Some of employees sometimes face the sudden notifications of dismissal due to the business transfer or bankruptcy. In this blog, I’m to discuss how employees can deal with such embarrassing situations. 

In principle, when a business is transferred to another and the owners mutually agreed employment buyout, the employees of the transferred or taken over business shall work under the same working conditions as the former ones. Or if the business refuses employment buyout, the employees will be dismissed. Then is it unfair dismissal? The Labor Standards Act (hereafter referred to as the “Act”) restricts dismissal for managerial reasons, but the dismissal is approved when the business is transferred or taken over. The relevant Article is as follows;  

Article 24 (Restrictions on Dismissal for Managerial Reasons)

(1) Where an employer wishes to dismiss a worker for managerial reasons, there must be an urgent managerial necessity. In this case, it shall be deemed that there is an urgent managerial necessity for the transfer, merger, or acquisition of the business in order to prevent managerial deterioration.

(2) In case of paragraph (1), the employer shall make every effort to avoid dismissal and shall establish and follow reasonable and fair criteria for the selection of those persons subject to dismissal. In this case, there shall be no discrimination on the basis of gender.

(3) Where there is an organized labor union which represents more than half of the workers at the business or workplace, the employer shall inform at least 50 days before the intended date of dismissal and consult in good faith with the labor union (where there is no such organized labor union, this shall refer to a person who represents more than half of the workers; hereinafter referred to as the “labor representative”) regarding the methods for avoiding dismissals, the criteria for dismissal, etc. under the provisions of paragraph (2).

(4) When an employer intends to dismiss personnel under the provisions of paragraph (1) above the fixed limit as prescribed by the Presidential Decree, he/she shall report to the Minister of Labor under the conditions as determined by the Presidential Decree.

(5) When an employer dismisses workers in accordance with the conditions in the provisions of paragraphs (1) through (3), it shall be deemed as a dismissal with proper cause under the provisions of Article 23 (1). 

Then this is the question; is it required to give 30 days prior notification when there are urgent managerial reasons? The answer is YES. The Act states that the employer shall 30 days notification when he or she intends to dismiss for managerial reasons. Please refer to the Article 26 of the Act as below.

Article 26 (Advance Notice of Dismissal)

When an employer intends to dismiss a worker (including dismissal for managerial reason), he/she shall give the worker a notice of dismissal at least thirty days in advance of such dismissal, and if the employer fails to give such advance notice, he/she shall pay that worker ordinary wages for not less than thirty days: Provided, That this shall not apply in case where a natural disaster, calamity or other unavoidable circumstances prevent the continuance of the business concerned or where the worker concerned has, on purpose, caused a considerable hindrance to the business or inflicted any damage to the property and it falls under any cause as determined by the Ordinance of the Ministry of Labor.  

Additionally, the prior notification shall be delivered in written form to the employee according to Article 27 as follows;

Article 27 (Written Notice of Reasons, etc. for Dismissal)

(1) When an employer intends to dismiss a worker, he/she shall notify the worker in writing of the reasons for and time of the dismissal.

(2) The dismissal of a worker shall become effective only subject to a notification made in writing pursuant to paragraph (1).

In conclusion, even if there is an urgent managerial reason, the employer who intends to dismiss an employer shall give written notification at least thirty days in advance of such dismissal If he or she fails to do so, he or she shall pay ordinary wages for not less than thirty days. If the employer violates the Act, the employee may report the delayed payment with the labor office and apply for remedy for unfair dismissal with Labor Commission.

If you have any further inquiries, please request a consultation (https://lawyerhwang.com/consultation/). My office is located near Seoul District Court and Gyodae station in Seoul.

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