Definition of layoffs for managerial reasons(layoff)
Urgent management needs
- The employer shall have an emergency managerial reason to discharge the employee. (Former part of Article 24 (1) of the Labor Standards Act)
※ In this case, the transfer, acquisition, and merger of business to prevent deterioration of management are urgent management needs. (Latter part of Article 24 (1) of the Labor Standards Act)
- Emergency managerial reasons not just include the company inevitably discharging the employee to avoid bankruptcy, but also regards personnel reduction to priorly handle potential risks in the future. However, the company shall show objective evidence that justifies personnel reduction in this case (refer to the Supreme Court’s judgment 2010다38007 announced on June 28, 2012, and 2014다20882 announced on November 13, 2014).
Efforts to avoid dismissal, selecting those to be fired based on reasonable standards
- In the above cases, the employer shall make every effort to avoid dismissal, set reasonable and fair standards for dismissal, and select the person eligible accordingly. (Former part of Article 24 (2) of the Labor Standards Act)
※ In this case, men and women should not be discriminated against on the grounds of gender. (Latter part of Article 24 (2) of the Labor Standards Act)
Prior notice to the representative of the workers, sincere consultation with representatives of workers
- The employer shall notify the trade union of the above methods and standards for dismissal by no later than 50 days before the date of dismissal and shall consult with the union in good faith, where there is a trade union organized by a majority of workers in the business or business establishment. (Article 24 (3) of the Labor Standards Act)
Report dismissal plan for managerial reasons
Report dismissal plan
- The employer shall report to the Minister of Employment and Labor no later than 30 days before the date of his first dismissal if he intends to fire any of the following persons for one month (Article 24 (4) of the Labor Standards Act and Article 10 (1) of Enforcement Decree of the Labor Standards Act) :
· A business or business establishment with 99 or fewer workers: 10 or more.
· A business or business establishment with 100 to 999 workers: at least 10% of the number of workers
· A business or business establishment with at least 1,000 permanent workers: at least 100
- When making a report according to the above, the following must be included. (Article 24 (4) of the Labor Standards Act and Article 10 (2) of Enforcement Decree of the Labor Standards Act)
· Reasons for dismissal
· The number of people expected to be laid off
· Contents discussed with the representative of workers
· Layoff schedule
Effects of layoffs for managerial reasons
Effects of layoffs
- Where an employer dismisses a worker under the all requirements of Article 24 (1) through 3 of the Labor Standards Act, the dismissal was made for a justifiable reason under Article 23 (1) of the Labor Standards Act. (Article 24 (5) of the Labor Standards Act)
Preferencial Reemployment of Employees Dismissed due to Managerial Reasons, etc.
Preferential reemployment
- Where an employer intends to employ an employee to perform the same duties as the one in charge at the time of dismissal within three years from the date of dismissal, an employment who dismisses a worker pursuant to Article 24 of the Labor Standards Act shall preferentially employ the worker who has been laid off for management reasons, if he/she wishes. (Article 25 (1) of the Labor Standards Act)
Stabilization of livelihood, reemployment, vocational training, etc
- The government should take necessary measures first, such as stabilizing the livelihood of laid-off workers, reemployment, vocational training, etc. (Article 25 (2) of the Labor Standards Act)