In Korean, the phrase for forming a relationship is “gwanggye-reul maetneunda”, which literally means “to tie a relationship”. In contrast, ending a relationship is expressed as “gwanggye-reul kkeuneunda”, or “to cut a relationship”.

This linguistic contrast – to cut rather than a more symmetrical term like “untie” – offers a glimpse into the emotional and social complexity surrounding the dissolution of relationships in Korean culture. While forming a bond is often harmonious and mutual, ending one can be abrupt, painful or even adversarial, hence the expression of “cutting” rather than “untying”. This idea carries over to employment relationships and, in particular, the concept of dismissal.


Legal grounds for dismissal

(1) Managerial necessity. South Korean labour law recognises two primary forms of dismissal. The first is dismissal for managerial reasons, governed by article 24 of the Labour Standards Act.

To dismiss an employee on this basis, an employer must demonstrate “urgent managerial necessity”. Procedural requirements include efforts to avoid dismissal (such as wage or hour adjustments), fair and reasonable selection criteria, and good-faith consultation with a majority employee representative or labour union.

Discriminatory practices, particularly on the basis of gender, are strictly prohibited in the act.

Case law interprets “urgent managerial necessity” narrowly. It applies only when the company is facing a severe crisis such as business closure, bankruptcy or liquidation that threatens its overall survival.

Moderate financial difficulties or department-specific restructuring generally do not meet this threshold. Objective, credible evidence must show that the company is unlikely to recover or improve its performance in the foreseeable future.

(2) Employee misconduct. The second category is disciplinary dismissal, under article 23 of the Labour Standards Act, which prohibits dismissal without “justifiable cause”. Courts define this as misconduct that renders continued employment unreasonable under prevailing social norms. Common examples include :

• Criminal conduct (e.g., assault, theft, sex crimes);
• Willful harm to the employer (e.g., embezzlement, breach of trust);
• Chronic absenteeism or unauthorised departures; and
• Fraudulent behaviour during recruitment (e.g. submitting false credentials).

(3) Poor performance. Poor performance may constitute justifiable cause, but only under stringent conditions:

• Internal rules or policies, such as Rules of Employment, must explicitly recognise poor performance as grounds for dismissal :
• Evaluation criteria must be objective and fairly applied;
• The employee’s performance must fall significantly below minimum expectations; and
• The employee must have been given a reasonable opportunity to improve, with little prospect of recovery.

While courts are gradually becoming more receptive to such cases, South Korean law remains far more restrictive than common law jurisdictions that permit “at will” termination.


Union protection

Dismissal on the grounds of union activity raises serious legal concerns. While misconduct such as property damage during union-related activities may warrant disciplinary action, such conduct must be clearly distinguishable from lawful union participation.

Under the South Korean Constitution and Trade Union and Labour Relations Adjustment Act, employees are guaranteed the rights to organise, bargain collectively and take collective action.

Any adverse employment action, including dismissal, taken solely in response to a lawful union activity constitutes unfair labour practice and may expose the employer and responsible individuals to criminal liability. Employers must be especially cautious to avoid any appearance of retaliation against union involvement.

Fixed-term employment

Under article 4 of the Act on the Protection of Fixed-Term and Part-Time Employees, the standard limit for fixed-term employment is two years. Beyond this, the employee is considered a regular, indefinite-term employee, unless the role falls within one of the statutory exceptions, such as elderly workers, professionals, or temporary replacements.

Employers must carefully assess whether a particular fixed-term arrangement qualifies as an exception. Extending a contract beyond two years without such qualification risks automatic conversion to regular employment, subject to all associated protections, including the requirement of just cause for dismissal.

Indirect, flexible arrangements

In response to the strict regulations on employee dismissal, many companies turn to more flexible employment structures such as outsourcing, freelancing and in-house subcontracting. Estimates suggest that one to three million workers are currently engaged under such alternative arrangements.

The labour law draws a strict distinction between sub-contracting and dispatch work:

• Sub-contracting involves outsourcing a specific task or result; and
• Dispatching involves the supply of manpower.

The Act on the Protection of Dispatched Workers limits dispatch work to certain roles and caps its duration at two years. If an arrangement is classified as illegal dispatch, the principal employer may face criminal penalties and be required to hire the worker directly.

Furthermore, if there is discriminatory treatment in working conditions, such as disparities in salary between sub-contracted workers and regular employees performing the same or substantially similar tasks, the employer may be held liable for the retroactive payment of the wage difference.

On the other hand, to maintain a legally valid sub-contracting relationship:

• The sub-contractor must be operationally independent, with its own workforce and management systems;
• Work must be assigned, supervised and evaluated by the sub-contractor, not the main contractor; and
• The main contractor may evaluate the outcomes of the sub-contracted work, but must not interfere with how the individual sub-contracted workers carry out their tasks.

In practice, sub-contracted workers often work side-by-side with regular employees, making strict separation difficult. Even indirect control such as giving instructions through internal communication tools, or real-time monitoring, may result in reclassification as an illegal dispatch under the labour law.


Freelancers, platform workers

Historically, freelancers included individuals like delivery drivers, insurance agents, golf course caddies and private tutors. But in recent years, the rise of the IT industry and platform economy has dramatically expanded freelance work into areas like web development, digital design and remote consulting.

A key legal issue is control and supervision. If a platform dictates work schedules, scope and payment, the freelancer may be reclassified as an employee. In a landmark 2024 Supreme Court decision, a ride-hailing platform driver was found to be an employee due to its control over his working hours, rules and compensation.

Legislative efforts are underway to extend full labour rights – including unionisation and collective bargaining – to platform workers.


Practical issues, strategies

Despite comparatively rigid labour regulations, employers have a variety of lawful options to navigate the employment relationship.

Probationary period. Employers may retain discretion by clearly stating that final employment is subject to a probationary period, typically up to three months. If properly implemented, this provides flexibility in early termination decisions.

Voluntary resignation. South Korean courts do not apply the constructive dismissal doctrine as broadly as many Western jurisdictions. If an employee formally resigns, even under subtle pressure, courts generally refrain from reclassifying the resignation as an unlawful dismissal. This provides companies with some latitude in offering voluntary resignation programmes.


Conclusion

For global companies operating in South Korea, compliance with local labour laws is not only a legal necessity, but also a practical imperative.

Encouragingly, access to information and legal support has become more accessible in recent years, with many law firms offering tailored services for foreign-invested businesses.

Crucially, building constructive and culturally informed labour management relationships is key. Understanding the values that underpin the employment culture – such as diligence, integrity and mutual respect – can help companies foster stability, trust and long-term success in this market.