Shin & Kim recently represented an employer (the “Defendant”) facing suit by its former employees who had voluntarily retired following the employer’s restructuring efforts. The Defendant had proposed the voluntary early retirement scheme after agreement with the trade union on restructuring amid financial difficulties. In implementing this scheme, the Defendant selected a list of employees to be laid off based on work performance, and received applications for voluntary early retirement from its employees.

The Plaintiffs argued that because they continue to work as temporary employees under a 4-month employment contract after voluntarily retiring under the early retirement plan at the Defendant’s factory, there was no break in their period of employment. Additionally, the Plaintiffs asserted that their employment constituted discordance of declaration of intention and should be invalidated. They also argued that their application for voluntary early retirement was coerced (e.g., that they would be laid off if they didn’t do so). As such, the Plaintiffs made a claim for the difference between the severance pay already provided and the severance pay newly calculated based on the years of service from recruitment to time of actual retirement, annual allowance, and incentives, etc.

Shin & Kim asserted on behalf of the Defendant that the application for voluntary early retirement was made at the discretion of the employees, and as such, retirement based on such application was valid. In making this argument, Shin & Kim highlighted the background of the voluntary early retirement scheme, the agreement on restructuring with the trade union and standards for selection of a list of employees to be laid off as well as the fact that other employees also applied for voluntary early retirement. The court agreed, and dismissed the Plaintiff’s claim.

Specifically, the court held that even though the Defendant implemented a voluntary early retirement scheme in accordance with its workforce restructuring plan and notified the employees on the lay-off list (the “Plaintiffs”) of possible lay-offs in the event that they do not apply for voluntary early retirement in order to encourage the employees to retire, it cannot be deemed that the Plaintiffs were illegally forced by the Defendant to apply for voluntary early retirement. Though the Plaintiffs did not intend to retire, the court did not find that Defendant’s actions constituted discordance of declaration of intention, nor can it be deemed that the Plaintiffs applied for voluntary early retirement under the coercion of the Defendant.