Corporate trends / Performance record
‘Unmet Requirements for Redundancy Dismissal (Workout Company)’: Unfair Dismissal Decision (Unfair Dismissal 77)
- Date2026/01/11 04:12
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[Case Information]
- Case name: Unfair dismissal decision concerning “Unmet requirements for redundancy dismissal (workout company)”
- Date of decision:
- Case number: Fully upheld
- Decision-making body: Seoul Regional Labor Relations Commission 2025BuHae3936 ○ ○ ○ Application for Remedy for Unfair Dismissal
2025.11.21
- Summary of outcome: A.
1. Legal Implications
This unfair dismissal case concerns a company undergoing a workout procedure that carried out so‑called redundancy dismissals, which were then fully upheld as unfair dismissals by the Seoul Regional Labor Relations Commission. By examining the Commission’s reasoning, this article reviews the four statutory requirements for managerial dismissals and highlights the importance—often overlooked in practice—of efforts to avoid dismissal, criteria for selecting employees to be dismissed, and the duty to consult with the employees’ representative. It is also significant in that the same issues recur frequently in disputes handled by Labor Law Firm Law&.
Ⅰ. Case Overview
In June 2024, after the commencement of the workout, the employer pursued a management improvement plan and dismissed certain employees on the grounds that its financial structure had deteriorated to the point where liquidation was being considered. The dismissal notice expressly stated that the dismissal was “for managerial reasons,” and the employee filed an application for remedy for unfair dismissal, which was heard by the Seoul Regional Labor Relations Commission.
While the Commission acknowledged the company’s management crisis itself, it examined whether the employer’s actions were justified, focusing on whether the remaining requirements for managerial dismissal (redundancy dismissal) under Article 24 of the Labor Standards Act had been satisfied.
Ⅱ. Issues in Dispute
The issue in this case is whether a redundancy dismissal is lawful where a company facing such a serious management crisis that a workout has been initiated is found to have an urgent managerial need, but has not properly satisfied the requirements under Article 24 of the Labor Standards Act—namely, efforts to avoid dismissal, criteria for selecting employees to be dismissed, and consultation with the employees’ representative.
Ⅲ. Summary of the Labor Relations Commission’s Decision
The panel in this case held that, given the employer’s financial structure, the commencement of the workout, and the progress of the management improvement plan, there was a need to reduce personnel for the survival of the enterprise, and thus an urgent managerial necessity existed.
However, in light of the fact that it was not substantiated in what specific ways and to what extent efforts had been made to avoid dismissal, that it was difficult to regard the criteria for selecting employees to be dismissed as objective, reasonable, and fair, and that, apart from the formal preparation of a consultation document, it was difficult to find that substantial and good‑faith consultations had been conducted with the employees’ representative,
the Commission held that the dismissal in this case did not satisfy all the requirements for the lawfulness of a managerial dismissal and was therefore unfair.
Ⅳ. Practical Points (From the Employee’s Perspective)
From the employee’s perspective, even if the company gives notice of dismissal citing “managerial reasons,” redundancy dismissal is not automatically justified merely because the company’s circumstances are difficult. Only where all of the following are satisfied can a managerial dismissal be recognized as lawful: efforts to avoid dismissal (such as hiring freezes, reassignment, and voluntary retirement), the reasonableness and fairness of the criteria for selecting employees to be dismissed, and prior notice to and good‑faith consultation with the employees’ representative.
Accordingly, if you receive notice of dismissal in a similar situation, you should carefully check: (i) what specific measures the company took to avoid dismissal, (ii) on what criteria you were selected, and (iii) when and on what matters the company consulted with the employees’ representative. After securing relevant materials (such as the dismissal notice, personnel reduction plan, and minutes of meetings), it is advisable to consult a specialized institution such as Labor Law Firm Law& to review the possibility of filing an application for remedy with the Labor Relations Commission.
Ⅴ. Practical Points (From the Employer’s Perspective)
From the company’s perspective, it must be borne in mind that even in a workout or restructuring situation, “management crisis ≠ lawful redundancy dismissal.” Along with securing financial data to prove the urgent managerial necessity, the company must actually implement alternatives to avoid dismissal—such as a freeze on new hiring, reassignment, voluntary retirement or recommended resignation, and adjustments to wages and working hours—and document the process.
In addition, in line with the purport of the case law, the criteria for selecting employees to be dismissed should be designed so that social protection needs—such as age, length of service, and dependents—are given priority, with work performance and ability reflected only as secondary factors. The company should also fully explain to the employees’ representative, in advance, the reasons for dismissal, the number of employees to be dismissed, the timing, the method, and the selection criteria, and organize materials such as minutes and agreements so that the process of good‑faith consultation can be substantiated.
2. Matters Decided
A. Case Overview and Procedural History
A. Whether the dismissal constitutes a managerial dismissal
In light of the fact that the dismissal notice expressly stated that the dismissal was for managerial reasons and considering the course of events leading up to the employee’s separation, the dismissal constitutes a managerial dismissal, not an ordinary dismissal.
B. Lawfulness of the managerial dismissal
(1) Given the progress of the management improvement plan following the commencement of the workout in June 2024 and the financial structure, which was such that immediate liquidation had to be considered, the Commission found that there was an urgent managerial necessity. However, (2) it was not specifically shown what efforts had been made to avoid dismissal, making it difficult to find that all possible efforts to avoid dismissal had been made; (3) it was difficult to regard the employer’s criteria for selecting employees to be dismissed as reasonable and fair; and (4) apart from the consultation document with the employees’ representative, it could not be found that the duty of good‑faith consultation had been fulfilled. Taking these factors together, the Commission found it difficult to conclude that the requirements for a managerial dismissal had been satisfied.
3. Summary of the Decision
A. Summary of the Labor Relations Commission’s Reasoning
A. Whether the dismissal constitutes a managerial dismissal
In light of the fact that the dismissal notice expressly stated that the dismissal was for managerial reasons and considering the course of events leading up to the employee’s separation, the dismissal constitutes a managerial dismissal, not an ordinary dismissal.
B. Lawfulness of the managerial dismissal
(1) Given the progress of the management improvement plan following the commencement of the workout in June 2024 and the financial structure, which was such that immediate liquidation had to be considered, the Commission found that there was an urgent managerial necessity. However, (2) it was not specifically shown what efforts had been made to avoid dismissal, making it difficult to find that all possible efforts to avoid dismissal had been made; (3) it was difficult to regard the employer’s criteria for selecting employees to be dismissed as reasonable and fair; and (4) apart from the consultation document with the employees’ representative, it could not be found that the duty of good‑faith consultation had been fulfilled. Taking these factors together, the Commission found it difficult to conclude that the requirements for a managerial dismissal had been satisfied. /
[See More Related Decisions]
- “Unfair dismissal decision concerning ‘Misunderstanding of consensual termination (agreement with employees’ representative)’” – Date of decision: – Case number: Fully upheld
- “Unfair dismissal decision concerning ‘Concurrent employment and receipt of money (youth football academy · hobby class)’” – Date of decision: – Case number: Dismissed
- “Unfair dismissal decision concerning ‘Expression of intent to resign (resignation remarks during a phone call)’”
[Tags]
Unfair dismissal, Unmet requirements for redundancy dismissal (workout company), Labor Law Firm Law&, large labor law firm, Samseong‑dong labor law firm, Samseong Station labor law firm, Gangnam labor law firm
※ This article is part of the “Unfair Dismissal Decisions” series by Labor Law Firm Law&.
※ You can view the previous article, “Unfair dismissal decision concerning ‘Expression of intent to resign (resignation remarks during a phone call)’,” in a new window.
※ The list of decisions related to unmet requirements for redundancy dismissal (workout company) can be viewed together on the “List of decisions related to unmet requirements for redundancy dismissal (workout company)” page.
※ Korean version of this case: Korean article
- Case name: Unfair dismissal decision concerning “Unmet requirements for redundancy dismissal (workout company)”
- Date of decision:
- Case number: Fully upheld
- Decision-making body: Seoul Regional Labor Relations Commission 2025BuHae3936 ○ ○ ○ Application for Remedy for Unfair Dismissal
2025.11.21
- Summary of outcome: A.
1. Legal Implications
This unfair dismissal case concerns a company undergoing a workout procedure that carried out so‑called redundancy dismissals, which were then fully upheld as unfair dismissals by the Seoul Regional Labor Relations Commission. By examining the Commission’s reasoning, this article reviews the four statutory requirements for managerial dismissals and highlights the importance—often overlooked in practice—of efforts to avoid dismissal, criteria for selecting employees to be dismissed, and the duty to consult with the employees’ representative. It is also significant in that the same issues recur frequently in disputes handled by Labor Law Firm Law&.
Ⅰ. Case Overview
In June 2024, after the commencement of the workout, the employer pursued a management improvement plan and dismissed certain employees on the grounds that its financial structure had deteriorated to the point where liquidation was being considered. The dismissal notice expressly stated that the dismissal was “for managerial reasons,” and the employee filed an application for remedy for unfair dismissal, which was heard by the Seoul Regional Labor Relations Commission.
While the Commission acknowledged the company’s management crisis itself, it examined whether the employer’s actions were justified, focusing on whether the remaining requirements for managerial dismissal (redundancy dismissal) under Article 24 of the Labor Standards Act had been satisfied.
Ⅱ. Issues in Dispute
The issue in this case is whether a redundancy dismissal is lawful where a company facing such a serious management crisis that a workout has been initiated is found to have an urgent managerial need, but has not properly satisfied the requirements under Article 24 of the Labor Standards Act—namely, efforts to avoid dismissal, criteria for selecting employees to be dismissed, and consultation with the employees’ representative.
Ⅲ. Summary of the Labor Relations Commission’s Decision
The panel in this case held that, given the employer’s financial structure, the commencement of the workout, and the progress of the management improvement plan, there was a need to reduce personnel for the survival of the enterprise, and thus an urgent managerial necessity existed.
However, in light of the fact that it was not substantiated in what specific ways and to what extent efforts had been made to avoid dismissal, that it was difficult to regard the criteria for selecting employees to be dismissed as objective, reasonable, and fair, and that, apart from the formal preparation of a consultation document, it was difficult to find that substantial and good‑faith consultations had been conducted with the employees’ representative,
the Commission held that the dismissal in this case did not satisfy all the requirements for the lawfulness of a managerial dismissal and was therefore unfair.
Ⅳ. Practical Points (From the Employee’s Perspective)
From the employee’s perspective, even if the company gives notice of dismissal citing “managerial reasons,” redundancy dismissal is not automatically justified merely because the company’s circumstances are difficult. Only where all of the following are satisfied can a managerial dismissal be recognized as lawful: efforts to avoid dismissal (such as hiring freezes, reassignment, and voluntary retirement), the reasonableness and fairness of the criteria for selecting employees to be dismissed, and prior notice to and good‑faith consultation with the employees’ representative.
Accordingly, if you receive notice of dismissal in a similar situation, you should carefully check: (i) what specific measures the company took to avoid dismissal, (ii) on what criteria you were selected, and (iii) when and on what matters the company consulted with the employees’ representative. After securing relevant materials (such as the dismissal notice, personnel reduction plan, and minutes of meetings), it is advisable to consult a specialized institution such as Labor Law Firm Law& to review the possibility of filing an application for remedy with the Labor Relations Commission.
Ⅴ. Practical Points (From the Employer’s Perspective)
From the company’s perspective, it must be borne in mind that even in a workout or restructuring situation, “management crisis ≠ lawful redundancy dismissal.” Along with securing financial data to prove the urgent managerial necessity, the company must actually implement alternatives to avoid dismissal—such as a freeze on new hiring, reassignment, voluntary retirement or recommended resignation, and adjustments to wages and working hours—and document the process.
In addition, in line with the purport of the case law, the criteria for selecting employees to be dismissed should be designed so that social protection needs—such as age, length of service, and dependents—are given priority, with work performance and ability reflected only as secondary factors. The company should also fully explain to the employees’ representative, in advance, the reasons for dismissal, the number of employees to be dismissed, the timing, the method, and the selection criteria, and organize materials such as minutes and agreements so that the process of good‑faith consultation can be substantiated.
2. Matters Decided
A. Case Overview and Procedural History
A. Whether the dismissal constitutes a managerial dismissal
In light of the fact that the dismissal notice expressly stated that the dismissal was for managerial reasons and considering the course of events leading up to the employee’s separation, the dismissal constitutes a managerial dismissal, not an ordinary dismissal.
B. Lawfulness of the managerial dismissal
(1) Given the progress of the management improvement plan following the commencement of the workout in June 2024 and the financial structure, which was such that immediate liquidation had to be considered, the Commission found that there was an urgent managerial necessity. However, (2) it was not specifically shown what efforts had been made to avoid dismissal, making it difficult to find that all possible efforts to avoid dismissal had been made; (3) it was difficult to regard the employer’s criteria for selecting employees to be dismissed as reasonable and fair; and (4) apart from the consultation document with the employees’ representative, it could not be found that the duty of good‑faith consultation had been fulfilled. Taking these factors together, the Commission found it difficult to conclude that the requirements for a managerial dismissal had been satisfied.
3. Summary of the Decision
A. Summary of the Labor Relations Commission’s Reasoning
A. Whether the dismissal constitutes a managerial dismissal
In light of the fact that the dismissal notice expressly stated that the dismissal was for managerial reasons and considering the course of events leading up to the employee’s separation, the dismissal constitutes a managerial dismissal, not an ordinary dismissal.
B. Lawfulness of the managerial dismissal
(1) Given the progress of the management improvement plan following the commencement of the workout in June 2024 and the financial structure, which was such that immediate liquidation had to be considered, the Commission found that there was an urgent managerial necessity. However, (2) it was not specifically shown what efforts had been made to avoid dismissal, making it difficult to find that all possible efforts to avoid dismissal had been made; (3) it was difficult to regard the employer’s criteria for selecting employees to be dismissed as reasonable and fair; and (4) apart from the consultation document with the employees’ representative, it could not be found that the duty of good‑faith consultation had been fulfilled. Taking these factors together, the Commission found it difficult to conclude that the requirements for a managerial dismissal had been satisfied. /
[See More Related Decisions]
- “Unfair dismissal decision concerning ‘Misunderstanding of consensual termination (agreement with employees’ representative)’” – Date of decision: – Case number: Fully upheld
- “Unfair dismissal decision concerning ‘Concurrent employment and receipt of money (youth football academy · hobby class)’” – Date of decision: – Case number: Dismissed
- “Unfair dismissal decision concerning ‘Expression of intent to resign (resignation remarks during a phone call)’”
[Tags]
Unfair dismissal, Unmet requirements for redundancy dismissal (workout company), Labor Law Firm Law&, large labor law firm, Samseong‑dong labor law firm, Samseong Station labor law firm, Gangnam labor law firm
※ This article is part of the “Unfair Dismissal Decisions” series by Labor Law Firm Law&.
※ You can view the previous article, “Unfair dismissal decision concerning ‘Expression of intent to resign (resignation remarks during a phone call)’,” in a new window.
※ The list of decisions related to unmet requirements for redundancy dismissal (workout company) can be viewed together on the “List of decisions related to unmet requirements for redundancy dismissal (workout company)” page.
※ Korean version of this case: Korean article
