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The Supreme Court Recognizes the Legitimacy of the Dismissal of Employees Hired by Unlawful Means


In this case, public corporation A (referred to as “Company A”) terminated the employees of its affiliate, public corporation B (referred to as “Company B”), who were hired via corrupt practices.  In September 2022, the Supreme Court confirmed the lower court’s decision and held that the dismissal was reasonable.

Company B (which was Company A’s affiliate) was mired in social controversy as local media reported its corrupt practices in the hiring process.  Prior to this, Company B was dissolved in July 2018 after transferring all businesses to Company A.  In connection thereto, Company A hired former employees of Company B as experienced employees, but some of the employees were investigated by the police on charges of being hired in a fraudulent manner by Company B.  According to Company A’s personnel regulations, “An employee confirmed to have been hired by fraudulent means” can be discharged, and accordingly, Company A implemented its discharge authority on the relevant employees, including the plaintiffs.

Chairman C, who had worked for Company B and had employment authority, illegitimately hired some employees, including the plaintiffs, for contract-based and permanent employment positions by putting pressure on interviewers to give these candidates high scores on their interview evaluation, upon requests by his acquaintances.  However, Chairman C passed away during the related police investigation process, and thus the police investigation was limited.  Considering these circumstances, the first trial court ruled that Company A’s discharge measure was not reasonable, taking into account that the specifics of the illicit methods of hiring the plaintiffs were not substantiated.

Kim & Chang’s Labor & Employment Practice was retained by the client at the appellate trial level, and successfully argued and proved that Company A’s discharge measure was indeed reasonable, by filing several requests for the production of documents (utilizing an application form explaining in detail the grounds instead of using the general request), and by closely analyzing the legal principles and relevant facts set out in Supreme Court and lower court precedents in order to establish persuasive arguments.

As such, based on the statements provided in the investigation records of the related criminal case, which were obtained through the litigation performance team’s document forwarding requests, the Seoul High Court acknowledged the fact that the plaintiffs obtained employment with Company B through illicit means, and Company A’s discharge by authority was reasonable.  Thus, the Supreme Court finalized this lower court decision as mentioned above.

This case was not only significant for Company A from a litigation risk of exposure perspective but also for its management-labor relations as well since the labor union of Company A constantly maintained the following message: “We refuse those illicitly hired employees of Company B from joining the union.”

In addition, as fairness in the employment practices of public institutions has recently become a social issue, considering that lower courts have handed down inconsistent decisions with other cases involving employment corruption, the Supreme Court’s decision in this case is meaningful as a leading court precedent and an example of preserving justice on the grounds that “discharge by authority of illicitly hired employees should be deemed reasonable.”