[비즈한국] Companies sometimes make decisions that are difficult to explain based solely on financial terms. Understanding the laws and systems hidden within those decisions allows for a deeper insight into the reality behind them. 'Useful Business Tips (Al-Ssul-Bi-Beop)' introduces clues that help navigate the flow of business..
Taking on labor cases is never pleasant. While winning or losing is critical in all litigation, it is especially true in labor disputes. When an employee is forced out of a company, they often feel as though all the values of their life are being denied. For the company, failing to control an employee after losing a labor dispute also presents a major headache. Therefore, labor cases often induce more stress than any other type of litigation.
Despite this, I often find myself taking on labor cases for various reasons. The content introduced in this column stems from one of the cases I handled in the past. I represented an employee who was challenging an unfair dismissal by their company. It is common knowledge even for beginners that there is no "at-will employment" in South Korea. An employer cannot fire an employee at will without just cause. Trusting this principle, I made a strong case against the company.
Then, the company made an unexpected move. They assigned my client to a highly unpleasant, isolated, and secluded position and strongly demanded they report to work immediately. The Local Labor Relations Commission seemed to lean in favor of the company. Their logic was as follows: if the company says it will reinstate the employee, the commission has no choice but to dismiss the claim if the employee refuses to accept it.
That day, I re-examined the structure of our labor law. I realized that while it is extremely favorable to employees regarding dismissal, it is excessively favorable to companies regarding personnel management rights. Article 23, Paragraph 1 of the Labor Standards Act states: “An employer shall not dismiss, lay off, suspend, transfer, reduce the wages of, or take other punitive measures against a worker without a just cause.”
The requirement of "just cause" carries the weight of dismissal regulation. A person cannot be let go simply because their performance is unsatisfactory or because the relationship is awkward. This is the exact opposite of the U.S.-style "employment at will," where one can be fired at any time without special circumstances. The justification for dismissal must be proven by the employer, and the standard required is quite high—to the extent that the employment relationship can no longer be maintained according to social norms. In short, dismissal is strictly restricted.
The problem lies in the fact that the same provision requires "just cause" for job transfers as well. Based on the text alone, it would seem that job reassignments should be judged by the same standards as dismissals. However, practice operates differently. For a long time, the Supreme Court has maintained the position that since transfers or reassignments are fundamentally within the authority of the employer as the holder of personnel management rights, the employer is granted significant discretion within the scope of business necessity. Such actions are considered valid unless there are special circumstances, such as violations of the Labor Standards Act or an abuse of rights (Supreme Court decisions 94Da52928, 93Da47677, etc.). The criteria for judging legitimacy include: ① business necessity, ② comparing and weighing the disadvantages to the employee's life, and ③ whether procedures required by the principle of good faith, such as consultation with the employee, were followed.
On paper, this reads like a balanced three-factor test. In reality, however, the criteria are applied in favor of the employer. The Supreme Court has even ruled that a transfer does not become invalid simply because the employer failed to properly follow consultation procedures (Supreme Court 2020Da253744). Ultimately, for an employee to win, they must prove that the transfer imposes a disadvantage significantly beyond what is normally expected. While the employer bears the burden of proving the justification for dismissal, the burden of proving the unfairness of a transfer effectively shifts to the employee. Though the law is the same, the intensity of the scrutiny differs.
Companies that understand this difference do not push for direct dismissal. They simply use their personnel management rights. Concluding that a direct dismissal would be difficult to sustain, the company eliminates the grounds for a remedy claim by using the guise of reinstatement. Meanwhile, they handle the position to which they assign the employee using the more lenient "personnel management" standard. In fact, cases appear repeatedly in legal precedents where, once an employee files for a remedy for unfair dismissal, the company immediately announces an order for reinstatement and demands the employee report to work the following day.
At this point, the employee is faced with an extremely difficult choice. Refusing reinstatement to a terrible position risks being labeled as having "unauthorized absences," which could eliminate the very benefit of seeking a remedy. Accepting it, however, means enduring demotion and isolation. The reason the Local Labor Relations Commission stated that they had no choice but to dismiss the claim if the reinstatement offer was not accepted lies in this structure. They argue that while dismissal is restricted, where an individual is assigned is at the company's discretion.
However, recent trends in legal precedents are moving in a slightly more favorable direction for employees. First, employees who do not want to return to their original position can apply for monetary compensation. Second, the Supreme Court has ruled that even if an employer orders reinstatement and pays an amount equivalent to wages, the "benefit of seeking a remedy" for monetary compensation does not immediately disappear without special circumstances, thereby making the sincerity of the reinstatement order a key point of contention. If the company issued a formal reinstatement order for the purpose of avoiding a remedy claim, the sincerity of that order itself can be challenged.
Third, retaliatory isolated or segregated assignments can be challenged as a separate issue of workplace harassment (Article 76-2 of the Labor Standards Act). Fourth, if a transfer is substantively part of a disciplinary action, it can be argued that it should be judged by the strict standards of discipline rather than the lenient standards of personnel management (Supreme Court 97Da36316). Ultimately, as a legal representative, one must focus on revealing that the company's personnel action is not a legitimate exercise of management rights, but a means to circumvent dismissal restrictions.
Of course, the flexibility of personnel management rights themselves is not the issue. To run an organization, the authority to reassign staff is necessary, and it is not appropriate for courts to overturn every single management decision after the fact. The problem arises when two different standards of scrutiny lead to the same result. If dismissal is restricted but personnel actions that lead to effectively the same result as dismissal are permitted under more lenient standards, the principle of dismissal restriction loses its effectiveness. If you cannot fire an employee but can send them to an unbearable position to force them to quit, the restrictions on dismissal become meaningless.
Therefore, labor commissions and courts must examine two things more carefully. One is the sincerity of the reinstatement. They must look at whether the reinstatement is intended to actually bring the employee back, or if it is merely a formality to neutralize the remedy. The other is the substance of the transfer. They must determine whether the assignment resulted from business necessity or if it was retribution for challenging the company.
Our labor law protects employees from dismissal. However, it does not yet sufficiently protect them from the positions to which a company might assign them. That is exactly what I realized that day at the Labor Relations Commission.