Recommended Resignation · Mutual Agreement Resignation
Mutually Agreed Resignation
What is a recommended resignation?
- Judged on substance, not form: was it really agreed, or coerced?
- Key points: the terms offered, time to consider, and a written record of the agreement
- The reason for separation affects subsidies and unemployment benefits
The moment you choose a recommended resignation, what the company must prepare shifts from grounds for dismissal to evidence that the agreement was genuine. In an unfair dismissal case, the Labor Relations Commission does not look at the resignation form. It looks at how the first interview began, when the terms were put in writing, and how many days the employee had to think it over. So the practical focus shifts from building grounds to documenting how the interviews went. The more smoothly a recommended resignation wrapped up verbally, the less the company has to show if a dispute arises later.
The boundaries with neighboring systems must also be clear. Redundancy dismissal under Article 24 of the Labor Standards Act requires all of the following: an urgent business need, efforts to avoid dismissal, reasonable and fair selection of those affected, and consultation with the worker representative 50 days in advance. Voluntary retirement means taking applications after disclosing the terms to a defined group. A recommended resignation, by contrast, is proposed individually to a specific person chosen by the company, which makes it the form most likely to be read as pressure. A resignation can be withdrawn before the company accepts it, and an employee who wants to contest it as a dismissal can file a remedy application with the Labor Relations Commission within 3 months. Many employment-related subsidies carry a headcount-maintenance period, so a single recommended resignation can raise the question of repaying subsidies already received.
The point where practice most often goes wrong is the reason field on the resignation letter. The moment you have the employee write 'personal reasons' to keep the record tidy, the employee loses eligibility for unemployment benefits and gains a reason to dispute it against the company. The separation certificate should state the actual reason, recommended resignation due to business necessity; entering something untrue leads back to corrections and fines. Another is the belief that paying a severance bonus settles it. If the meeting included remarks like 'decide today' or 'if you don't sign, we'll have to go to disciplinary action,' the signature itself can be challenged as given under duress, and if it is ruled an unfair dismissal, the company bears both reinstatement and back pay for the period of dismissal. Standards and case law can change, so check important cases with a labor law professional.
Jongmu KimSpecialist in corporate talent development and job competency building
Hwi KimCEO of HRDIST & talent development system consultantAn employment relationship can end by mutual agreement as well as by dismissal. But Korean case law holds that if the resignation was not given freely, it may be treated in substance as a dismissal.
Company A, a food manufacturer with 180 employees and annual revenue of about KRW 42 (≈ US$1) billion, introduced automated packaging-line equipment and ended up with 9 surplus workers on its three-shift schedule. Management ordered the issue resolved within three months, but the retention period for a youth hiring subsidy received the previous year was still running. (Hypothetical example)
- The first thing the HR director did was check the subsidy headcount-maintenance period. Finding that 2 employees still had 4 months remaining, the director first offered those two a transfer to open positions on the logistics team.
- For the other 7, they kept to the order of terms in writing first, meeting second. They handed over a single A4 sheet covering a severance bonus of four months of base pay, full payout of remaining annual leave, and reemployment training support.
- In the meeting, the head of Management Support said, 'You don't need to answer today. I'll see you again in two weeks,' and stood up. The two-week reflection period and a summary of the meeting were recorded in the minutes that same day.
- The agreement set out the severance bonus amount and the last day of employment, how the company made the proposal and the employee accepted it, and a no-objection clause. It even included wording stating that the reason on the separation certificate would be entered as 'recommended resignation due to business necessity.'
- Of the 7 employees, 5 left by mutual agreement and 2 moved to the logistics team, so there was not a single remedy application. Subsidy repayment was KRW 0, (≈ US$1) objections were 0, and the process wrapped up within the 3-month schedule.