In a case involving the legitimacy of a dismissal for poor work performance, the Supreme Court of Korea rendered a favorable decision for the employer.  In this regard, we provide below a summary of the case (Supreme Court Decision No. 2018Da253680, rendered on February 25, 2021).

Based on the results of annual personnel performance evaluations conducted over a period of three years, the defendant selected a certain range (the bottom 2%) of poor performers and conducted job reassignment training for approximately ten months, and based on the results of such training, the plaintiffs were reassigned to different departments.  Notwithstanding such efforts by the employer, the performance of the plaintiffs did not improve in their new departments, receiving the lowest personnel evaluation.  Given such circumstances, the defendant dismissed the plaintiffs on the grounds that they were unable to perform their duties due to their markedly poor work performance or ability.

Thereafter, the above plaintiffs filed a wrongful termination lawsuit against the defendant, alleging that their dismissal for poor performance was unfair under the Labor Standards Act (the “LSA”).  The District Court ruled in favor of the employer, finding that the dismissal was reasonable and fair and upon appeal by the plaintiffs, the High Court affirmed the District Court’s decision.  The plaintiffs then appealed to the Supreme Court and after three years of litigation, the Supreme Court eventually dismissed the appeal in its entirety, recognizing that a “just cause” under the LSA was met and it would therefore be difficult for the employer to maintain the employment of the plaintiffs.  The primary grounds for the Supreme Court’s decision included the following: (i) the job reassignment training provided by the defendant cannot be viewed as an attempt to encroach upon the LSA; (ii) the defendant selected poor performers for termination based on the results of a fair and objective personnel evaluation; and (iii) the defendant demonstrated best efforts to improve the work performance of the plaintiffs, and whether or not they actually improved as a result of the defendant’s efforts.

Given the foregoing, this decision is significant in that it provides a detailed overview of the criteria and grounds for “just cause” under Article 23 (1) of the LSA in the event of dismissal for poor performance at work.