SPECIAL: Choi Chang-gyun's Guide to Hospitality Labor Law, Part 12

TL;DR

Managing employee departures: resignation, termination, and everything in between

12. Managing Employee Departures in Hospitality

Writer: Choi Chang-gyun, CEO, Labor & Law Firm Seocho

Editor: Lee Chae-eun, Manager, ONDA

Hello, I'm Choi Chang-gyun, labor attorney at Labor & Law Firm Seocho. Most labor disputes in hospitality happen during the exit process — which is why how an employee leaves matters enormously. In this installment, we'll cover what you absolutely need to know when a staff member leaves your property.

1. Types of Employee Departure

Before we dig into exit management, let's clarify the five ways an employment relationship can end — depending on who initiates the departure.

Resignation — Employee voluntarily terminates the relationship
(e.g., "I'll work through the end of this month")
Mutual agreement (voluntary separation) — Both parties agree to end the relationship
(e.g., Employer: "Would you be open to finishing up this month?" / Employee: "Yes, that works")
Termination (dismissal) — Employer unilaterally ends the relationship, against the employee's will
(e.g., "Today is your last day" / "Don't come in after this month")
Contract expiration — Fixed-term contract reaches its end date
(e.g., The employment contract clearly states a period, and that period has ended)
Mandatory retirement — Employee reaches statutory retirement age (60 in Korea as of 2020)
(e.g., Employee turns 60 during employment)

Let's walk through what to watch out for in each scenario.

2. Resignation & Mutual Agreement: Key Precautions

Resignation and mutual agreement aren't heavily regulated by labor law. But disputes often arise later over which category the departure actually fell into — so you must document everything with a resignation letter or mutual separation agreement.

Because disputes over the nature of departure happen frequently, always document resignations and mutual separations in writing. (Photo by Charles Deluvio on Unsplash)

3. Termination: Key Precautions

Termination — where the employer unilaterally ends the relationship — is tightly regulated. The rules depend on your workforce size.

Businesses with fewer than 5 regular employees

You're not restricted from terminating, but you must give 30 days' advance notice (or pay 30 days' wages in lieu).

∙ What is the advance notice rule?

Employers must notify employees at least 30 days before termination.

Exceptions: employees with less than 3 months of service, force majeure events that make continued operation impossible, or cases where the employee intentionally caused serious damage to the business.

Businesses with 5 or more regular employees

The advance notice rule applies and you can only terminate for "just cause." You must also provide written notice stating the reason and effective date.

"Just cause" means circumstances so serious that the employment relationship cannot reasonably continue. What qualifies varies case by case — consult an expert before proceeding.

If you fire someone, they can file an unfair dismissal claim with the Labor Relations Commission. If the dismissal is ruled unfair, you must reinstate the employee and pay all back wages from the termination date to the reinstatement date.

Example: Employee terminated in June 2020 files a claim and wins reinstatement in October 2020. You owe them 4 months of back pay plus reinstatement.

4. Contract Expiration & Mandatory Retirement: Key Precautions

Contract expiration only applies if the employment contract clearly states a fixed term. Also remember:

After 2 years of fixed-term employment, the employee is considered permanent.
If the contract expires and you continue employing the person without any formal notice or renewal, the contract is deemed automatically renewed under the same terms.

Contract expiration only applies if the employment contract clearly states a fixed term. (Photo by Van Tay Media on Unsplash)

Mandatory retirement (for businesses with 10+ employees): the more favorable rule applies — either the retirement age in your work rules or the statutory retirement age.

If you keep employing someone past retirement age and then terminate them because they've passed retirement age, that may be ruled an unlawful dismissal.

Document everything in writing

As explained above, the rules vary by departure type — so it's critical to clearly classify the departure and verify you've followed the legal requirements. That means preparing and executing the relevant documents: resignation letters, employment contracts, termination notices, etc.

Confirm whether termination is lawful

Many hospitality operators get into trouble by firing someone when termination isn't actually permitted. Before you proceed:

Know your headcount. The rules change at 5 employees.
If you have 5+ employees, confirm with an expert whether you have just cause.
Check for other compliance issues — e.g., missing employment contracts, minimum wage violations, undocumented foreign workers. Even if the termination itself is valid, these issues can trigger separate disputes. If any exist, avoid termination altogether.

That wraps up what you need to know about managing employee exits. Follow these guidelines carefully to keep your operation stable.

This concludes our 12-part series, Choi Chang-gyun's Guide to Hospitality Labor Law. Thank you for your interest and support. I hope this series helped lighten your labor compliance burden, and I look forward to meeting you again in the future.