Wrongful Termination in South Korea: Employee & Employer Guide

1. What Is Wrongful Termination Under Korean Labor Law?

Key Answer

Wrongful termination (부당해고) refers to dismissal without just cause under Article 23 of the Korean Labor Standards Act. The law requires that employers must have “justifiable reason” to terminate an employee, and the termination must follow proper procedures.

Legal Framework

Article 23(1) of the Labor Standards Act states: “An employer shall not dismiss, lay off, suspend, or transfer an employee, reduce wages, or take other punitive measures against an employee without justifiable cause.” This provision applies to all businesses with 5 or more employees in South Korea. Whether a termination is “wrongful” depends not on its formal appearance but on its substantive reality.

Types of Termination

Korean law recognizes three main categories of termination: ordinary dismissal (based on employee misconduct), disciplinary dismissal (for violations of workplace rules), and managerial dismissal (economic layoffs under Article 24). Regardless of type, the principle of “substance over form” applies—which becomes evident in the two contrasting cases we will examine.

Common Types of Wrongful Termination

First, dismissals with procedural defects. When an employer fails to provide written notice of termination stating the reasons and effective date, or terminates without the required 30-day advance notice, the dismissal is procedurally defective. Written notification of termination grounds and timing is mandatory under Korean law.

Second, disguised economic layoffs. Layoffs for business reasons must be supported by genuine evidence of restructuring necessity. The employer must notify and consult with employee representatives at least 50 days in advance. Failure to comply renders the dismissal wrongful.

Third, discriminatory or retaliatory dismissals. Terminating an employee for union membership, filing grievances, or reporting violations to labor authorities constitutes wrongful termination. Additionally, employees cannot be dismissed during medical leave for work-related injuries (and 30 days thereafter) or during maternity leave (and 30 days thereafter).

Fourth, disguised contract expiration. When fixed-term employment contracts have been repeatedly renewed to the point of establishing a de facto permanent employment relationship, using formal contract expiration as grounds for termination may constitute wrongful dismissal.

When Termination Is Not Wrongful

Conversely, termination may be justified when the employee has committed serious misconduct: disclosure of confidential information, refusal to perform contractual duties, intentional damage to company property, repeated unauthorized absences, persistent poor work attitude, workplace violence, or defamation. However, mere performance deficiency alone is generally insufficient to justify dismissal, and the principle of proportionality must be observed.

2. Can a Coerced Resignation Be Considered Wrongful Termination? – Employee Victory Case

Key Answer

Yes. The Supreme Court of Korea ruled that when a resignation letter is submitted not based on the employee’s genuine intent but under employer coercion or pressure, it constitutes unilateral termination by the employer—equivalent to wrongful dismissal.

Case Background

Ms. A was an executive at a private company. She was suddenly called to a meeting and pressured by senior management to resign. Over just five days, she was subjected to repeated pressure. On the fourth day, exhausted and under intense duress, she submitted a resignation letter. She then filed a lawsuit seeking confirmation that her termination was invalid.

Court’s Judgment

Courts at all levels—from the trial court to the Supreme Court—ruled in favor of the employee. The Supreme Court established this key principle: “Even when a resignation letter exists formally, if the employer made the decision to terminate and the employee merely submitted the document in response to pressure rather than genuine voluntary intent, it constitutes unilateral termination by the employer.”

Decisive Factors

The court emphasized three critical elements. First, the nature and circumstances of the resignation solicitation—including whether undue pressure, threats, or disadvantageous treatment was involved. Second, whether the employee genuinely expressed intent to resign during the process. Third, the employee’s response after submitting the resignation letter. In this case, Ms. A filed an objection immediately after submission, clearly demonstrating that she had no genuine intent to resign.

3. Is Dismissal for Hiring Irregularities Justified? – Employer Victory Case

Key Answer

The Supreme Court ruled that when an employee actively participated in hiring irregularities that substantially undermined the fairness of the recruitment process, dismissal based on those grounds is justified—even if criminal charges related to the same conduct resulted in acquittal.

Case Background

Mr. B was hired as a mid-career employee at a public institution. Years later, an investigation revealed irregularities in the hiring process, and Mr. B was dismissed. Although he was acquitted in criminal proceedings, he lost his wrongful termination lawsuit. He was found to have actively participated in the hiring irregularities.

Court’s Judgment

From the trial court to the Supreme Court, all courts ruled in favor of the employer. The Supreme Court emphasized: “The criminal acquittal and the labor dispute have different scopes of review and apply different legal principles. A criminal acquittal does not preclude finding just cause for dismissal under labor law.”

Separation of Criminal and Civil Judgments

This case illustrates an important principle. Criminal trials determine whether specific elements of a crime have been proven “beyond reasonable doubt.” In contrast, wrongful termination lawsuits examine whether there is “just cause” under the Labor Standards Act, applying a “preponderance of evidence” standard. Consequently, conduct that does not meet criminal standards may still constitute sufficient grounds for dismissal under labor law.

4. What Are the Key Differences Between the Two Rulings?

Comparative Analysis

The Substance-Over-Form Principle in Both Directions

Both cases applied Korean labor law’s fundamental principle of prioritizing substance over form—but in opposite directions. In Case A, although a resignation letter existed formally, the substance was wrongful termination, benefiting the employee. In Case B, although there was a criminal acquittal, the substantive hiring misconduct existed, benefiting the employer.

Higher Standards for Public Institutions

In Case B, the court emphasized the special nature of public institutions: “Public institutions are established to serve the public interest and operate based on public trust, thus requiring higher standards for hiring fairness than private companies.” This means public sector employees must adhere to stricter ethical standards in hiring and personnel matters. In contrast, cases involving coerced resignation at private companies, like Case A, focus on whether the employer had intent to terminate and whether the employee genuinely intended to resign.

5. What Remedies Are Available for Wrongful Termination in South Korea?

Key Answer

Employees who have been wrongfully terminated in South Korea can file a remedy application with the Labor Relations Commission or bring a lawsuit in civil court seeking confirmation of dismissal invalidity. These procedures serve similar purposes but differ in nature, and employees may choose one or pursue both simultaneously.

Labor Relations Commission Remedy Application

Under Article 28 of the Labor Standards Act, wrongfully terminated employees may file for remedy with the Labor Relations Commission. This is an administrative remedy procedure where the Commission may order reinstatement and back pay. However, the application must be filed within 3 months of the termination date—this is a strict deadline (exclusion period), and missing it means the remedy application itself becomes impossible.

Dismissal Invalidity Confirmation Lawsuit (Civil Court)

A dismissal invalidity confirmation lawsuit asks the court to declare that the employer’s unilateral termination has no legal effect. Classified as a declaratory action under civil procedure law, it is filed when the employee seeks to confirm the dismissal was invalid and restore the employment relationship. There is no specific limitation period, but filing too late may result in dismissal based on the good faith doctrine.

Relationship Between the Two Procedures

Employees may choose one or pursue both procedures simultaneously. However, if a civil court issues a final judgment that “the dismissal was justified,” the benefit of the Commission remedy procedure is extinguished. The choice between these routes should be made after consulting with a legal expert, considering the nature of the case, available evidence, and time constraints.

6. What Is the Procedure for a Dismissal Invalidity Lawsuit?

Key Answer

Dismissal invalidity lawsuits in South Korea follow standard civil procedure: filing the complaint, defendant’s answer, trial proceedings and evidence examination, and judgment. If the dismissal is confirmed invalid, the employee is entitled to reinstatement and may claim back wages for the period of wrongful termination.

Litigation Procedure

The terminated employee files a complaint with the competent court, specifying the termination date, grounds, and procedural defects. Once the court serves the complaint on the employer, the employer files an answer asserting the justification for termination. The court then examines evidence including employment contracts, personnel records, disciplinary committee minutes, emails, and recordings, ultimately rendering judgment on the legitimacy of the dismissal and procedural compliance.

Burden of Proof

A crucial aspect of dismissal invalidity lawsuits is the allocation of burden of proof. It is not the employee who must prove the termination was unjust—rather, the employer must prove the termination was for just cause. The Supreme Court has consistently held: “The burden of proving just cause for dismissal rests with the employer.” Therefore, employees should specifically allege the circumstances and procedural defects of the termination, while the employer must demonstrate that the grounds meet the standard of social acceptability.

Effect of Judgment – Reinstatement

When the court rules that the dismissal is invalid, the employee’s employment relationship prior to termination is restored. The dismissal is void retroactively, obligating the employer to reinstate the employee to their original position. However, if the company has ceased operations or the employee has reached retirement age, monetary compensation equivalent to wages during the termination period may be awarded instead of reinstatement.

Effect of Judgment – Back Wages

Upon receiving a judgment of dismissal invalidity, the employee may claim wages for the period they were unable to work. Under Article 538 of the Korean Civil Code, wage obligations that arose from the employer’s refusal to accept work continue to exist. However, if the employee earned income from other employment during the termination period, the employer may deduct amounts exceeding the leave allowance level (70% of average wages).

Caution Regarding Good Faith Doctrine

If an employee accepts severance pay without objection after termination or files suit after a considerable delay, the court may find that the employee effectively acknowledged the termination and reject the claim under the good faith doctrine. Therefore, when contesting a termination, it is important to indicate “under protest” when receiving severance, or to document objections through email or certified mail immediately after termination.

7. What Should Employees and Employers Keep in Mind?

Key Answer

In wrongful termination disputes in South Korea, the substantive reality matters more than formal appearances. For employees, securing evidence of coerced resignation is crucial. For employers, preparing objective documentation that proves the justification for termination is essential.

Points for Employees

If you are being pressured to resign, create written records immediately. Document the conversations during resignation solicitation, and preserve any evidence of threats or pressure. Even if you write a resignation letter, add a note such as “written at company’s request” or file an objection immediately after submission. You should file a remedy application with the Labor Relations Commission or initiate a lawsuit within 3 months of receiving termination notice.

Importantly, avoid submitting a resignation letter if possible. Submitting one can significantly disadvantage your wrongful termination claim. Additionally, make copies of your employment contract and other documents, gather evidence about the circumstances and events, and secure witnesses if necessary.

Points for Employers

Termination requires both just cause and proper procedure. For disciplinary dismissal, ensure strict compliance with procedural requirements: proper composition of the disciplinary committee, providing the employee an opportunity to defend themselves, and written notification. Public institutions especially must follow all procedures specified in personnel regulations and relevant laws, and must secure objective evidence of the grounds for dismissal.

Since the burden of proving just cause rests with the employer in dismissal invalidity lawsuits, active preparation is essential. If you implemented justified personnel action but face a lawsuit, you need personnel records and evidence of reasonable grounds. When conducting economic layoffs, carefully verify compliance with legal requirements. If the legitimacy of discipline is unclear, review disciplinary procedures and the proportionality principle. If disputes arise repeatedly, consider revising your discipline and termination manuals.

Evidence Checklist for Employees

Winning a wrongful termination dispute requires systematic evidence collection. Review these points step by step.

First, verify the termination notification method. Termination must be communicated in writing (Article 27 of the Labor Standards Act), so secure emails, text messages, or notification letters. Second, examine whether the grounds for dismissal meet the standard of “making it difficult to maintain the employment relationship” under social norms. Third, check procedural legitimacy—whether the disciplinary committee was properly convened and whether you were given an opportunity to explain.

Fourth, review your employment contract and work rules to verify the company followed prescribed termination procedures. Fifth, create records of your post-termination response through emails, text messages, or certified mail documenting your objections. Sixth, be cautious when receiving severance pay—accepting it without noting “under protest” may be interpreted as acknowledging the termination. Seventh, document any employment and income during the termination period (relevant for interim earnings deduction). Eighth, gather as much evidence as possible: personnel orders, meeting minutes, attendance records, messenger conversations.

Advice for Dispute Prevention

Establishing transparent and fair procedures from the hiring stage is important. Personnel regulations should clearly define grounds and procedures for termination and adequately communicate these to employees. When problems arise, consulting with a legal expert immediately to minimize legal risks is advisable. Based on experience handling numerous similar cases, early response often has a decisive impact on the final outcome.

8. FAQ

Based on extensive experience handling wrongful termination cases in South Korea, the legality of dismissal is determined by substance, not form. Whether employee or employer, accurately understanding the applicable legal principles and securing appropriate evidence in the early stages of a dispute has a decisive impact on the outcome.

※ The cases introduced in this article are based on actual Supreme Court rulings but have been anonymized to protect the parties’ privacy.