Hello. Attorney Choi Jong-Ha of Cheongchul Law Firm is here.

Like everything else, employment relationships come to an end eventually. Ideally, this ending would be a process in which the company begs the employee to stay a little longer, and the employee promises to perfectly hand over their tasks right up until they leave, out of consideration for each other. However, not every farewell is beautiful, and just as the end of a relationship is not always pleasant, neither is the termination of an employment relationship.

Therefore, when a company reluctantly ends an employment relationship against the wishes of the employee, and the employee strongly resists or declares they will move to a competitor, many companies begin to worry: ‘What should we do if the employee later raises an issue, or if they take our know-how?’

Below, we present two documents that are advisable for an employee to prepare when resigning.

1.  Resignation Agreement

This is the most basic document that clearly states that the termination of the employment relationship was by ‘mutual agreement.’ It serves to prevent employees, who seem to have amicably accepted their resignation, from later filing wrongful dismissal lawsuits and similar claims. The key contents are as follows:

(1)   The employee has agreed to voluntarily resign as of the ‘resignation date.’

(2)   The employee has received all wages due from the company as of the ‘resignation date.’

(3)   The employee will not file civil, criminal, or administrative lawsuits against the company in the future.

In the case of a ‘criminal complaint,’ it cannot be prevented simply by having drafted this resignation agreement (in other words, if the employee sues the employer for wage arrears, it cannot be challenged as invalid solely based on the ‘resignation agreement’). However, even in this case, it can be disputed that all wages that should have been actually paid based on the resignation agreement were paid, and most importantly, it can significantly prevent disputes regarding wrongful dismissal. Therefore, the resignation agreement is the most critical document that should be prepared with the employee.

However, from the perspective of an employee who has already decided to resign, there may not be a compelling reason to draft this document. Thus, if there are reasons that make such a document necessary, it is common for the company to offer a small amount of consolation/encouragement money in addition to the statutory severance pay and request a signature in return. The scope and effectiveness of the resignation agreement can vary significantly depending on its contents, so it is essential to have the document reviewed by a lawyer before signing it.

2. Non-Disclosure Agreement

In industries where internal trade secrets are crucial, or when disputes that could lead to a decline in the company's reputation arise and someone decides to resign, there may be a separate agreement that specifies confidentiality obligations.

The most critical parts of such a non-disclosure agreement are as follows:

(1)   Subject of confidentiality: in other words, what needs to be kept confidential

(2)   Duration of confidentiality: in other words, how long the information must remain confidential

(3)   Penalties for breach of obligation: in other words, what happens if the confidentiality obligation is violated

In particular, if the internal know-how does not meet the requirements for a trade secret under the Unfair Competition Prevention and Trade Secret Protection Act, it can be quite challenging to measure damages when it is leaked. Therefore, the non-disclosure agreement can address these difficulties by pre-determining compensation for breach of the confidentiality obligation or establishing liquidated damages.

By properly drafting such documents and reaching an agreement, it can significantly prevent unnecessary legal disputes in the future, as well as provide the advantage of avoiding ‘uncertainty’ itself.

However, conversely, from the employee's perspective, it is essential to be aware that if one lightly signs such documents, they may be prevented from exercising rights they would originally have been entitled to or may incur burdensome obligations they were not originally subjected to.

Cheongchul Law Firm comprises lawyers with backgrounds from the country's top five law firms, prosecutors’ offices, and large corporate legal teams, with specialized attorneys forming teams to respond to cases rather than an individual lawyer. Cheongchul offers comprehensive solutions for entire business issues, focusing ultimately on helping clients achieve their goals and providing legal consulting. If you need assistance in reaching your goals, do not hesitate to contact Cheongchul.