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Newspaper Article
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Korean Way of Legal Hiring and Firing
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By Tom Coyner
Korea Times
October 19, 2007
While the biggest challenge for foreign employers may be
retaining talented Korean employees, the biggest headache can come when it’s
necessary to terminate a Korean employee. Many foreigners believe it is
virtually impossible to do so, but that is not the case.
This topic was discussed at length at a British Chamber of Commerce
Breakfast Meeting, moderated by Hwang Mok Park and foreign attorney Brendon
Carr. Carr started the conversation by noting that too often the cause for
termination starts during the hiring process.
He has seen inappropriate hires not work out because the Korean employee’s
only qualification was their English language skills and very little else.
This is a good example of one of the most common causes for terminations:
improper hiring practices. So let’s briefly look at some ways to avoid
making a hiring mistake that can lead to a difficult termination.
First, foreign employers need to be aware of the cultural and resulting
legal differences when hiring, disciplining and terminating Korean
employees. For example, Koreans place a much higher value on privacy than
freedom of speech compared to, say, Americans, where freedom of speech is
constitutionally guaranteed but there is hardly any privacy. Koreans have a
constitutional guarantee of privacy, but not freedom of speech.
As a result, past employers are usually noncommittal to say anything
negative about a former employee. The Korean definition of criminal
defamation includes simply communicating anything -- including the truth --
that may damage an individual’s reputation.
So when a former employer sandbags employment reference queries, it doesn’t
necessarily mean something is being hidden. It is probably just company
policy. Naturally, it is very dangerous to rely on a single reference check.
In spite of defamation liabilities, some Koreans will give away nuances
implying negative references due to some personal spite.
In any event, finding out the true backgrounds of anyone can be extremely
problematic. Koreans, therefore, often hire people whom they or their
trusted employees have known for years. As a result, it is very difficult to
check out an unknown, prospective employee from public records and sources.
An extreme example of where this can lead may be found in the current Shin
Jeong-ah scandal.
Korean employers often don’t verify employee backgrounds. Other employers,
including foreign, use background investigators to search both private and
public information sources. Ironically, although discovery of information
through public, thirdparty sources is usually not possible due to privacy
concerns, the employment interviewer can legally ask almost anything of the
job applicants -- including many questions that are illegal in the West.
Some even go to the extreme to record . and in a few cases, even videotape .
employment interviews and other important human resources meetings. Speaking
of which, it is important to understand that verbal or witnessed accounts
are not legally recognized as evidence. Even written, contemporary notes are
considered as being too self-serving to be admissible as evidence.
But, audio or visual records -- including those made without the knowledge
or permission of the other party . are admissible as legal evidence since
mechanical recordings are considered to be legally “disinterested.” While
some employers secretly tape meetings, it is generally much better to be
open and selective about recording since good employee relations anywhere
are based on trust.
Getting back to hiring, a practical approach may include having the job
applicants respond to a written questionnaire with them signing and dating
the document. If your rules of employment state so, you can justify a false
answer on this questionnaire as grounds for legal termination.
Given this environment, there are some basic principles. It is most
important to have stated the hiring requirements in your written rules of
employment so it is clear that all your requests are a matter of procedure
and not personal harassment or suspicion. These same rules of employment
should also describe other terms and conditions of employment, as well as
state conditions and processes for employment termination.
For example, the rules of employment might state a potential employment
candidate will be required to go to the local police station to get a letter
certifying that he or she has never been convicted of a crime. Another good
idea, particularly for those handling or having access to money, is that all
such finalist candidates must submit a copy of their family registers as a
condition of employment.
Mr. Carr noted that in just about every case of embezzlement he has
witnessed, a relative -- usually a brother -- was involved as an accomplice.
While the civil code does not require written employment contracts, the
Labor Standard requires an employee to receive written notice of the
company’s adherence to minimum standards regarding hours of work, vacation,
termination, welfare benefits, etc. As such, even small companies should
prepare written rules of employment.
But, should these rules not exist, the same matters should be covered in
detail in employment contracts. The roundtable discussion then turned to one
of the most controversial causes of termination -- temporary employee
contract non-renewals. Often these employees are referred to as “contracted
employees” and they may work as such for as long as two years. Some
employers try to get around the three-month employment probation maximum by
asking new hires to agree to a six-month probation.
Often eager new employees will accept this term of employment, but employers
should recognize that if later challenged, probation beyond three months is
not likely to legally stand. It is possible for an employer and employee to
agree to an extension of a three-month probation, but such cases are in fact
very rare. Other employers, in lieu of, or in addition to, a three-month
probation, initially hire employees and put them on a one-year contractual
basis.
Upon successful completion, the employee is hired as a so-called permanent
employee. This strategy may seem to make a lot of sense, but our roundtable
of HR specialists pointed out some drawbacks. First of all, contracted
employees often demand -- and get -- higher wages in lieu of uncertain,
short-term employment while not receiving the full benefits of permanent
employees.
Upon conversion to permanent employment status, it is virtually impossible
to reduce salary levels. Also, there is often a psychological divide between
contracted and permanent employees. As a result, teamwork, diligence and
overall morale may suffer causing a high turnover among even good contracted
employees. When employment termination is inevitable or necessary, it is
critical to protect the employee’s face since a mechanical and public
dismissal will almost guarantee depressing the remaining employees’ morale
and seed causes for future employee relations issues.
Whenever possible, one should gradually establish the psychological setting
to allow the employee to fully comprehend why termination is required and
give the employee a chance to submit a written and signed letter of
resignation. When possible, give the employee some time to think it over so
that he or she is not necessarily pushed or rushed into resigning. In any
case, some kind of signed termination of employment document is a must.
Sometimes foreign employers follow the local custom of allowing terminated
employees to come to work for weeks -- even months -- without pay to
maintain appearances while they look for new employment. There can, however,
be a major downside to this practice -- particularly with those employees
who have access to finances and sensitive information.
If one chooses to follow this Korean practice of delayed physical departure,
your rules of employment probably should stipulate that certain job
categories require immediate physical separation from the company premises
upon termination. Alternatively, terminated employees can be transferred to
a “subsidiary company” that actually does nothing other than hold terminated
employees until they find their next employer.
Whatever your company philosophy may be, it is critical to consider one’s
legal exposure and protect your Korean operations with well thought out and
detailed rules of employment. Wrongful termination in Korea can potentially
lead to criminal prosecution of the CEO or managing director -- particularly
if the wronged employee is not reinstated.
So legal and managerial preventive thinking -- and well considered hiring
and termination procedures -- are crucial for running a successful Korean
operation.
Tom Coyner is president of Soft Landing Korea, a consulting group
focusing on sales and human resources issues. He is
co-author of Mastering Business in Korea: A
Practical Guide.
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