Government Guidelines for Ordinary Dismissal Due to Poor Performance

저성과자에 대한 통상해고 지침

1. Possession of insufficient skills for the job and poor work performance is considered reasons for ordinary dismissal. In order for such dismissals to be justifiable, certain conditions must be met.

Remarkably insufficient skills for a job and poor work performance can be reasons for ordinary dismissal despite the lack of reason for disciplinary action, since the purpose for a labor contract is for an employee to offer work for wages and for the employer to pay wages for that work. A remarkable failure to fulfill the obligation to provide work can become a reason for terminating the employment contract. However, as Article 23 of the Labor Standards Act restricts such dismissals, there should be a justifiable reason why poor performance or a failure to provide the contractual work is serious enough to dismiss the employee. The court[2] stipulates that “justifiable reasons” for a dismissal due to poor work performance or a failure to provide the contractual work mean that the employee’s work performance is too poor to maintain employment relations according to socially accepted understanding. Such situations shall be judged on a case-by-case basis. Additionally, the Labor Relations Commission has also decided that an employer’s dismissal of an employee for failure to provide contractual work serious enough to make it impossible to maintain employment relations shall be deemed ordinary, not disciplinary, dismissal.

1. Disciplinary vs. ordinary dismissal

When an employer creates rules of employment that formulate service regulations and working conditions for the workplace (in cases where there is a labor union, the collective agreement can replace the ROE), disputes between the employees and the employer can be reduced to a minimum. Disciplinary dismissal not only financially disadvantages the dismissed employees, but also dishonors them and creates a critical disadvantage when seeking a new job. It is therefore desirable that dismissals for “remarkably poor work performance” are deemed grounds for ordinary dismissal, not disciplinary dismissal.

1. Objective and fair evaluation

(1) Basic principle

As evaluation of an employee’s job skills, work performance, etc., is one of the employer’s managerial rights and can be considered as up to the employer’s discretion. Even though this evaluation has an element of unilateral determination by the employer, it is not determined as an arbitrary judgment or an abuse of rights. However, in cases where such evaluation is used to avoid the legal conditions for dismissal or to urge an employee to accept early retirement, violates the Constitution or the law, or if it remarkably violates objective and equitable criteria, any dismissal that follows may be determined as illegal or subject to legal judgment.

(2) Suitability and objectivity of evaluation criteria (Considerations when designing an evaluation system)

Evaluations should be given based on the employee’s job skills and work performance. In cases where the employer’s individual feelings or a subjective judgment are involved regardless of the working process or results, such as “his/her working process is inefficient”, such evaluation will not be accepted as reasonable. Aspects subject to evaluation shall be itemized for proper evaluation of an employee’s job performance. For example, when evaluating sales positions, if an employer puts more weight on 360 degree feedback from an employee’s co-workers than on objective sales results (customer management), this will not be admitted as reasonable. Items for evaluation should be subdivided so as to provide as much detail as possible, and evaluation results divided into diversified levels to minimize subjectivity or arbitrary ratings. An evaluation system will be seen as more objective if it is composed of multiple levels (e.g. 5 levels) rather than a personal rating without different levels, and the evaluation is based on detailed items. Designing an evaluation in accordance with input from employees through the labor-management council, the labor union, or the employee representative, will help to increase objectivity and rationality.

(3) Validity of the evaluation method

① Individual and group evaluations (evaluation unit)

When a group evaluation is converted into an individual evaluation, the close relationship between individual and group work performance results should be reflected.

② Evaluations with and without ratings (evaluation factors)

Evaluations which can describe an employee’s job skills and performance as an objective number rating can easily be considered rational. However, if such an evaluation includes subjective, difficult-to-measure parts such as level of adaptation to the business organization, the evaluation criteria will not likely be determined as unfair.

③ Relative and absolute evaluations (evaluating method)

Generally, absolute evaluations are easily accepted as rational, while relative evaluations are not, as a certain number of personnel must be distributed to the lowest rating. Provided, ① in cases where a relative evaluation is improved through the use of absolute evaluation factors so that it does not relegate a certain number of personnel to the lowest rating in an arbitrary manner, there is a high possibility that such an evaluation will be determined as rational. ② In cases where a relative evaluation has introduced a 360 degree feedback evaluation system for a certain higher employment position, then gradually extended its application to other positions, and continuously applied its criteria and procedures based upon rationally-designed evaluation content and items, such an evaluation can be seen as rational. The employer shall not determine that an employee is unqualified in terms of job skills or performance simply because that employee has received the lowest rating in a relative evaluation, but shall consider other factors in overall justification of a dismissal.

(4) Reliability in evaluations

① Selection of evaluator(s)

In principle, when the evaluator is the same person evaluating all target employees, this increases consistency and fairness. Provided, in cases where it is difficult to use the same person as an evaluator due to company size and number of employees, some exceptions can be admitted. On the other hand, validity of difficult-to-measure items can increase when multiple evaluators are used through a 360 degree feedback evaluation or an evaluation committee, or when the evaluation is designed with several stages. In cases where multiple evaluators gave the same person low ratings, this evaluation can be regarded as highly reliable.

② Compliance with evaluation criteria and procedures

Unless the previously-determined evaluation criteria and procedures are implemented equitably, evaluation results will not be seen as fair. Even if, for example, there are three stages in the evaluation, if a particular stage (directors’ evaluation) is omitted, the personnel evaluation will be deemed in violation of personnel evaluation regulations for its lack of objectivity and fairness.

③ Notification of evaluation results, and the appeal process

If there is a system for target employees to appeal evaluations after notification of the results, this will increase the objectivity and fairness of the evaluation system.

(5) Selection of target employees for mandatory training, redeployment, etc.

When using evaluations to select target employees for mandatory training or redeployment, the necessity for and possibility of improving job skills should be estimated objectively: such training/deployment can be accepted as necessary if an employee’s evaluation has revealed poor job skills for a sustained period of time in several evaluations and mistakes have been similar in nature. On the other hand, if an employer dismisses an employee due to incidental mistakes, this will not be deemed as justifiable.

In cases where an employer requires that a certain number of personnel be allocated to the lowest level through a relative evaluation (for the purpose of a continuous system of dismissals), employees who simply receive the lowest rating will not be judged as remarkably deficient in their job skills. On the other hand, the appropriate ratio of employees who must receive training or who must be redeployed by means of personnel evaluations shall be decided by considering the overall situation such as job characteristics, the company’s personnel management policies, etc.

It is important that employers prepare reasonable exceptions when selecting target employees for training or redeployment. In cases where such selection occurs, it is necessary to consider items that decrease the ability to carry out one’s job and perform well such as internal and external factors (e.g.: external assignments, deterioration of business environment, etc.), and personal conditions such as disease, accident, etc.), in order to increase their acceptability. In particular, even for those with a lack of job skills and low performance, it is necessary to settle rules for reasonable exemptions in consideration of the characteristics of the evaluation system and the business environment. Such examples include: ① Those who have received a high rating in work-related achievement and job skills in a recent evaluation; ② Those who were recently hired; ③ Those who were assigned to a new organization or other department within one year previous to the evaluation; ④ Those whose jobs have changed less than one year previous to the evaluation; ⑤ Those who have returned from a full-time union officer’s position less than one year previous to the evaluation; and ⑥ Those who have returned from maternity leave or child care leave less than one year previous to the evaluation.

1. Providing training opportunities to improve job skills

(1) Efforts to improve job skills

The employer should choose the target employees for a skill-development program through objective and fair evaluations, and then first provide various opportunities to improve work attitude, work skills, and job performance before deciding to dismiss them.

(2) Method and quality of training opportunities

The program to improve job skills should not be simply for formalities, but be practically designed to improve employee job skills.

1. Efforts to avoid redeployment

(1) Providing new opportunities

In cases where those with poorer job skills and poor job performance cannot match their abilities with their current job, new opportunity through redeployment is desirable in terms of restricting dismissal and protecting their employment. To validate the redeployment, it should be used as an instrument not to push target employees to resign, but to satisfy the company’s need to improve organizational efficiency through assigning the right person to the right job.

(2) Redeployment to improve job skills

The company shall provide target employees with the conditions to be able to practically improve their job skills, so that such opportunities are not simple formalities but result in actual improvement.

1. Selection of those subject to dismissal

Justification for dismissal due to poor employee job performance shall be determined from the viewpoint of whether the employer can expect, in terms of socially-accepted norms, to maintain the employment in light of the poor performance.

(1) Possibility of improving job skills and/or performance

If the employer confirms the difficulty to expect continuous employment due to an employee’s poor job skills, this means that the employer cannot find any improvement after providing the employee with several opportunities for improvement through such methods as training, redeployment, etc. Even though the employer has provided training opportunities, if the target employee refuses to attend the training sessions, received relatively lower training grades than fair and objective average scores, and shows no improvement after training and returning to work, it may be judged that the employer cannot expect any further employment relations. In addition, even after an employee has received several penalties such as wage reductions and suspension from work due to poor job performance, if the employee receives the lowest consecutive ratings again, this can be regarded as he/she is a target employee for dismissal due to poor job performance. In cases where the employee could not improve job skills or performance after redeployment, this person may also be a legitimate target for dismissal.

(2) Considerable burden to work

In cases where the target employee has caused considerable burden to the company’s business due to remarkable deficiency of job performance, and has sustained this poor performance for a considerable period without any improvement expected, it can legally be estimated that the employee has caused considerable burdens to work. This shall be estimated by considering overall influences affecting business results, sales, etc.

[1] On December 30, 2015, the Minister of Employment and Labor, Ki-kwon Lee announced the “Government Guidelines for Ordinary Dismissal Due to Poor Performance”. These guidelines will be the main guide to judging criteria for ordinary dismissal.

[2] Seoul High Court ruling on October 25, 2006, 2006nu5730, which ruling was finally completed at the Supreme Court ruling on February 9 2007, 2007doo18287.