Court Rules "'Corona Closure' Isu Taepyeong Department Store's Employee Dismissal Justified"

[Asia Economy Reporter Kim Daehyun] A court ruling has upheld that the dismissal of sports center employees by Taepyeong Department Store, which closed due to the spread of COVID-19 and worsening business conditions, was valid.

According to the legal community on the 18th, the Administrative 14th Division of the Seoul Administrative Court (Presiding Judge Lee Sanghoon) recently ruled in favor of the plaintiff in the first trial of the unfair dismissal relief retrial cancellation lawsuit filed by Kyungyu Industry Co., Ltd., the operator of Taepyeong Department Store, against the Chairman of the Central Labor Commission, stating that "the conditions for business-related dismissal were met."

Previously, Taepyeong Department Store, considered a 'landmark' near Isu Station in Dongjak-gu, Seoul, began operations in 1992. It also operated a sports center equipped with a swimming pool, fitness center, and golf course. However, Kyungyu Industry decided to suspend operations in October 2020 and closed the store in October last year, as profits steadily declined and COVID-19 spread.

Ten employees working in instruction and facility management at the department store's sports center received preliminary dismissal notices in February last year. In response to their unfair dismissal relief applications, the Seoul Regional Labor Commission and the Central Labor Commission judged that the dismissal was unfair, concluding that the 'business-related dismissal requirements' specified in the Labor Standards Act were not met.

Kyungyu Industry disagreed and filed an administrative lawsuit in July last year. The first trial ruled in favor of Kyungyu Industry, stating that "the dismissal was a measure taken due to urgent business necessity."

The court explained, "Kyungyu Industry's net profit for 2020 decreased by 67% compared to the previous year, and due to the impact of COVID-19, performance rapidly deteriorated. It is difficult to find any circumstances predicting an improvement in the department store's situation," adding, "Deficits accumulated over several months, showing no signs of performance improvement."

Furthermore, the court stated, "The decision to close Taepyeong Department Store and prioritize shutting down the swimming pool and fitness center, and dismissing employees to reduce surplus personnel related to these facilities, was unavoidable to prevent overall business deterioration."

The court also judged that Kyungyu Industry made various efforts to prevent dismissal, considering factors such as workforce reductions since 2018, salary cuts for executives including the CEO from 2020, the temporary closure of the swimming pool and fitness center, and the implementation of unpaid leave.

The Central Labor Commission has appealed the first trial ruling.

This content was produced with the assistance of AI translation services.