Most Read Contributor in South Korea, February 2017
In July 2016, the Seoul Administrative Court accepted the Labor
Relations Commission's determination that the dismissal of an
employee who had continuously shown poor performance was justified.
See Case No. 2015Guhap12830 (Seoul Admin. Ct. July 14,
Since 2014, the manufacturing-company defendant had been
implementing what it called its "Capacity Advancement
Process," a kind of performance-improvement plan for
underperforming employees. The employee plaintiff was subjected to
the Capacity Advancement Process in 2014 because the employee
received the lowest performance grade for three consecutive years
from 2011 to 2013. However, the employee's performance did not
improve even after completing the Capacity Advancement Process, and
the employee was placed in the Capacity Advancement Process for a
second time in the same year.
In 2014, this employee received the lowest performance rating
again. The company then concluded that the employee was incompetent
to continue in his/her position. And the company placed the
employee on standby for transfer by removing the employee's
assigned responsibilities. Eventually, the company dismissed the
employee citing its Rules of Employment, which provide that an
employee can be dismissed "in the event that one's service
record or job performance is noticeably poor."
The employee then petitioned the Seoul Regional Labor Relations
Commission to void the dismissal as unjust, but the claim was
dismissed. The employee then filed an appeal to the Central Labor
Relations Commission, but the appeal was likewise dismissed. The
employee then filed a lawsuit in the Seoul Administrative Court
seeking to rescind the Commission's decision.
The court ruled that there was no evidence demonstrating that
the defendant company's evaluation was arbitrary or unfair,
considering that the employee plaintiff (1) received the lowest
performance rating for four consecutive years; (2) did not display
any willingness to improve and instead complained about the
assignments given or worked on something other than his/her
assignments despite poor job performance; and (3) was criticized by
superiors over a lack of job capacity, creativity, and ability to
The genuine purpose of the Capacity Advancement Process also
became an issue. The legality of performance-management measures
must be assessed in detail case by case, and the purpose and motive
behind a performance-management program for underperforming
employees may be disputed based on various factors, such as the
process by which the program was created, the reasons for
implementation, the results of implementation, the rate of
participants being found suitable to return to their original post,
and the actual training provided in the program.
In this case, the court stated that the purpose of the process
was legitimate because (1) the process was introduced based on a
considerable amount of discussion and preparation; and (2) more
than 50% of those who completed the process successfully returned
to the company's workforce.
However, employers should understand that the legitimacy of such
programs depends on whether they help underperforming employees to
improve their work skills and return to their positions in the
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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