Layoffs for business reasons in Korea run on two deadlines: 50 and 30 days

This guide is for employers in Korea, including foreign-invested companies, and their HR teams who are considering dismissals for business reasons (경영상 이유에 의한 해고), often called redundancy or layoffs. Two deadlines run at the same time. You must notify and consult the employee representative at least 50 days before the planned dismissal date, and if the cut is large enough, you must report to the Ministry of Employment and Labor 30 days before the first dismissal.

Two deadlines that overlap

In redundancy dismissals, the first thing to fail is usually not the legal requirements but the schedule. Article 24(3) of the Labor Standards Act (근로기준법) requires you to notify the employee representative (근로자대표) at least 50 days before the intended dismissal date and to consult in good faith. Article 10 of the Act's Enforcement Decree (시행령) requires employers above a certain size to report to the Minister of Employment and Labor (고용노동부장관) at least 30 days before the first intended dismissal. The two deadlines run in parallel.

The four requirements

Article 24(1) to (3) set the requirements. Article 24(5) says that a dismissal meeting them is deemed a dismissal with just cause under Article 23(1).

• There must be an urgent managerial necessity (paragraph (1)).
• A transfer, takeover or merger of the business to prevent its financial deterioration is deemed an urgent managerial necessity (second sentence of paragraph (1)).
• The employer must make every effort to avoid dismissals (paragraph (2)).
• The employer must set reasonable and fair dismissal criteria and select the people to be dismissed by those criteria (paragraph (2)).
• There must be no discrimination on the basis of sex (second sentence of paragraph (2)).
• The employer must notify the employee representative at least 50 days in advance and consult in good faith (paragraph (3)).

The employee representative is the labor union organized by a majority of the workers at the business or workplace, if there is one. If there is not, it is the person who represents a majority of the workers. A company without a majority union must start by electing that representative. The election also falls inside the 50 days, so if you overlook it, the consultation period shrinks by that much.

When you must report to the labor ministry

Article 10(1) of the Enforcement Decree requires a report at least 30 days before the first intended dismissal if, within one month, you plan to dismiss the following numbers:

The test is the cumulative total within one month. Even if you do not dismiss 10 people at once and split them into batches, you must report if the total within the same month reaches the threshold.

Under Article 10(2), the report must include four items:

• The reasons for the dismissals.
• The number of people to be dismissed.
• What was consulted with the employee representative.
• The dismissal schedule.

The third item is the real control. A company that only went through the motions of consultation cannot fill in this part of the report.

The 50 days and 30 days on one timeline

• D-50: notify the employee representative and start consultation. Without a majority union, electing the representative comes first.
• D-50 to D-31: consult on efforts to avoid dismissals and on the selection criteria.
• D-30: report to the Minister of Employment and Labor if the size thresholds are met.
• D-30: give each employee advance notice of dismissal (Article 26).
• Dismissal day: give written notice of the reason and the timing of the dismissal (Article 27).

Article 26 requires advance notice at least 30 days before dismissal, or payment of at least 30 days' ordinary wages (통상임금), and states that this includes dismissals for business reasons. There are three exceptions:

1. The worker has worked continuously for less than 3 months.
2. Continuing the business has become impossible because of a natural disaster, a calamity or another unavoidable reason.
3. The worker intentionally caused serious disruption to the business or property damage, and the case falls under the reasons set by an Ordinance of the Ministry of Employment and Labor.

Article 27 is stricter. You must give the reason and the timing of the dismissal in writing, and paragraph (2) says a dismissal takes effect only when notified in writing. A verbal notice has no effect in itself. Under paragraph (3), however, if you gave the Article 26 advance notice in writing and stated the reason and timing in it, you are deemed to have given the Article 27 notice. One written notice can satisfy both articles.

Counting back 50 days: an example

Take a company that wants to carry out dismissals at the end of October. Counting back the 50 days under Article 24(3), the notice to the employee representative must have gone out by early September.

Without a majority union, the representative must be elected before that, so the real start is mid-August. Announcing the election, taking candidates, voting and announcing the result take about two weeks. If you skip this and treat the worker members of an existing labor-management council (노사협의회) as the employee representative, the eligibility of your consultation partner itself can be challenged.

If your company is large enough to report, the report must go out at the end of September, and the form asks what was consulted with the employee representative. If there was no real consultation after the notice in early September, you cannot fill in that part. The 50 days are for consultation, not for waiting after the notice.

If you go ahead without meeting the requirements, the case turns into an unfair dismissal dispute. For a related separation topic, see the separation certificate after a recommended resignation.

Checklist

• Count the regular workforce and fix the report threshold that applies to you.
• Calculate on a one-month cumulative basis, so splitting the dismissals cannot get around the threshold.
• Check whether there is a majority union. If not, run the employee representative election first.
• Keep records of the election process.
• Document your efforts to avoid dismissals as you go.
• Put the selection criteria into numbers and check them for sex neutrality.
• Keep minutes of each consultation round: date and time, attendees and what was discussed.
• Build real content that you can write in the consultation section of the report.
• Decide whether to combine the advance notice and the written notice in one document or keep them separate.
• State both the reason and the timing of the dismissal in writing.
• Check individually whether staff with less than 3 months of service fall outside the advance notice rule.
• Keep proof that each employee received the notice, in case of a dispute after the dismissal.