[Case Information] This case is a decision that was concluded by upholding the first-instance ruling on the issue of “business necessity (closure of store managed by store manager).” Decision body: Central Labor Relations Commission, 2026BuHae207 ○ ○ ○ Application for Re‑examination of Remedy for Unfair Dismissal 2026-07-27 · Case result: First-instance decision upheld Key issue summary: (a) 1. Legal Implications Ⅰ. Case Overview This case arose in the course of successive closures of offline stores due to deteriorating business performance. A worker serving as a store manager was subjected to a personnel measure involving transfer and removal from a managerial position. The worker applied to the Labor Relations Commission for relief, claiming that this constituted an unfair personnel measure equivalent to unfair dismissal. The first-instance Labor Relations Commission found in favor of the employer, and although the worker sought re‑examination, the Central Labor Relations Commission (2026BuHae207) rendered a re‑examination decision upholding the first-instance ruling. Ⅱ. Summary of Issues The issue in this case is: “In circumstances where, due to business deterioration, stores are closed and the number of store manager positions is reduced, and where the employment contract contains a provision authorizing transfer including change of workplace, whether a personnel measure involving transfer and removal from a managerial position—accompanied by some disadvantages such as changes in commuting distance and reduction of position allowance—constitutes an abuse of managerial authority rising to the level of unfair dismissal.” Ⅲ. Summary of the Labor Relations Commission’s Reasoning The decision panel in this case found that the employer had included a provision in the employment contract authorizing transfer and reassignment; that, due to business deterioration, there were more store closures than new openings, resulting in an overall reduction in store manager positions; and that, as the store where the worker had been employed was in fact closed, a transfer to another workplace was objectively unavoidable. In light of these circumstances, the panel held that the business necessity of the transfer was established. The panel also took into account that many other workers had likewise been removed from managerial positions due to the employer’s business difficulties, making it difficult to view the measure as targeting a specific worker; that, after the transfer, the worker’s commuting distance was actually reduced, so that the worker did not suffer significant disadvantages in daily life; and that the position allowance was a wage component premised on holding a managerial position, and the amount of the reduction could not easily be regarded as clearly exceeding the range that must ordinarily be borne. Accordingly, the panel held that the transfer and removal from a managerial position did not constitute dismissal or disciplinary action prohibited under Article 23(1) of the Labor Standards Act, nor did it amount to an abuse of rights under the case law on transfer and reassignment. Rather, it fell within the scope of the employer’s legitimate exercise of its managerial prerogative, and the worker’s claim of unfair dismissal was not accepted. Ⅳ. Practical Points (From the Worker’s Perspective) From the worker’s standpoint, it should be noted that personnel measures such as transfer, reassignment, or removal from a managerial position do not always constitute unfair dismissal or redundancy dismissal. Business necessity and disadvantages in daily life must be assessed comprehensively. In particular, where the employment contract or work rules contain grounds for transfer or reassignment, and where similar measures have been taken against multiple employees in the context of company‑wide restructuring and store closures, it will be difficult to have unfairness recognized by the Labor Relations Commission based solely on a reduction in position allowance. If you seek relief in a similar situation, it is important to carefully organize specific facts such as whether you alone were selectively chosen as an unfavorable target for transfer; whether the disadvantages in daily life (commuting distance, health, family care, etc.) clearly exceed the level ordinarily to be borne; and whether there were any discriminatory or retaliatory motives in the personnel process. Ⅴ. Practical Points (From the Employer’s Perspective) From the employer’s perspective, for transfer, reassignment, or change of position to be recognized as a legitimate exercise of managerial prerogative, first, the objective business necessity (store closure, organizational restructuring, need for workforce redeployment, etc.) should be clearly documented with written materials and figures. Second, criteria for selecting employees and the actual application thereof should be managed consistently so that it is apparent that no specific worker was singled out. Third, it is advisable to consider and document supplementary measures to minimize disadvantages in the worker’s daily life, such as allowing some choice of workplace, providing commuting support, or offering job training. Doing so will be of great assistance in having the legitimacy of the measures recognized by the Labor Relations Commission. Ultimately, to reduce disputes over unfair dismissal, the key is to place the necessity and reasonableness of personnel measures in a state where they can be clearly explained. (ⓒ2026 copyright. Labor Attorney Youngseop Moon, Labor Law Firm Law&) 2. Matters Decided (a) Case Overview and Procedural History (a) Existence of Business Necessity In light of the facts that the employment contract contained a provision authorizing transfer; that, due to business deterioration, there were more offline stores closing than newly opening, so that the number of store manager positions naturally decreased; and that, as the store where the worker had been employed was closed, transfer to another workplace was unavoidable, the Commission determined that business necessity for the transfer existed. (b) Existence of Disadvantages in Daily Life Many other workers had also been removed from managerial positions due to the employer’s business difficulties; as a result of the transfer, the worker’s commuting distance was actually reduced; and the position allowance was a wage paid depending on whether a managerial position was held, and the amount of the allowance was not so large as to be deemed clearly beyond the range ordinarily to be borne… 3. Gist of the Decision (a) Summary of the Labor Relations Commission’s Reasoning (a) Existence of Business Necessity In light of the facts that the employment contract contained a provision authorizing transfer; that, due to business deterioration, there were more offline stores closing than newly opening, so that the number of store manager positions naturally decreased; and that, as the store where the worker had been employed was closed, transfer to another workplace was unavoidable, the Commission determined that business necessity for the transfer existed. (b) Existence of Disadvantages in Daily Life Many other workers had also been removed from managerial positions due to the employer’s business difficulties; as a result of the transfer, the worker’s commuting distance was actually reduced; and the position allowance was a wage paid depending on whether a managerial position was held, and the amount of the allowance was not so large as to be deemed clearly beyond the range ordinarily to be borne… / [See More Related Decisions] - “Unfair Dismissal Decision on ‘Failure to Meet Requirements for Redundancy Dismissal (Workout Company)’” - “Unfair Dismissal Decision on ‘Expression of Intention to Resign (Resignation Remark Made by Telephone Call)’” - “Unfair Dismissal Decision on ‘Dismissal of Application (Non‑appearance at Hearing)’” – Date of decision: – Case number: Dismissal of application [Tags] Unfair dismissal, business necessity (closure of store managed by store manager), personnel order·transfer, performance evaluation·poor performance, 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&. ※ The previous article, “Unfair Dismissal Decision on ‘Absence of Employer Status (Pre‑offer Stage)’,” can be viewed in a new window. ※ The list of decisions related to business necessity (closure of store managed by store manager) can be viewed together in the “List of Decisions Related to Business Necessity (Closure of Store Managed by Store Manager).” ※ Korean version of this case: Korean article