What Counts as "Urgent Necessity" When a Company Wants to Lay You Off in Korea

 In my last article, I explained the four basic conditions a Korean employer must satisfy before dismissing workers for "managerial reasons." Today I want to zoom in on the very first condition, because it's the one employers lean on most heavily, and the one courts have spent the most time defining: urgent necessity in relation to the business.

At first, you might think this simply means "the company is losing money, so it needs to cut staff." But Korean courts have actually taken a broader and, I think, more honest view of what counts. According to a 1991 Supreme Court ruling, the requirement of urgent necessity should not be interpreted narrowly to mean only that the company needs the dismissal to survive financially. Courts have recognized that a workforce reduction is also justifiable when it is done to improve productivity, reorganize work, adopt new technology, or keep up with changes happening across an entire industry — not just when the company is on the verge of collapse. In other words, "urgent" does not always mean "we are about to close our doors." It can also mean "we need to restructure now to remain competitive later."

At the same time, courts have set a real boundary here too. The financial difficulty behind a managerial dismissal has to be something the company genuinely cannot expect to overcome in the near future through normal operations. And here is a detail I found particularly reassuring: the mere fact that a labor union went on strike, even repeated strikes that made it hard for a company to operate normally, does not by itself give an employer the right to simply shut down the business and dismiss everyone. Employers cannot point to their own workers' legal union activity as the "urgent necessity" excuse for closing shop.

Another important detail: when a company has multiple branches, plants, or divisions, courts have said that "urgent necessity" cannot be judged by looking only at the struggling branch in isolation. The whole business has to be evaluated together. If one branch is losing money but the company as a whole is healthy, that alone may not be enough to justify dismissing the workers at that specific branch.

The book I've been studying shares a few real examples that make this much clearer. In one case, a company that produced construction aggregates along the Han River had to stop production due to environmental or regulatory reasons and consequently had to shut down and reduce its workforce — this was accepted as genuine urgent necessity, since the two affected plants had never shared operations, management, or employees, and each functioned as its own independent unit. In another case, a hospital-operating school corporation closed its Industrial Health Section and transferred those duties to an affiliated research center, dismissing the employees involved so they could be rehired under similar conditions at the new center — this too was accepted as justifiable, since it wasn't really a loss of jobs so much as a structural transfer.

But not every closure passes the test. In one case involving a clothing manufacturer with three separate plants — one producing high-end export clothing, one mass-producing garments, and one producing socks — the company decided to close the plant that made socks due to urgent business necessity, but dismissed all of its employees outright rather than exploring whether they could be transferred to either of the other two plants. Because the company made no genuine attempt to move those workers elsewhere within the same organization, the courts ruled that real efforts to avoid dismissal had not been made — meaning "urgent necessity" alone is not enough on its own; it has to be paired with real efforts to protect the workers affected.

I share all of this, kababayan, because I know some of us have been told by an employer, almost as a throwaway line, "wala tayong choice, kailangan bawasan ang tao dahil malas ang negosyo" — and many of us simply accept that at face value. But as you can see, Korean law does not accept vague claims of hard times as sufficient justification on their own. There has to be a real, demonstrable business necessity, considered across the whole company, not just one struggling corner of it — and even then, a genuine effort to protect workers through transfer or reassignment has to come first, before dismissal is ever legally acceptable.

Sa susunod na artikulo, pag-usapan naman natin kung paano dapat sinusukat ng employer kung talagang ginawa nila ang lahat para maiwasan ang tanggalan bago pa man umabot sa dismissal. Ingat lagi, kababayan.