[Case Information] This case is a decision in which the employer prevailed (application dismissed) on the issue of “ordinary dismissal (conversion of an insolvent financial institution to a bridge insurer).” Decision Body: Seoul Regional Labor Relations Commission 2026BuHae1918 ○ ○ ○ Application for Remedy for Unfair Dismissal 2026-08-05 · Case result: Dismissed Key Issue Summary: a. 1. Legal Implications Ⅰ. Case Overview This case concerns an application for remedy for unfair dismissal filed after an insurance company designated as an insolvent financial institution was subjected to a “decision on transfer of contracts and suspension of business” by the Financial Services Commission. Pursuant to an agreement with the Korea Deposit Insurance Corporation and the labor union, only part of the workforce was transferred and hired by a bridge insurer, and the employment relationships with the remaining employees were terminated. The employee applied to the Labor Relations Commission for relief, arguing that the termination of his/her employment relationship in substance constituted a redundancy dismissal (collective dismissal for managerial reasons), and that, because the statutory requirements for such dismissal had not been met, the dismissal was unfair. Ⅱ. Issues The issue in this case is whether the employer’s measure—terminating the employment relationships of most existing employees while transferring contracts to a bridge insurer after the insurance company was designated as an insolvent financial institution—constitutes (i) a redundancy dismissal premised on the continued existence of the company, or (ii) an ordinary dismissal (ordinary termination of employment) accompanying business closure, and further, whether such measure was lawful. Ⅲ. Summary of the Labor Relations Commission’s Findings The panel in this case noted that the employer had been designated as an insolvent financial institution and, in consultation with the Korea Deposit Insurance Corporation and the company’s labor union, agreed that only some employees would be hired by the bridge insurer while the employment relationships with the remaining employees would be terminated; that, pursuant to the Financial Services Commission’s “decision on transfer of contracts and suspension of business,” all insurance contracts were transferred to the bridge insurer; and that all employees, except for one person other than the claimant, left the company in the form of voluntary resignation. In light of these circumstances, the panel held that the dismissal in this case did not constitute a redundancy dismissal adjusting headcount on the premise that the company would continue to exist, but rather amounted to an ordinary dismissal accompanying de facto business closure. Accordingly, instead of strictly applying the rigorous standards applicable to redundancy dismissals—such as “urgent managerial necessity, efforts to avoid dismissal, and reasonable and fair selection criteria”—the panel took into account the special nature of the resolution procedures for financial institutions, including restructuring measures implemented under the supervision of the financial authorities for depositor protection, the process of reaching agreement with the Korea Deposit Insurance Corporation and the labor union, and the uniform handling of all employees as voluntary resignations. On this basis, the employee’s claim of unfair dismissal was not accepted. Ⅳ. Practical Points (From the Employee’s Perspective) From the employee’s perspective, it is important to recognize that the applicable legal arguments differ significantly depending on whether the termination of employment constitutes a “redundancy dismissal” or an “ordinary dismissal due to business closure.” In particular, in restructuring cases involving insolvent financial institutions or public institutions, where supervisory authorities and the Korea Deposit Insurance Corporation are involved, employees should, together with an expert, comprehensively review the continued existence of the overall business, how the entire workforce is handled, and the content of any agreements with the labor union, and then consider whether they can assert a violation of the requirements for redundancy dismissal. Ⅴ. Practical Points (From the Employer’s (Company’s) Perspective) From the employer’s side, when restructuring measures such as designation as an insolvent financial institution and decisions on transfer of contracts and suspension of business are underway, it is crucial to document clearly the procedures for reaching agreement with the labor union, the criteria for transferring employees to a bridge insurer, and the methods and timing of voluntary resignations and dismissals. Employers should also distinguish for themselves whether the situation constitutes “business closure,” in which the continued existence of the company is practically impossible, or a “redundancy dismissal” situation involving downsizing of only certain divisions, and, accordingly, ensure that the dismissal procedures and requirements for lawfulness are satisfied, with advice from experts such as Labor Law Firm Law&. In restructuring and redundancy dismissal cases involving financial institutions of this kind, practitioners should pay particular attention to the fact that the determination of unfair dismissal is not based solely on the formal appearance of voluntary resignation or mutual termination, but rather on the substantive continued existence of the employer’s business and the overall structure of workforce reduction. 2. Matters Decided a. Case Overview and Procedural History a. Whether the dismissal constitutes an ordinary dismissal (1) The company was designated as an insolvent financial institution, and the Korea Deposit Insurance Corporation and the company’s labor union, etc. agreed that only some of the existing employees would be hired by the bridge insurer, while the employment relationships with the remaining employees would be terminated; (2) pursuant to the Financial Services Commission’s “decision on transfer of contracts and suspension of business,” all insurance contracts were transferred to the bridge insurer, and all employees except for one person other than the claimant resigned voluntarily. In light of these circumstances, the dismissal constitutes an ordinary dismissal due to business closure, not a redundancy dismissal for managerial reasons premised on the continued existence of the company. b. Whether item a. is lawful (1) The employer was designated as an insolvent financial institution and received from the Financial Services Commission … 3. Gist of the Decision a. Summary of the Labor Relations Commission’s Findings a. Whether the dismissal constitutes an ordinary dismissal (1) The company was designated as an insolvent financial institution, and the Korea Deposit Insurance Corporation and the company’s labor union, etc. agreed that only some of the existing employees would be hired by the bridge insurer, while the employment relationships with the remaining employees would be terminated; (2) pursuant to the Financial Services Commission’s “decision on transfer of contracts and suspension of business,” all insurance contracts were transferred to the bridge insurer, and all employees except for one person other than the claimant resigned voluntarily. In light of these circumstances, the dismissal constitutes an ordinary dismissal due to business closure, not a redundancy dismissal for managerial reasons premised on the continued existence of the company. b. Whether item a. is lawful (1) The employer was designated as an insolvent financial institution and received from the Financial Services Commission … / [See More Related Decisions] - “Unfair Dismissal Decision Concerning ‘Failure to Satisfy Requirements for Redundancy Dismissal (Workout Company)’” - “Unfair Dismissal Decision Concerning ‘Non-Formation of Hiring Commitment (Absence of Offer Letter)’” – Date of Decision: – Case Result: First-instance decision upheld - “Unfair Dismissal Decision Concerning ‘Expression of Intent to Resign (Resignation Remark in Telephone Call)’” [Tags] Unfair dismissal, ordinary dismissal (conversion of an insolvent financial institution to a bridge insurer), restructuring, others, 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, “Unfair Dismissal Decision Concerning ‘Limitation on Legal Application (Fewer Than Five Regular Employees)’,” in a new window. ※ The list of decisions related to ordinary dismissal (conversion of an insolvent financial institution to a bridge insurer) can be viewed together on the “List of Decisions Related to Ordinary Dismissal (Conversion of an Insolvent Financial Institution to a Bridge Insurer)” page. ※ Korean version of this case: Korean article