Dismissal

Chapter 1. Understanding Dismissal

2. Ordinary Dismissal

[Ordinary Dismissal]

Recently I received two questions regarding ordinary dismissal from two different companies for whom I have provided regular consultation. The first question was from a company engaged in unloading imported vehicles from a car carrying ship at a car dock. Around 8:20 pm on July 4th, 2015, while driving vehicles out of a ship and on to a parking lot, an accident occurred in which the driver hit a structural support on the ship while turning a corner. The driver should have easily seen the supports as he had driven vehicles on such ships many times. This particular driver had had a visual impairment when he was hired on January 1st, 2009, but it was not serious enough at the time to disqualify him from employment. Since that time, he had had ten accidents including this most recent one, so the company asked him to go for an eye exam at a hospital designated by the company, and turn in the results. If the employee’s eye exam is poor enough that he would have been disqualified from being hired were he a new employment candidate, can the company dismiss him so as to prevent further accidents and safeguard other employees?

The second question was from a company whose sales manager disappeared after embezzling 400 million won in funds received by the company in return for products delivered to customer companies. This sales manager had large personal debts, and used the company money to pay them. So the company pressed charges against the employee after a search and investigation by the police. On July 15, 2015, the company requested this labor attorney for advice on how to handle this employee in terms of his embezzlement and long term absence.

Both companies in these cases should dismiss the relevant employees: one due to his disqualification from employment, the other for embezzlement and long-term absence for personal problems. Generally, companies describe procedures for disciplinary dismissal in their rules of employment, but hardly make mention of procedures for ordinary dismissal. Herein, I would like to explain the criteria for the concept of ordinary dismissal, types, and justification in related labor cases.



I. The Concept & Types of Ordinary Dismissal

1. The concept of ordinary dismissal

“Ordinary dismissal” refers to termination of the employment contract due to the non-performance of the employee’s obligation to provide labor service in accordance with the employment contract. Therefore, ordinary dismissal requires a reason attributable to the employee that the employee cannot provide work. Hyungbae Jun, “A Study on the Justification of Ordinary Dismissal, by Type”, Seoul Labor Relations Commission, 2011, p. 1.
“A reason attributable to the employee” means that the employee falls into the remarkable condition where he or she becomes mentally or physically disqualified from providing the work which is the employee’s main obligation according to the employment contract, and as a result, the employee cannot sufficiently carry out his assigned work in the workplace. Jongryul Lim, 「Labor Law」, 13th edition, 2015, Parkyoung sa, p. 353.
That is, “the term ‘employment contract’ in the Labor Standards Act means a contract which is entered into in order for a worker to offer work and for an employer to pay wages for that work” (Article 2 of the Labor Standards Act). As the reason the employee cannot provide work according to the employment contract is attributable to the employee, the employer can terminate the employment contract on the grounds that the employee’s situation seriously breaches the employment contract. This is referred to as ordinary dismissal.

2. Types of ordinary dismissal

In most cases, ordinary dismissal is for causes attributable to the employee, but court rulings also place termination of an employment contract due to company bankruptcy or voluntary closure in the category of ordinary dismissal.

(1) Dismissal due to reasons attributable to the employee

1) In cases where the employee is not qualified for work, or lacks the necessary vocational skills
① In cases where the employee is unable to obtain a qualification certificate essential for work, or fails an examination required for appropriate work performance, or is lacking the necessary professional knowledge or skills, this may be grounds for ordinary dismissal. Supreme Court ruling on July 25, 1989, 88daka25595.

② If the employee’s work performance has been evaluated as very poor, the employer cannot dismiss the employee for that reason alone. However, in cases where the employee’s work ability has been evaluated remarkably deficient in objective reviews, a dismissal may be determined as attributable to the employee. Seoul Civil Court ruling on April 12, 1990, 89gahap33263.

③ In cases where the employee has a severe handicap after completing medical treatment for an occupational injury, if the employee cannot carry out or completes his previous assignments very poorly, the employer may be justified in dismissing the employee. Supreme Court ruling on November 12, 1996, 95nu15728.


2) In cases where the employee has an illness that makes it unreasonably difficult to provide work
① In cases where a driver has become blind, or in cases where a cook has contracted an incurable infectious disease, dismissal is regarded as attributable to the employee. Supreme Court ruling on December 6, 1996, 95da45934.


② In cases where the employee was injured due to actions unrelated to work, and cannot work as normal for a considerable time even after twice taking a leave of absence, dismissal may be justifiable. Administrative Court ruling on March 3, 2006, 2005goohap14158.


3) In cases where potential exists for company secrets to be leaked
In cases where an employee is in a position to know a company’s business secrets and has a close relationship, through marriage, with a competitor’s management, or the employee has a close relative or friendly relationship with a competitor company’s directors, dismissal may be acceptable to prevent the leakage of business secrets. Constitution Court decision on March 31, 2005, 2003hunba12; Hyungbae Kim & Jisoon Park, the above book, page 217.


(2) Dismissal due to reasons attributable to the employer
① In cases where a bankruptcy administrator dismisses all employees after a declaration of bankruptcy, this dismissal is not managerial dismissal, but ordinary dismissal, and so the company does not need to follow the requirements in the Labor Standards Act as to the process for dismissal for managerial reasons. Supreme Court ruling on February 27, 2004, 2003doo902.


② In cases where the employer has made every effort to resolve financial problems, and has concluded that closing the business is the most reasonable method, and closed the business and dismissed the employees, these dismissals are justifiable. Administrative Court ruling on April 18, 2006, 2005gookhap34015.


③ In cases where the employer has dismissed an employee because the work that was supposed to be carried out is no longer needed, this dismissal is not for managerial reasons, but is ordinary dismissal. Supreme Court ruling on October 29, 1996, 96da22198.


④ In cases where an employee was hired to work at a specific workplace, and the company’s license to use the specific workplace has expired, dismissal of that employee may be justifiable. Administrative Court ruling on July 19, 2005, 2004goohap39723.

II. Reasons Necessary for Ordinary Dismissal

1. Ease of dismissal

In cases where the employee neglects his primary duty in the employment contract to provide work, or carries out his assigned duties insufficiently, the employer can notify the employee that his employment contract has been terminated. This ordinary dismissal serves to increase the number of reasons for terminating the employment contract and make flexibility in manpower management possible.

There are three types of dismissal: ordinary dismissal, disciplinary dismissal, and managerial dismissal. Here, disciplinary dismissal and managerial dismissal have strict requirements and procedures that must be followed for the dismissal to be determined justifiable.

Disciplinary dismissal requires the employer to follow the disciplinary procedures stipulated in the Collective Agreement or the rules of employment. If the employer does not do so, the dismissal becomes unfair even though the reason was serious enough to justify dismissal. In one case, the courts ruled, “The Collective Agreement, the rules of employment, and the related rules regulated that the employer shall hold a disciplinary committee that includes a Labor Union representative, and provide the employee concerned the opportunity to attend a disciplinary action meeting where he/she may explain his opinions and submit any defending documents. However, if the employer dismissed the employee concerned in violation of the disciplinary procedures, this dismissal is unfair and invalid regardless of any justifiable reason for dismissal. Supreme Court ruling on July 9, 1991, 90da8087.


Managerial dismissal requires very strict conditions and the employer to comply with procedures according to dismissals for managerial reasons in Article 24 of the Labor Standards Act to be determined justifiable in accordance with Article 23 (1) of the same Act. These conditions and procedures for managerial dismissal are: 1) there must be an urgent necessity in relation to the business; 2) the employer shall make every effort to avoid dismissal; 3) the employer shall follow reasonable and fair criteria for the selection of those persons subject to dismissal; and 4) the employer shall inform and consult in good faith with the labor union (where there is no such organized labor union, the employee representative) regarding the methods for avoiding dismissals and the criteria for dismissal at least 50 days before the intended date of dismissal. The above four conditions and procedures should be observed in order for managerial dismissals to be determined justifiable.

2. No need for procedures of dismissal
Ordinary dismissal does not become unfair if procedures required for disciplinary and managerial dismissals are not followed. In this review, ordinary dismissal plays a role in reducing the restrictions on dismissal, and is used when there are reasons attributable to the employee, unlike disciplinary and managerial dismissals. Related examples include:

① Ordinary dismissal does not require that disciplinary procedures be followed, such as holding a disciplinary committee meeting and providing opportunity for the employee to explain his opinions. Supreme Court ruling on September 24, 1991, 91da13533.


② An employee claimed that dismissal was unfair because the company did not follow the procedure to hold a personnel committee meeting and did not request submission of a doctor’s medical note as stipulated in the collective agreement. However, there were no rules stipulated in the company’s collective agreement and the rules of employment that the company had to hold a personnel committee meeting for dismissals besides disciplinary dismissal. The company did not need to hold a personnel committee meeting to confirm there was a reason to dismiss the employee, so this dismissal is not simply illegal because the company did not follow the procedures for dismissal. Supreme Court ruling on December 6, 1996, 95da45934.



III. Conditions for Justified Ordinary Dismissal

1. Good faith principle

Where a reason for ordinary dismissal has not become serious enough to terminate the employment, dismissing the employee without sufficient consideration of the employee’s situation according to the principle of good faith and sincerity will be determined unjustifiable and an abuse of the managerial rights by the employer. For example, in cases where the employer intends to dismiss an employee due to a physical disability, if the employee can be rehabilitated or otherwise recover from that disability in a relatively short time, it would be necessary to keep the employee for a certain period of time by way of assigning him to lighter work.

2. Observance of legal procedures

Ordinary dismissal should be prepared for with legal procedures. As ordinary dismissal is a unilateral action by the employer to terminate the employment contract, the employer must follow the procedural requirements in the Labor Standards Act. If an employer intends to dismiss an employee, the employer shall notify the employee of the reason(s) for dismissal and the date of such dismissal in writing (Article 27 of the LSA). The employer shall give notice to the employee at least thirty days before the planned dismissal. If notice is not given thirty days before the planned dismissal, ordinary wages of at least thirty days shall be paid to the employee in lieu of the notice (Article 26 of the LSA). A written notification of dismissal is related to the justification for dismissal, but such advance notice of dismissal can be substituted with money.

According to judicial rulings, ordinary dismissal does not require the observation of procedural regulations for other forms of dismissal. If the employer does not have regulations in the collective agreement or rules of employment requiring a personnel committee meeting to be held for all dismissals except those for disciplinary reason, dismissals without following the disciplinary dismissal procedures are also not illegal. Supreme Court ruling on December 6, 1996, 95da43934.
As the dismissal is an ordinary dismissal, the employer does not have to consider the procedures that involve holding a disciplinary committee meeting or provide the opportunity for the employee to explain his opinion. Supreme Court ruling on September 24, 1991, 91da13533.



IV. Conclusion

The two questions in this article’s Introduction section are related to ordinary dismissal. Regarding the first question, in cases where an employee is unable to sufficiently fulfill his work duties due to a physical disability, the employer can dismiss him for reasons attributable to the employee. In the second question, the employee embezzled company money and had been absent from work for a long period of time, actions which are subject to both disciplinary dismissal and ordinary dismissal. This company’s rules of employment regulate that, when intending to dismiss an employee, the employer must hold a disciplinary committee meeting and provide opportunity for the employee to explain his side. Since the employee had been absent for a long period of time, it was impossible to follow the procedures for disciplinary dismissal. Therefore, the absence would be justification for ordinary dismissal. Accordingly, in terms of personnel management, the employer can make the most of ordinary dismissal by using the related legal principles, such as ease of dismissal and no need for dismissal procedures.

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

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