Often we are asked by our firm’s foreign clients about the possible situations where any criminal penalties would be imposed on an employer in relation to employment termination.
If and to the extent that an employer had reasonable grounds to dismiss an employee based on poor performance, satisfying the standards prescribed in the Labor Standards Act of Korea, then the employer would not be subject to any criminal sanctions since the employer did not violate the relevant provisions of the Labor Standards Act. It would be risky, however, for any employer to form a subjective judgment that any employment termination was proper, and it would thus be important to have and accumulate as much evidence as possible to objectively show that any employment termination was based on a “justifiable cause.”
Further, please note that the possibility of any criminal sanctions would come up only if and when the Labor Committee, which had received an employee’s complaint and reviewed the case, ordered an employer to reinstate the relevant employee’s position and pay compensation (i.e., lost wages), but the employer did not comply with such order. According to the Labor Ministry’s guidelines regarding handling of unjust employment termination claims, an employer would be required to comply with any corrective order of the Labor Committee within 7 days of receipt of such order. If the employer does not comply within the 7-day period, then the labor inspector would recommend to the prosecutors’ office to indict the employer in question, and the employer would be subject to a fine of up to 30 million won or an imprisonment of up to 5 years. If an employer does not have any prior conviction record, then the employer in question would usually be required to pay certain fines.
Another instance which may lead to an employer facing criminal sanctions would be where a labor inspector under the Ministry of Labor can independently investigate, in cases where the Labor Committee proceedings did not materialize due to such reasons as passing of the relevant filing period, etc., and may issue a corrective order to the relevant employer if the employer is found liable, and the employer is required to comply with the said order with a 7-day period. And, again, if the employer does not comply within the 7-day period, then the labor inspector would recommend to the prosecutors’ office to indict the employer in question, and the employer would be subject to criminal penalties as noted earlier.
For any Korean labor law inquiries, please contact Keun Dong Lee (leekd@sigonglaw.com) or Hoon Lee (hoonlee@sigonglaw.com) at Sigong Law P.C. (www.sigonglaw.com).