[Case Information] This case is a decision in which the employer prevailed (application dismissed) on the issue of “excessive disciplinary severity (negligent credit examination).” Decision date: 2026-06-30 · Decision body: Seoul Regional Labor Relations Commission · Case No.: 2026BuHae1405 Key issue summary: A. Existence of grounds for discipline Failure to thoroughly review examination documents and negligent performance of related examination duties in connection with credit examination and credit card limit increase work was recognized as grounds for discipline. B. Appropriateness of the level of discipline (1) Officers and employees of banks are subject to a stricter duty of care as a good manager and a stricter duty to comply with internal controls than those in ordinary companies, and where a breach of such duties results in non-performing assets, the necessity and reasonableness of discipline is recognized to a higher degree; (2) As the lead examiner, the employee neglected essential review items required in the credit examination process for an extended period and on a repeated basis, etc. 1. Legal Implications In Seoul Regional Labor Relations Commission Case No. 2026BuHae1405, filed as an application for remedy for unfair dismissal, the issue was not the separate indemnity disposition itself, which does not fall within the scope of applications for remedy to the Labor Relations Commission, but rather the legitimacy of a three‑month wage reduction imposed on a lead examiner who neglected his duties in credit examination and credit card limit increase work. The Labor Relations Commission emphasized the particular nature of financial institutions and the duty of internal control and ruled in favor of the employer. This case can be seen as one that reconfirmed, for both financial sector employees and companies, the criteria for assessing the severity of discipline. Labor Law Firm Law& also intends to actively apply this legal reasoning in practice in similar unfair dismissal and disciplinary cases in the financial sector. Ⅰ. Case Overview The employee, serving as a lead examiner at a bank, was responsible for credit examination and credit card limit increase examination work. During the course of this work, he was referred to disciplinary proceedings after being criticized for failing to thoroughly review examination documents and repeatedly neglecting key review items. Following deliberation by the personnel committee, the employer imposed a three‑month wage reduction and a separate indemnity disposition. The employee, claiming that the discipline was excessive and unfair, filed an application with the Labor Relations Commission for a remedy for unfair dismissal (unfair discipline). Ⅱ. Issues The issues in this case were: “Where a bank’s lead examiner repeatedly neglects credit examination and credit card limit increase duties, resulting in large‑scale losses, does a three‑month wage reduction constitute excessive discipline that departs from or abuses the employer’s discretionary power in determining disciplinary measures, and, when combined with the indemnity disposition, does it fall within the scope of measures that may be challenged by an application for remedy to the Labor Relations Commission?” Ⅲ. Summary of the Labor Relations Commission’s Reasoning The panel in this case found that the negligent examination conduct constituting grounds for discipline on the part of the employer did in fact occur; that bank officers and employees are subject to a far stricter duty of care as a good manager and duty to comply with internal controls than those in ordinary companies; and that, as the lead examiner, the employee neglected core review items required in the credit examination process for a long period and on a repeated basis, thereby causing property losses of approximately KRW 4,651,000,000 and a deterioration in asset soundness. In light of these factors, the panel held that the necessity and reasonableness of the three‑month wage reduction were established. The panel further held that, given the nature of credit business, it is a logically natural consequence to determine whether there was negligent examination ex post facto on the basis of cases in which non‑performing assets have actually materialized; that commendations are merely discretionary mitigating factors and not mandatory grounds for mitigation; that the same type of wrongful work was repeated over a long period; and that, as there were no apparent defects in the disciplinary procedure, such as the convening of a personnel committee and the provision of an opportunity for the employee to explain himself, the level of discipline in the wage reduction disposition was appropriate. In addition, the panel held that the indemnity disposition does not directly concern the restoration of wages or the employment relationship and therefore does not fall within the scope of measures that may be challenged by an application for remedy for unfair dismissal to the Labor Relations Commission. Ⅳ. Practical Points (From the Employee’s Perspective) Employees working at financial institutions, particularly those engaged in bank credit and examination work, should recognize internal regulations and examination manuals not as mere “recommendations” but as core obligations, the violation of which may result in severe disciplinary measures. Where the same type of negligent examination or procedural violation is repeated, there is a high likelihood that even if dismissal is not imposed, severe disciplinary measures such as wage reduction or suspension will be found to be justified. It is therefore important to check each examination step against a checklist and to keep records. Furthermore, when the company retrospectively examines whether there was negligent examination after large‑scale losses have occurred, employees should systematically retain work‑related evidence such as emails, approval documents, and consultation notes so that they can explain the course of their review and the basis for their decisions. If disciplinary proceedings are initiated, it is advisable to work with a labor law expert to organize issues such as the existence of grounds for discipline, causation with the losses, and the measures the employee took, and to focus the dispute on whether the level of discipline is excessive. Ⅴ. Practical Points (From the Employer’s Perspective) Employers such as banks and other financial institutions should establish specific, documented examination standards and internal control procedures for key risk‑bearing work such as credit examination and limit increases, and put in place systems for regular training and evaluation. In cases where, as in this case, the employer proceeds with discipline after large‑scale losses have occurred, the clearer the pre‑existing rules and records of training and guidance, the greater the likelihood that the grounds for discipline and the level of discipline will be found legitimate. Although indemnity dispositions imposed separately from discipline are not themselves the direct subject of applications for remedy to the Labor Relations Commission, they may lead to civil litigation or other disputes. Accordingly, it is advisable to clearly set out in work rules and internal regulations the standards, calculation methods, and procedures for indemnity, and to provide sufficient explanation to employees. In addition to ensuring procedural fairness by convening a personnel committee and providing an opportunity for explanation, employers should maintain consistency in the level of discipline across similar cases to prevent allegations of abuse of discretionary power in disciplinary matters. 2. Matters Decided A. Case Overview and Procedural History This is a case in which the Labor Relations Commission held that an indemnity disposition does not fall within the scope of measures that may be challenged by an application for remedy, and that a wage reduction imposed for the employee’s neglect of duties in credit examination review and credit card limit increase work as a lead examiner was legitimate. 3. Gist of the Decision A. Summary of the Labor Relations Commission’s Reasoning A. Existence of Grounds for Discipline Failure to thoroughly review examination documents and negligent performance of related examination duties in connection with credit examination and credit card limit increase work was recognized as grounds for discipline. B. Appropriateness of the Level of Discipline (1) Officers and employees of banks are subject to a stricter duty of care as a good manager and a stricter duty to comply with internal controls, and where a breach of such duties results in non‑performing assets, the necessity and reasonableness of discipline is recognized to a higher degree; (2) As the lead examiner, the employee continuously and repeatedly neglected essential review items required in the credit examination process; (3) The employee’s conduct caused property losses to the bank amounting to KRW 4,651,000,000, significantly impairing soundness, and multiple wrongful acts were committed repeatedly over a long period; (4) Given the nature of credit business, it is a logically natural consequence to determine whether there was negligent examination ex post facto on the basis of cases in which non‑performing assets have actually materialized; (5) Commendations are discretionary mitigating factors and not mandatory grounds for mitigation, and the same type of wrongful work was repeated over a long period. In light of all these factors, the three‑month wage reduction was found to be appropriate in terms of its level. C. Legality of the Disciplinary Procedure There were no apparent procedural defects, as a personnel committee was convened and the employee was given an opportunity to explain himself. [See More Related Decisions] - ‘Disciplinary Severity (Participation in Services for Another Institution)’ Unfair Dismissal Decision - ‘Excessive Disciplinary Severity (Negligent Management and Supervision)’ Unfair Dismissal Decision - ‘Business Necessity (Reassignment of Cleaning Staff)’ Unfair Dismissal Decision [Tags] Unfair dismissal, excessive disciplinary severity (negligent credit examination), disciplinary dismissal, violation of company policy · non‑compliance with work instructions, 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 Labor Law Firm Law&’s “Unfair Dismissal Decisions” series. ※ You can view the previous article, “‘Implied Dismissal (Laptop Retrieval · Loss of Four Major Insurances)’ Unfair Dismissal Decision,” in a new window. ※ The list of decisions related to excessive disciplinary severity (negligent credit examination) can be viewed together at “List of Decisions Related to Excessive Disciplinary Severity (Negligent Credit Examination).” ※ Korean version of this case: Korean article