Notices

Seven Dismissed Workers of Korea Optical High Tech Have Appealed to the Supreme Court:

Korea Optical High Tech is a Korean subsidiary of Japan’s Nitto Denko and manufactures LCD films at its plant in Korea. Following a major fire in October 2022, the company decided to close the plant. It offered voluntary retirement to approximately 210 employees. However, 17 employees ultimately refused to accept the voluntary retirement package, and the company notified them of their dismissal.

Another Korean affiliate with the same Japanese parent company as Korea Optical High Tech operates a plant in Pyeongtaek, and the production volume previously handled by Korea Optical High Tech was transferred to the Pyeongtaek plant. Although the two companies are Korean subsidiaries of the same Japanese parent company and manufacture and supply similar products, they have been operated as separate and independent legal entities.

The key issue in this case is whether the two companies in Korea should, in substance, be regarded as a single business. If the two companies are considered one business, the company would, in principle, be required to satisfy the statutory requirements and procedures for dismissal for managerial reasons when closing one of the plants and dismissing its employees. On the other hand, even though the two companies share the same parent company, they may be regarded as separate legal entities and separate businesses if they have been operated independently without personnel exchanges or substantial integration of their management.

The 17 dismissed employees therefore filed applications for remedy from unfair dismissal. However, the company’s position was upheld by the Gyeongbuk Regional Labor Relations Commission, the National Labor Relations Commission, the Administrative Court, and the appellate court. These bodies and courts concluded that, although the two Korean companies share the same Japanese parent company, they are separate and independent legal entities. Accordingly, the closure of Korea Optical High Tech’s plant was regarded as the termination of an independent business itself. The dismissals resulting from the impossibility of continuing the business were therefore considered to have justifiable grounds under Article 23 of the Korean Labor Standards Act.

The Supreme Court must now make a final determination as to whether the businesses of the two Korean affiliates should, in substance, be regarded as a single business, or whether they should be treated as separate and independent businesses, as the lower courts have held.