LABOR CASES

Dismissals

Government Guidelines for Ordinary Dismissal Due to Poor Performance

1. Possession of insufficient skills for the job and poor work performance is considered reasons for ordinary dismissal. In order for such dismissals to be justifiable, certain conditions must be met.

Remarkably insufficient skills for a job and poor work performance can be reasons for ordinary dismissal despite the lack of reason for disciplinary action, since the purpose for a labor contract is for an employee to offer work for wages and for the employer to pay wages for that work. A remarkable failure to fulfill the obligation to provide work can become a reason for terminating the employment contract. However, as Article 23 of the Labor Standards Act restricts such dismissals, there should be a justifiable reason why poor performance or a failure to provide the contractual work is serious enough to dismiss the employee. The court stipulates that “justifiable reasons” for a dismissal due to poor work performance or a failure to provide the contractual work mean that the employee’s work performance is too poor to maintain employment relations according to socially accepted understanding. Such situations shall be judged on a case-by-case basis. Additionally, the Labor Relations Commission has also decided that an employer’s dismissal of an employee for failure to provide contractual work serious enough to make it impossible to maintain employment relations shall be deemed ordinary, not disciplinary, dismissal.

2. Disciplinary vs. ordinary dismissal

When an employer creates rules of employment that formulate service regulations and working conditions for the workplace (in cases where there is a labor union, the collective agreement can replace the ROE), disputes between the employees and the employer can be reduced to a minimum. Disciplinary dismissal not only financially disadvantages the dismissed employees, but also dishonors them and creates a critical disadvantage when seeking a new job. It is therefore desirable that dismissals for “remarkably poor work performance” are deemed grounds for ordinary dismissal, not disciplinary dismissal.

3. Objective and fair evaluation

(1) Basic principle
As evaluation of an employee’s job skills, work performance, etc., is one of the employer’s managerial rights and can be considered as up to the employer’s discretion. Even though this evaluation has an element of unilateral determination by the employer, it is not determined as an arbitrary judgment or an abuse of rights. However, in cases where such evaluation is used to avoid the legal conditions for dismissal or to urge an employee to accept early retirement, violates the Constitution or the law, or if it remarkably violates objective and equitable criteria, any dismissal that follows may be determined as illegal or subject to legal judgment.
(2) Suitability and objectivity of evaluation criteria (Considerations when designing an evaluation system)
Evaluations should be given based on the employee’s job skills and work performance. In cases where the employer’s individual feelings or a subjective judgment are involved regardless of the working process or results, such as “his/her working process is inefficient”, such evaluation will not be accepted as reasonable. Aspects subject to evaluation shall be itemized for proper evaluation of an employee’s job performance. For example, when evaluating sales positions, if an employer puts more weight on 360 degree feedback from an employee’s co-workers than on objective sales results (customer management), this will not be admitted as reasonable. Items for evaluation should be subdivided so as to provide as much detail as possible, and evaluation results divided into diversified levels to minimize subjectivity or arbitrary ratings. An evaluation system will be seen as more objective if it is composed of multiple levels (e.g. 5 levels) rather than a personal rating without different levels, and the evaluation is based on detailed items. Designing an evaluation in accordance with input from employees through the labor-management council, the labor union, or the employee representative, will help to increase objectivity and rationality.

(3) Validity of the evaluation method
① Individual and group evaluations (evaluation unit)
When a group evaluation is converted into an individual evaluation, the close relationship between individual and group work performance results should be reflected.
② Evaluations with and without ratings (evaluation factors)
Evaluations which can describe an employee’s job skills and performance as an objective number rating can easily be considered rational. However, if such an evaluation includes subjective, difficult-to-measure parts such as level of adaptation to the business organization, the evaluation criteria will not likely be determined as unfair.
③ Relative and absolute evaluations (evaluating method)
Generally, absolute evaluations are easily accepted as rational, while relative evaluations are not, as a certain number of personnel must be distributed to the lowest rating. Provided, ① in cases where a relative evaluation is improved through the use of absolute evaluation factors so that it does not relegate a certain number of personnel to the lowest rating in an arbitrary manner, there is a high possibility that such an evaluation will be determined as rational. ② In cases where a relative evaluation has introduced a 360 degree feedback evaluation system for a certain higher employment position, then gradually extended its application to other positions, and continuously applied its criteria and procedures based upon rationally-designed evaluation content and items, such an evaluation can be seen as rational. The employer shall not determine that an employee is unqualified in terms of job skills or performance simply because that employee has received the lowest rating in a relative evaluation, but shall consider other factors in overall justification of a dismissal.
(4) Reliability in evaluations
① Selection of evaluator(s)
In principle, when the evaluator is the same person evaluating all target employees, this increases consistency and fairness. Provided, in cases where it is difficult to use the same person as an evaluator due to company size and number of employees, some exceptions can be admitted. On the other hand, validity of difficult-to-measure items can increase when multiple evaluators are used through a 360 degree feedback evaluation or an evaluation committee, or when the evaluation is designed with several stages. In cases where multiple evaluators gave the same person low ratings, this evaluation can be regarded as highly reliable.
② Compliance with evaluation criteria and procedures
Unless the previously-determined evaluation criteria and procedures are implemented equitably, evaluation results will not be seen as fair. Even if, for example, there are three stages in the evaluation, if a particular stage (directors’ evaluation) is omitted, the personnel evaluation will be deemed in violation of personnel evaluation regulations for its lack of objectivity and fairness.
③ Notification of evaluation results, and the appeal process
If there is a system for target employees to appeal evaluations after notification of the results, this will increase the objectivity and fairness of the evaluation system.
(5) Selection of target employees for mandatory training, redeployment, etc.
When using evaluations to select target employees for mandatory training or redeployment, the necessity for and possibility of improving job skills should be estimated objectively: such training/deployment can be accepted as necessary if an employee’s evaluation has revealed poor job skills for a sus

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call (+82) 2-539-0098 or email bongsoo@k-labor.com

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