[Case Information] This case is a decision in which the employee prevailed in full on the issue of “absence of urgent managerial necessity (abolition of the leasing business team).” Decision date: 2026-07-28 · Decision body: Jeonbuk Regional Labor Relations Commission · Case No.: 2026부해245 Key issues summary: a. Urgent managerial necessity Sales and profits had steadily increased according to the financial statements, the company’s cash position was sound, and there was no crisis apparent from the objective financial data. In light of these factors, urgent managerial necessity was not recognized. b. Efforts to avoid dismissal Before discussing the abolition of the leasing business team, the employer merely suggested reassignment and did not actively seek other methods to overcome the alleged management crisis. The employer also failed to consider the employee’s proposal for an “wage peak” system. In these circumstances, it was difficult to find that the employer had exhausted efforts to avoid dismissal… 1. Legal Implications Ⅰ. Case Overview In this case, the employer carried out collective redundancies (managerial dismissals) of certain employees on the ground that the leasing business team would be abolished and downsized. The employees filed applications for remedy for unfair dismissal, and the Jeonbuk Regional Labor Relations Commission rendered a decision. The Labor Relations Commission comprehensively reviewed the company’s financial condition, efforts to avoid dismissal, the criteria for selecting employees for dismissal, and the consultation procedure with the employees’ representative, and on that basis determined whether the dismissals constituted unfair dismissal. Ⅱ. Summary of Issues The issue in this case is: “In a situation where sales and profits are increasing according to the financial statements and the company’s cash position is favorable, did the collective dismissal based on the abolition of the leasing business team satisfy the statutory requirements for managerial dismissal under the Labor Standards Act—namely, urgent managerial necessity, efforts to avoid dismissal, reasonable and fair selection of employees to be dismissed, and good-faith consultation with the employees’ representative?” Ⅲ. Summary of the Labor Relations Commission’s Findings The panel in this case found that: sales and profits had steadily increased according to the financial statements, the company’s cash position was also sound, and it was therefore difficult to conclude that there was a managerial crisis based on objective financial indicators; prior to discussing the abolition of the leasing business team, the employer did not actively explore concrete measures to avoid dismissal, including alternatives proposed by employees such as a wage peak system, other than simply suggesting reassignment; the employer designated only those employees remaining after the organizational restructuring as dismissal targets without any objective and comprehensive selection criteria; and the employer engaged in only formal consultation by processing the agenda items en bloc at meetings without sharing with the employees’ representative the prior consultation process with the dismissal targets or the specific circumstances involved. In light of the above, the Commission held that the dismissals in this case constituted unfair dismissal, as they failed to satisfy the requirements set forth in Article 24 of the Labor Standards Act—urgent managerial necessity, efforts to avoid dismissal, reasonable and fair selection of employees to be dismissed, and good-faith consultation with the employees’ representative. Ⅳ. Practical Points (From the Employee’s Perspective) From the employee’s standpoint, when an employer asserts managerial dismissal, it is necessary to carefully examine whether there is in fact urgent managerial necessity by comprehensively reviewing the financial statements, cash flow, dividend policy, and indirect indicators such as new hiring and overtime work. It is also important to check whether measures to avoid dismissal—such as voluntary retirement, wage adjustments, and reassignment—were sufficiently discussed and considered before the dismissal. Securing documents such as the selection criteria table for dismissal targets and minutes of meetings with the employees’ representative can serve as key evidence in an application for remedy for unfair dismissal. Ⅴ. Practical Points (From the Employer’s Perspective) From the employer’s perspective, it should be borne in mind that the mere downsizing of a business unit or organizational restructuring will rarely suffice to justify managerial dismissal. The employer must be able to objectively substantiate urgent managerial necessity through financial indicators and workforce management data. In addition, the employer should actually review and implement various alternatives to avoid dismissal (such as a hiring freeze, adjustments to wages and benefits, reassignment, and voluntary retirement), and document the process. With respect to the employees’ representative, the employer should ensure a substantive, not merely formal, consultation procedure by fully explaining in advance the reasons, scope, and criteria for dismissal and by soliciting and reflecting opinions. This type of decision illustrates that, in unfair dismissal disputes, Labor Relations Commissions view the four requirements for managerial dismissal as independent and essential. If even one of these requirements is not met, they are reluctant to recognize the legitimacy of collective redundancies. 2. Matters Decided a. Case Overview and Procedural History This is a case in which the dismissals were held to be unfair because the employer failed to satisfy the requirements for managerial dismissal under the Labor Standards Act—urgent managerial necessity, efforts to avoid dismissal, reasonable selection of dismissal targets, and good-faith consultation with the employees’ representative. 3. Summary of Decision a. Summary of the Labor Relations Commission’s Findings a. Urgent managerial necessity Sales and profits had steadily increased according to the financial statements, the company’s cash position was sound, and there was no crisis apparent from the objective financial data. In light of these factors, urgent managerial necessity was not recognized. b. Efforts to avoid dismissal Before discussing the abolition of the leasing business team, the employer merely suggested reassignment and did not actively seek other methods to overcome the alleged management crisis. The employer also failed to consider the employee’s proposal for a wage peak system. In these circumstances, it was difficult to find that the employer had exhausted efforts to avoid dismissal. c. Reasonableness and fairness of selection of dismissal targets In view of the fact that, without reasonable selection and evaluation criteria, the employer designated only those employees remaining after the organizational restructuring as dismissal targets, it was difficult to find that the selection of dismissal targets was reasonable and fair. d. Prior notice to and good-faith consultation with the employees’ representative The employer merely conducted formal consultation by processing the agenda items en bloc at meetings, without sharing with the employees’ representative the prior consultation process with the dismissal targets or genuinely hearing their opinions. Accordingly, it was difficult to find that the employer had fulfilled its duty of good-faith consultation. [See More Related Decisions] - “Unfair Dismissal Decision on Failure to Satisfy Requirements for Managerial Dismissal (Workout Company)” - “Unfair Dismissal Decision on Remedy Interest and Refusal to Rehire (Post-Retirement Fixed-Term Employee)” - “Unfair Dismissal Decision on Necessity of Reassignment for Business Reasons (Reassignment of Cleaning Staff)” [Tags] Unfair dismissal, absence of urgent managerial necessity (abolition of leasing business team), restructuring, Labor Law Firm Law&, large labor law firm, Samseong-dong labor law firm, Samseong Station labor law firm, Gangnam labor law firm ※ This article is part of the “Unfair Dismissal Decisions” series by Labor Law Firm Law&. ※ You can view the previous article, “Unfair Dismissal Decision on Employee Status (Inside Director and Outsourcing of Course Management),” in a new window. ※ A list of decisions related to absence of urgent managerial necessity (abolition of leasing business team) can be viewed under “List of Decisions Related to Absence of Urgent Managerial Necessity (Abolition of Leasing Business Team).” ※ Korean version of this case: Korean article