LABOR LAW GUIDE

Chapter 7 Employment Adjustment

Section 1: Dismissal for Managerial Reasons. Ⅱ. Requirements (2/2)

3. Fair and unfair criteria for the selection of those persons subject to dismissal

Criteria for the selection of those persons subject to dismissal are normally described in the collective agreement or rules of employment and can be admitted as long as they are unbiased and generally accepted in society. However, if not specified, an employer can set reasonable and fair principles and select those persons subject to dismissal.
If an employer selects one of the three criteria - age, service period, and service record - without considering other conditions such as employees’ dependents, property, health, etc., that criteria cannot be validated as rational or fair.

▶ Concrete examples of considerations
① Protection of employee and employee’s family: Employee’s age, length of service, number of dependents, income of the spouse, property, etc.
② Benefit to the company: employee’s work performance, job skills, experience, craftsmanship, prizes or penalties, etc.
③ Status within, or degree of loyalty to, the company: Daily worker, part-timer, temporary worker, etc.

(1) Fair criteria for selecting those subject to dismissal

1) When an employer selects those subject to dismissal based on age, service years, number of dependents, faithfulness in attendance, rewards and punishments, certificates of qualification, etc., this selection is reasonable and fair criteria for dismissal because objectively measurable methods and distinguishable criteria were applied after considering subjective situations for each employee and the company synthetically.
2) Concerning the criteria and method used to select those subject to dismissal for managerial reasons, the employer shall not consider only one factor, like employee job skills, but also consider employee living conditions, equity between employees, etc. The criteria and methods to be used are mostly at the employer’s discretion, but the criteria and methods of selection decided upon by mutual agreement between the employer and the employee representative are considered reasonable, unless they are extremely subjective or unjustifiable.
3) In cases where dismissal of employees for managerial reasons must be done, it is desirable that the employer shall not only select those employees working in a division that will be abolished, but also select those subject to dismissal from throughout the company, as employees are transferable in personnel management.
4) If an employer excludes some employees in production from those subject to dismissal for managerial reasons, it shall be accepted as reasonable if they are skilled craftsmen and possess essential certificates of qualification to operate production lines.
5) Even though the only employees dismissed for managerial reasons were labor union members, this is justifiable if the employer consulted with the labor union in advance and dismissed them according to objective and fair criteria.

(2) Unfair criteria for selecting those subject to dismissal

1) Criteria that only considers company circumstances

1) In the selection of those subject to dismissal, if the employer considers educational background as the sole criteria for dismissal, proposes voluntary resignation only to those with lower educational levels, and dismisses the employees concerned without making any effort to avoid dismissal, these dismissals would be unfair because they were not done according to the required procedures.
2) When dismissing temporary employees for managerial reasons, a local government made no effort to avoid dismissal and dismissed temporary employees according to age, from the oldest, without determining reasonable and fair criteria for dismissal. The local government also implemented the dismissals unilaterally, without consulting with the employee representative, so these dismissals were unfair, and an abuse of the right to manage personnel.
3) An employer selected employees subject to dismissal for managerial reasons on the basis of age as unilateral and subjective criteria. If the employer did not consider the degree of disadvantage for the employees concerned, the necessity of social protection, contribution made, or employee attitudes during their service period, etc., this dismissal cannot be seen as having reasonable and fair criteria.
4) It is difficult to accept as fair dismissal for managerial reasons an employer’s selection of those subject to dismissal only on the basis of disciplinary punishment received by certain employees. Even though such criteria are accepted as reasonable, most disciplinary punishment of the employees concerned cannot be accepted as justifiable reason for dismissal in view of their procedures, timing, and purpose.
5) In one case, a company unilaterally decided that length of employment would be the main criteria in choosing employees to dismiss for managerial reasons. In other words, those who had served the company longer, although they had contributed more than other workers to the company, were still more likely to be dismissed for managerial reasons. Other things, like work attitude, were also considered, but they were not weighted as heavily against an employee in determining dismissal as length of employment. Therefore, this selection cannot be accepted as reasonable and fair.
6) If the employer did not engage in prior consultations with the employee representative regarding criteria for dismissal for managerial reasons and the possible methods for avoiding dismissal, dismissal for managerial reasons is illegal since correct procedures were not followed in choosing objective and socially justifiable rationale.

2) Criteria deficient in reasonableness and fairness

1) In cases where the employer selected as subject to dismissal for managerial reasons those employees who did not agree to transfer and also did not agree to voluntarily resign, this selection cannot be justifiable based upon reasonable criteria.
An employer notified one of his employees several times of the intention to dismiss him for managerial reasons because of his constant refusal to transfer to another department. After consulting with the labor union, the employer dismissed the employee for managerial reasons, particularly because he did not agree on a transfer and also did not respond to suggestions to voluntarily resign. This selection for dismissal cannot be accepted as being done according to objective and reasonable criteria. Even though the employer consulted with the labor union, this selection for dismissal violated the principles of the Labor Standards Act and cannot be accepted.
2) Even though requirements for dismissal for managerial reasons were satisfied, choosing those to be dismissed for managerial reasons by vote cannot be admitted as justifiable.
An employer selected those employees subject to dismissal only by means of a vote by committee members, without any objective evaluation materials or evaluation criteria. This dismissal for managerial reasons could be affected by individual relationships more than by company criteria, so there is a great possibility for unfair results.
3) An employer dismissed an employee who refused to accept an honorary resignation recommended by the employer, even though his dismissal wouldn’t have any effect in reducing labor costs. This cannot be accepted as a socially fair and objective dismissal for managerial reasons.
As one method to avoid dismissal, the employer proposed honorary resignation and a position transfer to short-term contract employment to an employee who was going to retire from the company in 9 months. As the employer would not be able to reduce his labor costs by dismissing this employee, this dismissal, because the employee would not voluntarily resign, cannot be accepted as fair or objective.
4) Even though collective bargaining has stipulated the order of and method by which employees are subject to dismissal, if the employer selects the employees subject to dismissal simply at his own discretion, this selection is not made in a justifiable way but is a violation of reasonable and fair criteria.
5) In cases where some workplaces of a business are closed but others in the same business are still in operation, it is not possible to dismiss all the employees of the closed workplaces by citing an urgent managerial reason as the reason for dismissal.
When there are some workplaces in operation, although others are closed, this constitutes a business curtailment, not a complete closure. Therefore, the employer may not dismiss all employees only at the closed workplaces just because the workplaces are closed.

4. Sincere consultations with the employee representative

When an employer tries to consult with the employee representative in good faith but cannot reach an agreement, the dismissal of the employee according to the employer’s own criteria is not invalid; provided, however, that the criteria shall be reasonable and fair as a precondition.
In some cases, the collective agreement provides that the employer should reach agreement with the union on any dismissal for managerial reasons. If this is the case and if the union keeps resisting the proposed layoff without giving a justifiable reason for such resistance, any layoff that the employer carries out without agreement by the union is legally effective. There was a case where an urgent managerial reason required a massive layoff and the employer had good-faith consultations with the union in advance and did his best to minimize dismissals. Given this, it seems that the union, which refused to agree to the planned layoffs without giving a justifiable reason for such refusal, abused its right to refuse, which states that the collective agreement requires a bilateral accord on dismissal for managerial reasons. As the employer failed to reach agreement with the union because of a reason attributable to the union, the layoffs were effective.

▶ Concrete examples
① An employer shall inform the employee representative on the methods for avoiding dismissals and the criteria for dismissal 50 days prior to the date of dismissal. ② An employer shall consult in good faith.
※ Employee representative: Where there is an organized labor union representing more than half of the workers at a business or business location, the labor union becomes the employee representative; however, where there is no such organized labor union, the employee representative shall refer to a person who represents more than half of the workers.

(1) Unit selected for employee representation

The employee representative shall be selected from a unit of a business or workplace. However, in cases where target employees are defined by particular occupations or positions, the employee representative shall be one who represents these targeted employees. Accordingly, if these particular targeted employees are not entitled to union membership, it would be pointless to consult with the labor union concerning the managerial reduction of these targeted employees. In a hospital where the employer intends to reduce employees of 4th rank or higher, consulting with the labor union as an employee representative of 5th rank and lower would be unacceptable as the employer has not consulted in good faith with an appropriate employee representative.

(2) Method of employee representative selection

1) Where there is an organized labor union representing more than half the employees

Whether the labor union represents more than half the employees shall be estimated in the unit of the business where the employer wants to select an employee representative and shall be estimated in a unit of the workplace for the unit of the workplace. If the labor union represents more than half the employees, it is taken for granted that the labor union becomes the representative of the employees or the person(e.g. chairman of the union branch) who has been authorized to represent the labor union.

2) Where there is no organized labor union representing more than half the employees

For dismissals for managerial reasons, the employee representative for the purpose of consulting with the employer shall be selected by independent and voluntary decision-making by the employees, after they are informed of the reason for choosing employee representation. It is also acceptable to choose the employee representative through employee congregation or individual signatures on circulating representative lists. If an employer asks the employees to choose an employee representative, the employees autonomously determine procedures and methods of selection without intervention by the employer, and select someone(even though some employees could not participate) that represents more than half of the employees, the person shall be regarded as the employee representative.

(3) Invalid employee representatives

Agreement from or consultation with an employee who does not justifiably represent the employees is not legally valid.
1) Even though an employer had explained the deterioration of business to team leaders in manager-level plenary meetings and asked them for their opinions in selection of target employees for managerial dismissal, this is not company consultations with an acceptable employee representative.
2) Because the company did not comply with substantial conditions in the course of managerial dismissal and, furthermore, consulted with an arbitrary organization and not an employee representative, this dismissal for managerial reasons is unfair.

For further questions, please
call (+82) 2-539-0098 or email bongsoo@k-labor.com

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