I. Summary

S Construction Company (hereinafter referred to as “the Company”), with 40 employees, turned its main business to foreign markets as it became more and more difficult to win contracts in the domestic construction market due to a long-term economic recession, and in March and April, 2009, the Company won turnkey subcontracts for two projects (worth 10 million dollars) in Saudi Arabia. The Company assigned 12 employees to Saudi construction sites and worked to complete the construction, but were unable to do so by the time scheduled, due to a lack of overseas construction experience, which caused a loss of about 5 billion won as calculated by the total time required to complete the building. If the construction were to be completed at such a slow pace, the Company would face damages of up to 12 billion won. On April 16, 2010, the Company handed over the rights necessary to perform the construction and direct supervision over their 12 employees to a contractor which had a lot of foreign market experience. At this announcement, 8 of the 12 employees formed an emergency committee, and, dissatisfied by the changes, demanded the Company disclose the details of the contract between the Company and the contractor, collectively refusing to come to work from May 1st, 2010, if the Company failed to do so. The Company issued a warning that they would be fired if they carried out their threat, and when the employees did not show up for work after May 1st, 2010, the Company held a disciplinary action meeting and dismissed the 8 employees, who returned to Korea and applied for remedy from the Labor Commission.

II. Employee Claims

1. General Situation
The employer visited the Saudi construction sites on April 16, 2010, and 1) blamed on-site employees for the company having to spend more on construction than expected due to their lack of skill, 2) commissioned the contractor with authority for all work related to the Saudi construction, and 3) ordered on-site employees to accept supervisory control and directions from the contractor. On April 24, 2010, the contractor issued orders that placed Company employees on their organization chart. The following day, they issued another order that said, “Assigned daily duties shall be completed without exception, even if you are required to work all night.” Since the employees felt this order left them unreasonably vulnerable to dismissal, they agreed to send questions to the Company as a group, but the Company did not give answers they felt were acceptable. Then, claiming that the Company’s personnel orders were unfair without employee consent, the 8 employees stayed in their Company quarters, refusing to accept instructions from the contractor from May 1, 2010. In response, the head of the contracting company visited the 8 employees and informed them that if they did not return to work, he would have them deported. As the employees continued to refuse to return to work on May 2nd, the contractor applied for an exit visa. The Company then announced that all 8 employees would be fired if they did not return to work by 9 am on May 3, 2010, but still the employees did not show up. Instead, they boarded an airplane at 1 pm on May 3rd in accordance with the exit visa, with airplane tickets arranged by the contractor. At the same time the employees were boarding the plane, the Company held a Disciplinary Action Committee and dismissed the 8 employees.

2. Violation of Reasonable Severity of Punishment
The Company commissioned all on-site operational rights to the contractor, along with rights to move on-site personnel, which falls under a company’s rights to move personnel. Any movement of personnel shall require agreement of the person(s) concerned, but the Company did not receive such agreement. Accordingly, there was no reason for the employees to follow the contractor’s orders. Also, it is stipulated in the Rules of Employment that the Company can only dismiss employees who have been absent for 15 days or more. Nevertheless, the Company dismissed the employees for an absence of only two days, disciplinary action which is too severe to accept as reasonable.

3. Faulty Disciplinary Process
While the Company held a Disciplinary Action Committee hearing at 1 pm on May 3, 2010, they did not follow the principle of giving the employees an opportunity to explain their violations. Deprivation of the employees’ right to explain things makes the disciplinary process faulty.

III. Employer Claims

1. Justifiable Personnel Orders from the Company
The Company’s orders were unavoidable due to business necessity and they made a justifiable managerial decision. About three months ahead of the Terminal construction deadline, the client and auditing company had already issued repeated demands for contingency plans from the Company, which was dealing with delays in construction and increasing costs that it could not deal with by itself, ignorant as it was of on-site situations. So, it was absolutely necessary to receive the assistance of the contractor who had performed construction projects in that locality for years.

2. Illegal Group Activities
While expressing worries about the collective behaviors of the employees concerned and answering their questions, the Company tried to persuade them of the necessity of bringing in an outside contractor to the construction project, up until they collectively started refusing to work on May 1, 2010. The employees expressed opposition to bringing in an outside contractor, and demanded to know the details of the agreement made with the contractor. As for this, the employer, the managing director, the on-site construction manager, and even the director of the contracting company tried to persuade the employees to come back to work, but they did not return. Ultimately, the Company notified the employees that if they did not return to work by 9 am on May 3, 2010, the Company would take disciplinary action. Each of the employees concerned refused the Company order to return to work to the end.

3. Justification for Procedures
After receiving a report from the on-site manager that the employees concerned had rejected the Company’s final order to return to work on the morning of May 3, 2010 and were getting ready to return to Korea, the Company started taking disciplinary action. As there were no specific rules for the composition of a disciplinary committee, the company held a disciplinary meeting with three registered directors (including the representative director) and decided to dismiss the employees. Concerning the provision stipulated in the Rules of Employment that employees be given “opportunity to explain”, the Company considered this situation to be an exceptional case where the employees concerned could not come to the disciplinary committee for unavoidable reasons. According to a related judicial ruling, if the Company had provided enough opportunities for the employees concerned to explain their actions, or if their opinions had been reflected sufficiently in the disciplinary hearing, a decision to dismiss them would have been acceptable despite their absence.

IV. The Labor Commission’s Decision

1. Justifiable Reasons for Disciplinary Action
“As long as disciplinary reasons and types of disciplinary action related are stipulated in the Rules of Employment, disciplinary action implemented accordingly are acceptable, unless they violate the good-faith principle or are an abuse of rights. When the employee’s misbehavior falls under the reasons for dismissal as stipulated by the Rules of Employment, dismissal according to the Rules is justifiable.”(Supreme Court 91 da20173)
The employer was in danger of suffering large losses on two Saudi building construction projects, so decid