earticle

영어

The legal rules governing individual dismissals are one of the most important parts of the Employment Law of Korea. A basic characteristic of dismissals regulation is the employee' right to file a suit against their employer questioning their dismissal as unfair or unjustified. When a dismissal is declared unfair in the Labor Board, the employee should be reinstated and financially compensated. But this is not always the case. When the opposite party appeals against the decision, the dispute takes time and costs a lot. The process of dismissal dispute resolution has become increasingly controversial, but its economic impact remains little understood. Little is known, also, about the extent to which statutory law of unfair dismissal disputes induces inefficiency and redistribution. In this paper, I focus on the nature of litigation and settlement as resolution of unfair dismissal disputes. The paper examines the conditions under which parties have an incentive to enter into the settlement and their welfare implications. Some commentators say settlement permits defendants to strip plaintiffs of important legal rights, while others say that the agreements lead to wider societal harms by inhibiting the development of law. These criticisms have been offered as reasons not to enforce settlement agreements. Settlement agreements, like all contracts, will be attractive to potential plaintiffs and defendants when they can enhance the joint wealth of the contracting parties. Parties have an incentive to enter into an settlement agreement only when the margin between deterrence benefits and dispute resolution costs is larger under the settlement regime. If disputes are resolved efficiently by settlement, if conflict is avoided and citizens learn to seek compromise when disputes do arise, society would be better off.