SOUTH KOREA Law and Practice Contributed by: Sihoon Yang, Young Min Kim, Jung Mo Hong and Douglas Hwang, Yoon & Yang LLC
individual employment contracts or rules of employ - ment set by the employer. Collective agreements also entail a “peace obligation” that, during the effective period (maximum of three years) of the collective agreement, requires the parties to mutually comply with the provisions within the col - lective agreement and prohibits the trade union from taking collective action for the purposes of modifying terms of the collective agreement that have already been agreed between the parties. Ordinarily, contracts are binding only upon the parties to such contracts. For collective agreements, how - ever, the binding effect of the agreement may also extend to third parties (ie, non-parties to the agree - ment) if “certain conditions are satisfied” (see Articles 35 and 36 of the Trade Union Act). 7. Termination 7.1 Grounds for Termination In South Korea, termination of employment can occur in the following ways: • occurrence of grounds for automatic termination (eg, employee reaching retirement age, death of the employee or expiry of the contract period); • the employer’s unilateral dismissal of the employ - ee; and • termination through mutual agreement between the employer and employee. There is no difference in procedures depending on the grounds for dismissal; hence, the general requirements for dismissal are identical regardless of the grounds on which an employee is dismissed. In particular, Article 26 of the Labor Standards Act prescribes that an employer must give an employee prior notice of at least 30 days if the employer intends to dismiss such employee. If this notice requirement is not satisfied, the employer must pay the employee an additional sum of money equivalent to at least 30 days’ worth of the employee’s ordinary wages. The foregoing requirement applies even in circumstances where employees are dismissed owing to managerial reasons.
In addition to the prior notice requirement, to dismiss an employee, the employer must provide the employ - ee with “written” notice in accordance with Article 27 of the Labor Standards Act. Furthermore, the writ - ten notice must describe the reason for dismissing the employee as well as when the employee is to be dismissed. Automatic Termination No “motivation” is required for automatic termination where employment is terminated, irrespective of the employer or employee’s intent. However, if employ - ment is terminated owing to expiry of the contract period, and if the employee concerned had a legiti - mate expectation for renewal of their employment contract, then it may be difficult for the employer to terminate the employment relationship unilaterally against the relevant employee’s will without a justifi - able cause. Unilateral Dismissal Article 23 (1) of the Labor Standards Act requires employers to have a justifiable cause when dismiss - ing, laying off, suspending or transferring an employee, reducing an employee’s wages or taking other disci - plinary actions. As such, employers may only termi - nate employees against their will if the employer has a “justifiable cause”. The South Korean Supreme Court has defined that there is a justifiable cause if, owing to a fault attributable to the employee, it is impossible for the employer and the employee to continue their employment relationship under generally accepted social norms. Mutual Termination This refers to termination of employment upon the employer’s and employee’s mutual agreement. Mutual terminations can further be narrowed down to, among others, cases where employees voluntarily resign by submitting a letter of resignation or employees accept the employer’s suggestion to resign, in which case the employment relationship is terminated upon the par - ties’ execution of a separation agreement. Collective Redundancies Article 24 of the Labor Standards Act governs dis - missals based on managerial reasons, including mass lay-offs (ie, collective redundancies). For an employer
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