Labor Attorney Bongsoo Jung / KangNam Labor Law Firm  |

I. Case Overview

One day, an accounting manager responsible for the company’s accounting work was informed that he could no longer remain employed. The reason given by the company was not an accounting error identifiable in the figures or a delay in closing the accounts. Rather, it was his inadequate teamwork and communication with colleagues and his failure to improve through the procedures introduced by the company. The employee believed that he had performed his duties diligently, but the company assessed him differently. The dispute ultimately raised the question: “Can an employee be dismissed solely on the basis of a poor performance evaluation and failure to comply with an improvement plan?”

The applicant joined Company T as an accounting manager in October 2016. In the evaluation of his 2017 performance, conducted in early 2018, he was rated below expectations in teamwork and communication. In April 2018, the company repeatedly asked him to submit a Performance Improvement Plan (PIP), but the applicant disagreed with the evaluation itself and did not submit a PIP. In May, the company initiated a Corrective Action Plan (CAP) and conducted three evaluations at intervals of approximately 30 days.

The department head concluded that there had been no improvement and that the possibility of future improvement was low. On September 18, 2018, the company dismissed the applicant as a disciplinary measure. The employee applied to the Labor Relations Commission for relief, arguing that it was unfair to lose his job on the basis of a subjective assessment of interpersonal relationships and a short-term improvement procedure. The following discussion examines the legal issues based on the parties’ respective arguments and the outcome of their settlement.

 

II. Company T’s Arguments

1. Grounds for Dismissal: Repeated Workplace Conflict and Failure to Comply with Requests for Improvement

From the company’s perspective, this was not simply a matter of one performance evaluation. The department head claimed that, during 2017, he had identified problems with the applicant’s expressions of emotion and conflicts with other team members and had repeatedly informed him that teamwork was an important evaluation criterion. After the 2017 evaluation, the company requested that he submit a PIP on four occasions, but he refused. According to the company, his attitude did not change even during the CAP, which was offered as a final opportunity for improvement.

2. The Company’s Position on the Justification for Dismissal

The company asserted that the applicant had harmed the departmental atmosphere through inappropriate remarks and conduct toward supervisors or colleagues and excessive expressions of anger, and that there were also problems with his work attitude. It considered disciplinary dismissal under its Rules of Employment unavoidable because, despite verbal warnings, written warnings, the PIP, and the CAP, the applicant neither cooperated nor improved.

 

III. The Employee’s Arguments

1. The Argument That This Was a “Relationship Problem,” Not a “Failure in Job Performance”

The applicant presented an entirely different account. He maintained that, during approximately two years of employment, he had neither been absent without authorization nor committed a serious violation of company rules. In 2017, he had worked substantial overtime, on holidays, and at night in the finance department, and had met accounting closing and other work deadlines. He also asserted that he had cooperated smoothly with other departments while handling accounting, tax, and customs clearance work. Accordingly, he argued that there was insufficient evidence that he lacked the ability to perform his duties and that the company had attributed the conflict to his individual personality or attitude without examining its causes together with the department head, who was responsible for managing the team.

To the employee, the request to submit a PIP appeared less like an opportunity for improvement than a demand that he accept an evaluation he considered unfair. The company, by contrast, regarded his refusal as evidence of a lack of willingness to improve. The two parties thus assigned different meanings to the same conduct. When an improvement plan is implemented without resolving a dispute over the credibility of the evaluation, the PIP or CAP itself may become a new source of conflict.

2. Issues Concerning the Proportionality and Procedure of Dismissal

The employee argued that, even if there had been some problems with teamwork and communication, these were not grounds serious enough to terminate the employment relationship immediately, and that the company could have considered other measures, including training, mediation, reassignment, and warnings. He also maintained that the results of a short-term CAP did not necessarily establish that improvement would be impossible in the future. Although the company described the measure as disciplinary dismissal, ordinary dismissal based on insufficient work ability and disciplinary dismissal based on specific misconduct are assessed from different legal perspectives. It is therefore necessary to distinguish the actual grounds stated in the dismissal notice and the relevant provisions of the Rules of Employment.

 

IV. Relevant Legal Principles and Court Decisions

1. Starting Point for the Assessment: Fair Evaluation and Just Cause for Dismissal

Article 23(1) of the Labor Standards Act prohibits dismissal without just cause. A low evaluation rating or failure to meet PIP requirements does not automatically justify dismissal. An overall assessment must consider whether the evaluation was objective and fair, the nature and duration of the employee’s deficiencies, whether the employee fell below the minimum level of performance ordinarily expected for the position, and whether a genuine opportunity for improvement was provided. In addition, when dismissing an employee, the employer must separately examine the requirements under Article 27 of the same Act to provide written notice of the grounds and effective date of dismissal.

2. Three Relevant Court Decisions

① Seoul Administrative Court, January 27, 2006, Case No. 2005Guhap23879: Even where an employee received the lowest rating in a relative evaluation for four consecutive periods, the court found it difficult to conclude from those ratings alone that the employee’s abilities were objectively so deficient that the employment relationship could not be maintained, where his professional competence was recognized and interpersonal issues were the principal cause.

② Seoul Administrative Court, December 28, 2004, Case No. 2003Guhap39306: In this case, the court held that the employer had not abused its disciplinary authority, taking into account the specific circumstances, including two consecutive lowest performance ratings and the employee’s previous record of repeated disciplinary measures related to poor work performance.

③ Seoul Administrative Court, January 24, 2003, Case No. 2002Guhap16306: The court emphasized that the employee had repeatedly made the same errors over several years in relatively simple and standardized work, and that performance evaluations continued to deteriorate despite instructions to improve.

The three decisions reached different conclusions not merely because of the number of low ratings, but because the underlying facts differed, including the actual performance problems, their duration, warnings, and opportunities for improvement.

3. Standards Clarified by Subsequent Supreme Court Decisions

In its decision of February 25, 2021, Case No. 2018Da253680, the Supreme Court stated that, in dismissals based on poor performance, it is necessary to examine not only the objectivity and fairness of the evaluation but also whether performance was below the minimum ordinarily expected level for a substantial period, rather than merely lower than that of other employees, and whether future improvement could reasonably be expected. Whether genuine opportunities for improvement, such as training and reassignment, were provided is also an important consideration. Conversely, in a significant decision issued on September 15, 2022, the Supreme Court explained that, even if a standby order is justified, the mere fact that performance did not improve during the standby period does not necessarily establish that a subsequent dismissal is justified.

Applying these principles to this case, the critical issues are not simply whether the company implemented a PIP and CAP, but how the evaluation criteria related to the employee’s duties, whether the improvement targets were specific, whether there was evidence supporting the department head’s subjective assessment, and whether sufficient time and actual support were provided. The employee’s refusal to submit an improvement plan may also be considered, but that fact alone does not establish the proportionality of dismissal.

 

V. Conclusion and Practical Implications

This case did not end with a final ruling by the Labor Relations Commission. The company believed that it could be at a disadvantage in the proceedings because it had relied primarily on one annual performance evaluation and because the evaluation focused on teamwork and communication rather than the employee’s ability to perform the job itself. The company ultimately proposed a settlement, which the employee accepted. Under the agreement, the company would pay the employee an amount equivalent to 12 months’ salary and respond positively to reference checks from prospective employers.

The most important lesson is the need to distinguish “management of poor performance” from “creating documentation to remove an employee.” Performance evaluations should be based on specific criteria related to the job. Where teamwork is at issue, the problematic remarks, situations, and effects on work should be recorded factually. A PIP should preferably specify achievable goals, the period for improvement, training and support measures, regular feedback, methods for raising objections, and evaluation methods. Disciplinary matters and insufficient ability should not be conflated; justification and proportionality must be examined separately for each ground of dismissal.

Personnel management should be a process that gives employees an opportunity to understand and correct their shortcomings. The fact that an employee is difficult for an evaluator to work with is not equivalent to a legal determination that the employee can no longer be retained by the organization. Unless the company has objective evidence and proper procedures to explain that distinction, it may be unable to avoid the risk of a dismissal dispute, even if it conducts multiple evaluations and implements improvement plans.