Selection order for dismissals and layoffs in detail
There is no statutory selection order for dismissals under South Korean law. However, the criteria used to select employees for business layoffs must be reasonable and fair. Courts have interpreted this condition to require employers to consider not only the employer’s interests (e.g. favouring high performing employees), but also the individual employees’ interests (e.g. number of dependents). In addition, certain employees are protected from dismissal, such as employees on maternity leave or on leave due to a work-related injury or illness.
To dismiss employees for business reasons, employers must satisfy the stringent requirements set out in Article 24 of the Labour Standards Act. This is very difficult, and it is a virtual ‘must’ to effect the bulk of any downsizing through voluntary compensated exits.
For involuntary layoffs, there must be an ‘urgent business necessity’. The employer must make ‘every effort’ to avoid layoffs. It cannot randomly select employees, but must establish reasonable and fair criteria to select employees. These must take into account the needs of both the employer and employees (i.e. factors indicating that hardship will be caused to employees through losing their jobs).