Ⅵ. Criteria for Determining whether Forced Resignation is Agreed Resignation or Dismissal

1. Concept

There are two ways to terminate employment: voluntary resignation and dismissal, the latter of which is a unilateral decision by the employer. Resignations do not cause labor disputes as the employee chooses to resign, whereas dismissals require a justifiable reason in accordance with Article 23 of the Labor Standards Act since they terminate the employment relationship without mutual consent.
Forced resignations are in the grey area between resignation and dismissal, and refer to cases where the employee does not wish to quit but must submit a letter of resignation at the employer’s insistence, whereupon the employer terminates the employment relationship. In this case, it would seem that there would be no labor dispute about whether this was a dismissal or not because the employer simply terminated the employment by accepting the letter of resignation submitted. In relation to this, the Civil Act(Article 17: Declaration of Untrue Intention) stipulates, “A declaration of intent shall be valid, even if the declarant has made it with the knowledge that such declaration is different from his intent: Such declaration of intent shall be void if the other party was aware, or should have been aware, of the real intent of the declarant.” Judicial rulings have shown that if an employer receives letters of resignation from all employees but dismisses them selectively, such terminations are considered dismissals, whereas if employers pay certain employees a voluntary early retirement bonus and, in return for that, receive a letter of resignation before engaging in managerial dismissals due to urgent business reasons, these are considered mutually agreed resignations.
There are no substantial or stipulated criteria for determining if forced resignations are agreed resignations or de facto dismissals, resulting in frequent labor disputes. I would like to look at related cases and review the legal criteria for such determinations.

2. Cases Determined to be Dismissals

In cases where an employee was unilaterally forced by the employer to submit a resignation letter to the company, the resignation can be invalidated because it was not the employee’s actual intent to resign. Judicial rulings have shown that when an employer forced an employee to submit a letter of resignation and terminated the employment based upon the received letter of resignation, this was considered de facto dismissal as the decision to terminate employment was a unilateral employer decision. In addition to this, dismissal without justifiable reason is equal to unfair dismissal. Following are some cases where resignation was considered de facto dismissal.

(1) Employee unable to enter the country if a resignation letter was not submitted
An employee who was working overseas had to enter the country to undergo medical treatment for an illness, but the company insisted that he submit a letter of resignation if he wished to enter the country, and so he did so, although that was not his original intent. In this case, the employee’s letter of resignation was not considered a valid reason for termination of employment.

(2) All employees submitted letters of resignation, after which the company terminated employment with all of them
A company’s quality team was strongly criticized by the quality management director for quality problems. The quality team held a meeting where they decided that the entire team would submit letters of resignation to the board members to show their desperate determination to improve their work. The letters of resignation were not meant to express an actual intention to resign, but to apologize for the quality problems collectively, and express their intention to not repeat those mistakes. However, the company accepted their letters of resignation and terminated employment with everyone on the quality team. Included were low-ranking employees who had to submit the letters of resignation in solidarity with the other members of the quality team(including the quality management director and the team leader). This termination was judged as unfair dismissal.

(3) All employees submitted letters of resignation, but the company only terminated selected employees.
A company received an order from the supervisory office to terminate a certain number of employees, and in implementing this order, the company forced all employees to submit letters of resignation. The applicant for remedy of unfair dismissal had to submit a letter of resignation along with his other coworkers, against his will. The company then terminated employment for six employees. This case was considered a dismissal because employment was, in reality, terminated by unilateral decision of the employer.

(4) Personnel at the managerial level or higher were forced to submit letters of resignation, which the company accepted
A company president ordered all senior managers to submit letters of resignation so that he could get recognition from the chairman of the board. All managers had to submit their resignations against their will, which the company accepted, and terminated employment with all of them. These terminations were ruled to be unilateral dismissals by the company president.

(5) A company terminated employment with all employees after receiving their letters of resignation, and hired them again
All employees had to submit letters of resignation according to company business policy. The company accepted these resignations and terminated employment relations. They were then rehired. Since there was no gap in time between their resignations and rehiring, it was determined that the employees had not truly intended to resign when they submitted their letters of resignation, and that the employer was aware that the employees resigned only on the condition of reemployment. Therefore, the company’s terminations based upon the letters of resignation were not valid.

(6) An employee was transferred only after submitting a letter of resignation, in accordance with company policy
In cases where an employee transfers from the parent company to its subsidiary, or from the subsidiary to the parent company, whether continuous employment exists or not depends on whether he actually intended to resign or is simply following company requirements that he resign before such a transfer. If the employee submitted a letter of resignation to the parent company or the subsidiary with the real intention of terminating the employment relationship, received severance pay and later was hired by the parent company or its subsidiary again, it can be regarded that his employment with the previous entity has been terminated. However, if the employee had to resign and be rehired by the company according to the parent company’s unilateral policy, and so submitted a letter of resignation(without really intending to terminate the employment relationship), even should the employee receive severance pay, the employment shall not be considered terminated as the employee had no intention to do so in actuality.

(7) Employees with poor performance results forced to quit by the employer
Korea Rural Community Corporation was required to downsize its workforce in accordance with a government management innovation plan. The Corporation selected some employees to terminate without rational or fair criteria, and forced them to submit letters of resignation. These forced resignations were considered to be dismissals since they were done by unilaterally decided by the employer.

3. Cases determined to be agreed resignations

The criteria for determining agreed resignation refer to conditions where the employee submits a letter of resignation without really desiring to resign, but resignation is admittedly in his or her best interest. This may be considered agreed resignation. The following legal principle can be used as criteria for judgment.
Even though an employer forces an employee to submit a letter of resignation against his will, then accepts the resignation and terminates employment, this may not be dismissal, but an agreed resignation. The employee outwardly expressed his intention to resign as fitting the situation, even though that was not his real intention. Therefore, even though he did not want to resign, if he judged that expressing his intention to do so was the best thing he could do under the circumstances, it can be understood that his real intention was to express regret, not actually resign.

(1) Voluntary resignation in relation to dismissal for managerial reasons
Even though the employees of a certain company did not wish to resign, they submitted letters of resignation as they seemed the best plan of action when collectively considering the economic situation, the company’s redundancy plans, the company’s early retirement bonus, and the interests of both sides. The employment relationship between the employees and the company was terminated on the basis of agreed resignation after the employees submitted letters of resignation as recommended by the company.

(2) An employee submitted a letter of resignation on the basis of forced resignation rather than resigning for disciplinary reasons
Even though an employee at another company did not wish to resign at the time he submitted a letter of resignation, he chose his best option, which was to avoid disciplinary dismissal and resign, as a way of gaining severance pay and future employment rather than seek judgment on the validity of disciplinary dismissal under those circumstances. The letter of resignation was considered to be valid as his resignation corresponded to his expression of true intention.

4. Comments

Whether an employee submits a letter of resignation without real intent is dependent upon whether his true intentions were understood and accepted. If they weren’t, then the employer shall take responsibility for unfair dismissal, whereas when an employee’s letter of resignation is determined as true intent, no issue related to unfair dismissal will occur as it is then regarded as an agreed resignation or honorary resignation.
Judicial rulings provide us with the following criteria: If an employer terminates the employment relationship with an employee who submits a letter of resignation under pressure from the employer, or who is forced to do so, this is a termination of the employment contract by unilateral employer decision, and will be considered a dismissal. However, even should an employee not truly wish to resign but does so as his best choice under the given situation, it will not be considered a dismissal.