I have received a better offer from another company during my employment and I want to change jobs to work for that other company. However, the employer insists that since a replacement worker is needed, I should pay the salary for the remaining period as compensation in accordance with the labor contract. Do workers really have to pay the expenses for replacement workers?
In some labor contracts, when a worker resigns during the term of the contract, he or she may be required to pay a certain amount to the employer in the form of compensation for loss of business, cost of finding a replacement, etc. In a general civil law contract, it is possible to set a penalty for failure to fulfill the contract, which will be upheld. However, labor contracts are different from other general contracts.
Article 20 of the Labor Standards Act stipulates that an employer shall not enter into any contract in which a penalty or indemnity for damages caused by a breach of contract is predetermined. This is to prevent workers being forced to work at a job they do not want. Therefore, the provision of a predetermined penalty or indemnity of a certain amount for damages in the labor contract as in the above question is invalid as it violates Article 20 of the Labor Standards Act. An employer who violates this will be fined up to KRW 5 million. However, if there is a loss that the employer has suffered due to the mid-term resignation of the employee, the employer may file a separate civil action against the employee. In this case, the employer must be able to demonstrate the specific amount of damage suffered by the employee leaving.