a low grade in personnel evaluations over a long period and shows no room for improvement should be regarded as justified.
This may be regarded as a judgment that holds significant implications for both companies and employees.
As a reliable partner to both companies and employees, Daeryun Law Firm LLP provides high-quality legal services based on expertise built up over many years.
If you need a consultation or advice in connection with the Labor Standards Act, you are welcome to reach out to Daeryun Law Firm LLP at any time.
