Terminating an Employee in Korea: Why Poor Performance Is Not Enough

An expensive Korean employment dispute often begins with a short message from overseas headquarters:

“The employee is not performing. Please terminate employment immediately and pay whatever notice is required.”

That instruction combines two different questions.

The first is whether the employer has a legally justifiable reason to dismiss the employee. The second is whether the employer must give advance notice or pay wages in lieu of notice.

Paying 30 days of ordinary wages may satisfy the notice requirement in an applicable case. It does not automatically make the underlying dismissal valid.

This distinction is one of the most important things a foreign employer should understand before terminating an employee in Korea.

Korea is not an at-will employment jurisdiction. For workplaces to which the relevant dismissal protections apply, the employer must be able to demonstrate a justifiable reason and comply with the required procedure. A decision that appears commercially obvious to headquarters can still become an unfair-dismissal dispute if the evidence is weak, the employee was not given a fair opportunity to respond or improve, the company ignored its own work rules, or the dismissal notice was defective.

The resulting exposure may extend far beyond a severance calculation. It can include reinstatement risk, back-pay-related liability, legal fees, payroll corrections, social insurance adjustments, management time and a negotiated settlement.

Four Different Situations That Headquarters May Call “Termination”

Before taking action, the employer should identify what type of case it is actually dealing with.

1. Poor performance or lack of capability

The employee is not meeting the expected level of work, but the issue is not deliberate wrongdoing.

Examples may include:

Repeated failure to meet clearly defined job requirements
Material and sustained errors
Inability to perform the core duties of the position
Failure to improve after feedback, training or a reasonable improvement opportunity

This is usually an evidence-and-improvement case. The employer must be able to explain what was expected, how the employee fell short, how the assessment was made and why continued employment became unreasonable.

2. Misconduct or a disciplinary issue

The concern is an alleged breach of rules or duties rather than inability.

Examples may include:

Violence, threats or serious workplace disruption
Fraud, theft or deliberate falsification
Serious insubordination
Unauthorized disclosure of confidential information
Repeated breach of a known company rule

This is generally an investigation-and-proportionality case. The employer should establish the facts, allow the employee to explain, follow the disciplinary procedure and decide whether dismissal is proportionate to the proven conduct.

3. Redundancy or dismissal for managerial reasons

The position is being removed because of restructuring, closure, financial difficulty or another business reason unrelated to the employee’s individual performance or conduct.

Korean law has separate and demanding requirements for dismissal for managerial reasons. Relabeling a redundancy as “poor performance” does not reduce the risk; it may weaken the employer’s credibility if the dispute is later reviewed.

4. Mutual separation

The employer and employee voluntarily agree to end employment on negotiated terms.

A properly handled mutual separation can be a practical solution where litigation risk, business disruption or evidentiary uncertainty is high. It is not the same as a unilateral dismissal, and it must be genuinely voluntary. Pressure, threats or misleading statements can create a later argument that the resignation was effectively forced.

The correct legal and practical route depends on the facts. A company should not use one standard termination template for all four situations.

Just Cause and 30-Day Notice Are Separate Requirements

Article 23 of the Korean Labor Standards Act restricts dismissal without justifiable cause. Article 26 separately addresses advance notice.

As a general rule, an employer dismissing an employee must provide at least 30 days’ advance notice or pay at least 30 days of ordinary wages in lieu of notice, subject to statutory exceptions. One exception concerns an employee who has been continuously employed for less than three months.

That exception is frequently misunderstood.

If an employee has worked for less than three months, the statutory 30-day notice requirement may not apply. This does not mean that every short-service employee can automatically be dismissed without legal risk. The employer still needs to review the applicable dismissal protections, employment contract, work rules, workplace size, probation terms, reason for dismissal and procedural requirements.

Similarly, paying notice wages does not purchase a lawful dismissal. It addresses timing, not the legal sufficiency of the reason.

For a foreign headquarters, the safest mental model is:

Justifiable reason: Why may the company dismiss this employee?
Notice or payment in lieu: When may the dismissal take effect?
Required procedure: How must the decision be investigated, approved and communicated?

All three questions should be answered before the final decision is delivered.

Why Poor Performance Is Not Enough by Itself

An employment contract or work rule may list poor performance as a possible ground for termination. That wording is not conclusive.

The Korean Supreme Court has explained that an employer’s assessment must be based on fair and objective criteria. Performance must be more than merely lower than that of coworkers. It must fall below the generally expected minimum for a considerable period, with little reasonable prospect of improvement, to the extent that continuing the employment relationship has become unreasonable under generally accepted social standards.

The assessment is fact-specific. Relevant considerations can include:

The employee’s position and actual duties
The level of performance or expertise reasonably required for the role
The seriousness and duration of the shortfall
Whether expectations were communicated clearly
Whether the evaluation criteria were fair and objective
Whether the employer offered training, feedback or another meaningful opportunity to improve
Whether reassignment was reasonably considered
The employee’s response after the improvement opportunity
The employee’s work attitude
The operational circumstances of the workplace

This does not mean that every employer must operate an identical performance improvement plan, or PIP, for a fixed number of months. Korean law does not turn one global PIP template into an automatic safe harbor.

It means that the employer should be able to prove a fair process and a serious, sustained problem. A PIP, coaching record, warning letter, training plan or reassignment review may become important evidence, but its value depends on whether it was genuine and suited to the employee’s role.

Building a Defensible Poor-Performance Record

A defensible record usually begins long before the termination meeting.

Define the role and expected standard

The job description, employment contract, objectives and reporting lines should accurately reflect the work the employee is expected to perform.

Vague criticism such as “not proactive enough” or “not a good fit” is difficult to test. Wherever possible, the employer should identify the required task, expected standard, actual result and business impact.

Use objective and consistent evaluation criteria

The company should be able to explain how performance was measured and whether comparable employees were assessed on a reasonably consistent basis.

An evaluation created only after management has decided to dismiss the employee will be vulnerable to challenge. So will a system that changes targets without notice or relies mainly on one manager’s undocumented impression.

Communicate the gap

Employees should receive clear feedback about the specific performance problem. The record should show what needed to improve, not merely that management was dissatisfied.

For a foreign manager, written English feedback may not be enough if the employee did not fully understand the instruction. The company should consider language, local management involvement and whether the message was actually clear.

Provide a meaningful opportunity to improve

The appropriate period and support depend on the role and problem. A senior executive responsible for an urgent regulatory deadline is not in the same position as a newly hired employee learning an internal process.

Possible measures include:

Coaching or closer supervision
Technical or process training
Written priorities and measurable objectives
Regular review meetings
A reasonable improvement period
Clarification of authority and resources
Reassignment to a more suitable role, where reasonably available

An improvement plan designed to be impossible from the beginning may damage rather than strengthen the employer’s case.

Record the employee’s response

The employer should document whether the employee improved, refused reasonable instructions, disputed the assessment, identified missing resources or raised a health, discrimination, harassment or whistleblowing concern.

Those facts may materially change the legal analysis. A performance process must not be used to disguise retaliation or another prohibited reason.

Misconduct Requires Investigation, Not Just Management Certainty

Poor performance and misconduct should not be mixed together.

In a misconduct case, the employer should generally:

Preserve relevant emails, messages, access logs, CCTV records and other evidence lawfully available.
Identify the exact rule, duty or policy allegedly breached.
Interview relevant witnesses.
Inform the employee of the allegation with enough detail to respond.
Give the employee a genuine opportunity to explain.
Follow the disciplinary procedure in the employment contract, work rules, collective agreement or company policy.
Review how comparable cases were handled.
Assess whether dismissal is proportionate to the proven misconduct.
Record the findings and decision.

A serious-looking incident does not make procedure irrelevant.

In one matter we encountered, a physical confrontation in the workplace led overseas management to conclude that immediate dismissal was self-evidently justified. The later dispute, however, did not examine only whether the incident looked unacceptable. It also raised questions about the investigation, competing accounts, the legal characterization of the conduct, the employee’s opportunity to respond, the applicable disciplinary rules and whether dismissal was proportionate.

The dispute continued for approximately a year and a half. The company faced legal costs, potential back-pay exposure, related payroll and social insurance consequences, and a negotiated settlement.

The lesson is not that workplace violence must be tolerated. It is that even a serious allegation should be converted into a properly investigated and documented employment decision before the company acts.

The Short-Service Trap

Foreign employers sometimes assume that the first three months are effectively “at will.”

They are not.

The less-than-three-month rule concerns the statutory advance-notice requirement. It should not be treated as a universal exemption from all dismissal protections or contractual obligations.

In another matter we encountered, an employee had worked only a few weeks. The company believed the short service period made an immediate exit straightforward. Weak documentation and procedural risk changed the commercial balance, and the matter ended with a settlement broadly equivalent to several months of salary.

That was a negotiated outcome, not a statutory rule requiring three months of pay. It illustrates a practical reality: even a short-service dispute can cost much more than the salary earned before termination.

Before ending employment during probation or early service, the company should still ask:

Were the probation conditions clearly agreed?
Was the employee told what standard applied?
Is the stated reason supported by evidence?
Does the reason match the real reason?
Were contractual and internal procedures followed?
Is the employee in a legally protected situation?
What written notice is required?
What is the likely cost of a dispute compared with a negotiated exit?

Written Notice Is Not a Technicality

Under Article 27 of the Labor Standards Act, the employer must notify the employee in writing of the reason for dismissal and the effective date, where that provision applies. A dismissal takes effect only after the written notification requirement has been satisfied.

The reason should be specific enough for the employee to understand the factual and legal basis of the decision.

Statements such as the following may be too vague when used without supporting particulars:

“Loss of trust”
“Poor attitude”
“Business decision”
“Failure to meet expectations”
“Violation of company policy”

The notice should be prepared after the investigation and decision-making process, not used as a substitute for that process.

Companies should also be cautious about assuming that any email or instant message satisfies the requirement. Whether an electronic communication is sufficient can depend on its content, form, delivery and the surrounding facts. A formal, counsel-reviewed written notice is safer than an informal message from a manager.

What an Unfair-Dismissal Dispute Can Look Like

An employee may challenge a dismissal through the courts or, where the statutory procedure applies, request a remedy from a Labor Relations Commission.

The National Labor Relations Commission explains that the administrative unfair-dismissal remedy generally applies to a business or workplace ordinarily employing five or more workers. A remedy application must generally be made within three months of the dismissal.

Smaller workplaces should not assume that they have no employment obligations. The precise application of the Labor Standards Act, contractual rights, notice requirements and other protections requires a separate review.

A Labor Relations Commission case can proceed from the Regional Labor Relations Commission to review by the National Labor Relations Commission and then to administrative litigation. Depending on the outcome and remedy, exposure may include reinstatement and wages for the dismissal period.

Even when the parties settle before a final result, the company may already have incurred:

External legal fees
Local management and headquarters time
Back-pay-related exposure
Statutory severance or retirement-benefit cost
Payroll reversals or corrections
Social insurance acquisition, loss or contribution adjustments
Withholding-tax corrections
Settlement payments and their tax treatment
Internal disruption and employee-relations consequences

This is why termination risk should be reviewed before the employee is told, not after a demand letter arrives.

Payroll Does Not End When the Dismissal Letter Is Issued

Once the legal route and final employment date are confirmed, HR, payroll, Finance and the company’s labor adviser should coordinate the exit calculation and filings.

The checklist may include:

Salary through the final working date
Overtime, commissions and other earned compensation
Unused annual-leave allowance, if payable
Approved expense reimbursements
Bonus or equity-plan treatment
Statutory severance or retirement-pension processing
Departure-year wage tax settlement
Wage and salary income withholding receipt
National Health Insurance reconciliation
Social insurance loss reporting
Employment separation documentation and reason codes
Return of corporate equipment, cards and confidential information
Payment deadline and funding arrangements

The legal characterization of the exit must be communicated accurately to payroll. A resignation, mutual separation, disciplinary dismissal and redundancy should not be coded interchangeably simply because all four remove the employee from the next payroll.

A Practical Ten-Step Checklist Before Dismissal

1. Pause the final communication

Do not let a frustrated manager announce the decision before the Korean legal and payroll review is complete.

2. Classify the actual reason

Decide whether the case concerns capability, misconduct, redundancy, expiration of a fixed term, retirement, resignation or a possible mutual separation.

3. Check the governing documents and workplace status

Review the employment contract, work rules, disciplinary policy, collective agreement, probation clause, workplace size and any delegation-of-authority rules.

4. Check for protected circumstances

Obtain advice if the employee is on or near maternity leave, childcare leave, occupational injury or illness leave, has reported harassment or wrongdoing, has exercised a statutory right, or may raise a discrimination or retaliation issue.

5. Preserve and organize evidence

Collect the documents before accounts or devices are disabled. Maintain confidentiality and comply with Korean privacy requirements.

6. Give the employee a chance to respond

The process should test the company’s conclusion, not merely create paperwork after the result has already been fixed.

7. Review improvement and alternatives

For a capability case, consider whether feedback, training, a reasonable improvement opportunity or reassignment is appropriate. For a business case, review the separate managerial-dismissal requirements.

8. Test proportionality and consistency

Ask how comparable employees were treated and whether a warning, suspension or another measure would reasonably address the issue.

9. Obtain Korean labor-law review

Before communicating the decision, have qualified Korean labor counsel or another appropriately licensed labor-law professional review the reason, evidence, process and proposed notice.

10. Finalize the payroll and communication plan

Confirm the effective date, notice or payment in lieu, final compensation, severance, tax, social insurance, separation reporting, return of property and employee communication.

When Mutual Separation May Be the Better Route

A mutual separation agreement may be commercially sensible where:

The evidence is mixed
The performance process is incomplete
The relationship has broken down
A rapid, orderly transition has real value
Both parties prefer certainty over a long dispute

The agreement should address matters such as:

The voluntary nature of the separation
Final employment date
Salary and other earned amounts
Statutory severance or retirement benefits
Any additional separation payment
Tax and withholding treatment
Confidentiality and return of property
Handover obligations
Release language, to the extent legally valid
Payment timing

The employee should have sufficient opportunity to review the proposal and obtain independent advice. A resignation obtained through coercion may later be challenged as a dismissal.

The Main Question Is Not “How Much Notice Pay?”

When terminating an employee in Korea, the first question should not be:

“Do we need to pay 30 days?”

The better questions are:

What is the genuine reason for ending employment?
What objective evidence supports that reason?
Has the employee received a fair process?
Have the company’s own rules been followed?
Is dismissal proportionate and legally defensible?
What written notice is required?
What payroll, tax, severance and social insurance consequences follow?

A foreign employer can dismiss an employee in Korea when the facts and law support it. The risk arises when a global assumption—such as “poor performer,” “probationary employee” or “we paid notice”—is treated as a complete Korean termination process.

Korea Payroll Partners supports the payroll, tax, social insurance, severance and payment consequences of employee exits and coordinates with specialized Korean labor counsel where legal review is required. For assistance with a planned termination or separation calculation, see our Payroll & Global Mobility Services or contact our team by email.

This article provides general information as of July 31, 2026. It is not legal advice. The correct approach depends on the workplace size, employee status, contract, work rules, reason for termination and specific facts. Obtain Korean labor-law advice before taking action.

FAQ

Is employment in Korea at will?

No. Korea does not generally follow the US-style at-will employment model. For workplaces covered by the relevant dismissal protections, an employer needs a justifiable reason and must follow the applicable procedure.

Can an employer dismiss an employee during probation?

Probation does not automatically create at-will employment. The employer should review the agreed probation terms, applicable law, objective reason, evidence and procedure. An employee with less than three months of continuous service may fall within an exception to the statutory 30-day advance-notice requirement, but that does not automatically validate the reason for dismissal.

Is paying 30 days of wages enough to terminate an employee?

No. Payment in lieu of notice addresses the notice requirement. It does not replace the need for a justifiable reason or cure a defective dismissal procedure.

Must a dismissal notice be in writing?

Where Article 27 of the Labor Standards Act applies, the employer must give written notice stating the reason for dismissal and the effective date. The reason should be sufficiently specific. Companies should have the notice reviewed before delivery.

Is a performance improvement plan mandatory in every case?

There is no single statutory PIP format or fixed period that applies to every employee. However, in a poor-performance case, evidence of fair evaluation, clear feedback and a meaningful opportunity to improve can be highly important. The appropriate process depends on the role and facts.

How long does an employee have to file an unfair-dismissal remedy request?

Where the Labor Relations Commission remedy procedure applies, the request must generally be filed within three months of the dismissal.

Does the unfair-dismissal remedy apply to every small company?

The Labor Relations Commission explains that the statutory remedy procedure generally applies to workplaces ordinarily employing five or more workers. Smaller workplaces remain subject to certain statutory and contractual obligations, so their position should be reviewed separately rather than assumed.

Official References

Korean Labor Standards Act, Articles 23, 26, 27 and 28 — National Law Information Center
Current Korean law:
https://www.law.go.kr/LSW/lsInfoP.do?lsId=001872
Official English translation page:
https://www.law.go.kr/LSW/lsInfoP.do?chrClsCd=010203&lsiSeq=232199&urlMode=engLsInfoR&viewCls=engLsInfoR
National Labor Relations Commission — Adjudication on Remedy Requests for Unfair Dismissal and Other Disciplinary Measures
https://nlrc.go.kr/nlrc/en/adjudication.html
Supreme Court, February 25, 2021, 2018Da253680 — Poor-Performance Dismissal Standard
https://www.law.go.kr/LSW/precInfoP.do?precSeq=237021

Reference note: The official English translation of Korean legislation may not always reflect the latest Korean amendments immediately. Confirm the current Korean text and obtain professional advice for a live case.