Korean Way of Legal Hiring and Firing
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 necessarilymean 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.
Some 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 newe mployees 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.