This case is an unfair dismissal decision that was concluded by upholding the first-instance ruling on the issue of “business necessity (closure of the store managed by the employee).” Decision date: 2026-07-27 · Decision body: Central Labor Relations Commission · Case No.: 2026BuHae207 Key issue summary: A. Existence of business necessity Given that the employment contract contained a clause providing a basis for reassignment/transfer, that due to deteriorating business performance there were more offline stores closing than newly opening so that store manager positions were naturally decreasing, and that reassignment to another workplace became unavoidable when the store where the employee had been working was closed, the Commission found that there was business necessity for the reassignment. B. Existence of disadvantage in livelihood Due to the employer’s managerial difficulties, a number of other employees were also relieved of their managerial positions… 1. Legal Implications In this unfair dismissal relief application case, the Labor Relations Commission examined whether the employer’s measure ordering reassignment (transfer and change of position) of an employee who had been serving as a store manager was legitimate. When the offline store where the employee worked was closed due to deteriorating business performance, the company implemented a personnel measure changing the place of work to another store, removing the store manager position, and discontinuing payment of the position allowance. The employee challenged this on the grounds of disadvantage in livelihood and failure to comply with consultation procedures, but the Central Labor Relations Commission ruled in favor of the employer. Ⅰ. Case Overview In this unfair dismissal relief application case, the Labor Relations Commission reviewed whether the employer’s order of reassignment (transfer and change of position) for an employee serving as a store manager constituted a legitimate exercise of managerial prerogative. As the offline store where the employee had been working was closed due to deteriorating business conditions, the company implemented a personnel measure changing the employee’s workplace to another store, removing the store manager position, and ceasing payment of the position allowance. The employee contested this, citing disadvantage in livelihood and non-compliance with consultation procedures, but the Central Labor Relations Commission sided with the employer. Ⅱ. Issues The issue in this case is whether, in light of business necessity, disadvantage in livelihood, and compliance with consultation procedures, the removal of the store manager position and reassignment to another store due to store closure constituted a legitimate exercise of managerial prerogative in personnel matters, or whether it amounted to an abuse of rights equivalent to unfair dismissal. Ⅲ. Summary of the Labor Relations Commission’s Reasoning The panel in this case found that the employer’s reassignment order fell within the scope of a legitimate exercise of managerial prerogative. The panel noted that the employer had included a clause in the employment contract providing a basis for reassignment/transfer, that due to deteriorating business performance there were more store closures than new openings so that store manager positions were naturally decreasing and the store where the employee had been working had in fact been closed, and that, as a result, reassignment to another workplace had become unavoidable. In light of these circumstances, the panel held that business necessity for the reassignment was established. The panel further found that there were many other employees who had also been relieved of their managerial positions due to the employer’s managerial difficulties, that the commuting distance had actually decreased after the reassignment, that the position allowance was a payment contingent on holding the position and the amount was around KRW 100,000 so that the disadvantage was not substantial, that removal from the store manager position was not perceived as a disciplinary measure, and that the company was in an emergency management situation. Taking these factors into account, the panel concluded that the disadvantage in livelihood resulting from the reassignment could not be regarded as significantly exceeding the level that an employee would ordinarily be expected to endure. In addition, the panel confirmed that, prior to the reassignment, the branch manager had engaged in consultation with the employee regarding the reassignment by telephone. On this basis, it held that the consultation procedure required under the principle of good faith had been satisfied. Accordingly, the panel held that this case did not involve a dismissal, and that the reassignment measure was a legitimate exercise of managerial prerogative that did not constitute an abuse of rights. Ⅳ. Practical Points (From the Employee’s Perspective) From the employee’s perspective, when disputing the unfairness of a reassignment/transfer, it is necessary to objectively organize not only the fact that the position has been removed, but also the employer’s managerial circumstances, whether the store/department to which the employee belonged has been closed, the commuting distance and total wages before and after the reassignment, the size of the position allowance, and other concrete disadvantages in livelihood. It is also important, for purposes of responding before the Labor Relations Commission, to check whether the employment contract or work rules contain a clause providing a basis for reassignment/transfer, and to keep records (such as notes or recordings) of what explanations and communications took place during the actual consultation process. Ⅴ. Practical Points (From the Employer’s Perspective) From the employer’s perspective, even without resorting to collective redundancies, when using reassignment/transfer as part of a restructuring process, it is necessary to firmly establish three pillars: (1) objective business necessity (such as store closure, organizational restructuring, or the need for personnel redeployment), (2) remedial measures to ensure that any disadvantage in livelihood does not exceed the ordinarily acceptable range (such as commuting distance, wages/allowances, and job difficulty), and (3) consultation procedures required under the principle of good faith (advance explanation, hearing of opinions, and securing records). In particular, as in this decision, it is crucial to clearly specify the basis for reassignment/transfer in the employment contract and to prepare to prove, with concrete materials, the emergency managerial situation and the inevitability of the personnel measures, as this is key both to preventing disputes and to responding before the Labor Relations Commission. This legal reasoning provides a standard for how to design and implement personnel redeployment through reassignment/transfer before resorting to more severe personnel adjustment measures such as collective redundancies, and thus both employees and employers should pay close attention to it. (ⓒ2026 copyright. Labor Attorney Youngseop Moon, Labor Law Firm Law&. Unauthorized reproduction and redistribution are prohibited.) 2. Matters Decided A. Case Overview and Procedural History This is a case in which the reassignment was found to be legitimate on the grounds that business necessity for the reassignment was recognized, the disadvantage in livelihood was not significantly great, and the consultation procedure required under the principle of good faith had been observed. 3. Gist of the Decision A. Summary of the Labor Relations Commission’s Reasoning A. Existence of Business Necessity It was found that the employment contract contained a clause providing a basis for transfer, that due to deteriorating business performance there were more offline stores closing than newly opening so that store manager positions were naturally decreasing, and that reassignment to another workplace became unavoidable when the store where the employee had been working was closed. In light of these circumstances, the Commission held that business necessity for the reassignment existed. B. Existence of Disadvantage in Livelihood The Commission noted that many other employees had also been relieved of their managerial positions due to the employer’s managerial difficulties, that the commuting distance had actually decreased as a result of the reassignment, that the position allowance was a wage paid depending on whether the position was held and that the amount (KRW 100,000) did not constitute a substantial disadvantage, that removal from the store manager position was not perceived as a disciplinary measure, and that the company was in an emergency management situation. In view of these factors, the Commission held that, in comparison with the business necessity, the disadvantage in livelihood did not significantly exceed the level that an employee would ordinarily be expected to endure, and therefore the measure fell within the scope of legitimate managerial prerogative in personnel matters and did not constitute an abuse of rights. C. Compliance with Consultation Procedures Required Under the Principle of Good Faith Considering that, prior to the reassignment, the branch manager had a telephone conversation with the employee regarding the reassignment, the Commission found it reasonable to conclude that the employer had followed the procedures required under the principle of good faith. [See More Related Decisions] - Unfair dismissal decision on “Business Necessity (Reassignment of Cleaner)” - Unfair dismissal decision on “Appropriateness of Disciplinary Sanction (Participation in Services for Another Institution)” - Unfair dismissal decision on “Relief Interest and Refusal to Rehire (Post-Retirement Fixed-Term Employment)” [Tags] Unfair dismissal, business necessity (store manager store closure), personnel movement/transfer, performance evaluation/poor performance, 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 Labor Law Firm Law&’s “Unfair Dismissal Decisions” series. ※ You can view the previous article, “Unfair Dismissal Decision on ‘Lack of Employer Status (Pre-Hiring Offer Stage)’,” in a new window. ※ The list of decisions related to business necessity (store manager store closure) can be viewed together under “List of Decisions Related to Business Necessity (Store Manager Store Closure).” ※ Korean version of this case: Korean article