Understanding Dismissal for Managerial Reasons in Korea: What Every Foreign Worker Should Know

 Up to now, I have been sharing individual dismissal stories with you — real disputes between one worker and one employer. But there is another kind of dismissal every foreign worker in Korea should understand, because it can affect many of us at the same time, even when we personally did nothing wrong: dismissal for managerial reasons.

This is what happens when a company lets employees go not because of any fault on the worker's part, but because of the company's own economic, industrial, or technical situation — restructuring, downsizing, financial trouble, a merger, or a business transfer meant to avoid financial collapse. If you have ever heard a company say "we have to let people go because of the recession" or "because of restructuring," this is the category that applies.

I want to be clear about something important: Korean law does not let employers use "managerial reasons" as a free excuse to fire whoever they want. Article 24 of the Labor Standards Act sets strict conditions, and if an employer skips these requirements, they can actually be found guilty of unfair dismissal — and even face criminal penalties, including imprisonment of up to five years or a fine of up to thirty million won. That is how seriously Korean law treats this.

For a managerial dismissal to be considered valid, four conditions generally need to be met.

First, there has to be a genuine urgent necessity related to the business — real financial trouble, not just a preference for a leaner staff. The law even recognizes situations like business transfers, mergers, or acquisitions meant to prevent the company's financial deterioration as valid grounds here.

Second, the employer must show real effort to avoid dismissal before resorting to it. This can include things like restricting overtime, encouraging employees to take leave, reducing labor costs through adjusted working hours or wages, freezing new hiring, not renewing temporary contracts, redeploying staff to other roles, temporarily suspending work, or offering early retirement to those willing to take it. In other words, dismissal is supposed to be a last resort, not a first response.

Third, the employer must use fair and reasonable criteria when deciding who gets dismissed. Both the employer and employees are expected to genuinely try to understand each other's position during this process. And importantly, the law specifically bans gender discrimination in how these selection criteria are applied — meaning an employer cannot simply decide to let go of, say, all the female staff or all the male staff, under the excuse of "managerial reasons."

Fourth, the employer must inform and consult in good faith with the employee representative — usually a union, or an employee representative if there is no union — with at least fifty days' notice before the dismissals happen. During this consultation period, the employee side has the right to present opinions on the selection criteria being used, and to suggest alternatives to dismissal altogether.

There are also reporting requirements when a company plans to lay off a large number of people at once. If a company with fewer than 100 employees is planning to dismiss ten or more people, or a company with 100 to 999 employees is dismissing 10 percent or more of its total staff, or a company with 1,000 or more employees is dismissing 100 or more people, they are required to report this to the Labor Ministry at least 30 days before the dismissals take effect.

Even after a managerial dismissal is properly carried out, employers still owe dismissed employees a 30-day prior notice or dismissal allowance equivalent to 30 days' normal wages, just like in ordinary dismissal cases. And here is a detail I think many workers do not know: if the employer later wants to hire new employees within three years of a managerial dismissal, for the same kind of work, the law expects them to make an effort to re-employ the people they previously let go. In other words, if the company recovers and starts hiring again for similar positions, the workers who were laid off due to "hard times" are supposed to get a fair chance to come back first.

I share all of this, kababayan, because layoffs due to company restructuring can feel completely out of our hands — like something happening to us rather than something we have any say in. But as you can see, Korean law actually gives affected workers a real voice in this process: the right to be consulted, the right to have your situation genuinely considered before being let go, the right to fair selection, and even a future right to be considered again if the company starts rehiring. Knowing this does not guarantee your job will be saved, but it does mean you are not powerless if your workplace ever announces layoffs "for managerial reasons."

Sa susunod na artikulo, tatalakayin natin nang mas malalim ang mga detalye ng bawat kondisyon na ito. Ingat po tayong lahat, at alamin natin ang ating mga karapatan bago pa man ito kailanganin.