Fired like on Twitter?..."No Massive Layoffs from Global Big Tech"

Foreign IT Companies Also Subject to Domestic Labor Laws
"Unilateral Mass Layoffs Like Twitter Are Not Possible"

[Image source=Yonhap News]

[Asia Economy Reporter Yuri Choi] As Tesla CEO Elon Musk launched a massive layoff immediately after acquiring Twitter, the Korean branch could not escape the downsizing. Consequently, concerns arose that a wave of mass layoffs triggered by global big tech companies might occur, but the likelihood is considered low. This is because foreign IT companies must comply with Korean labor laws, making unilateral mass layoffs impossible.

According to the IT industry on the 10th, Meta plans to start notifying employees of layoffs at its Korean subsidiary soon. This follows Meta CEO Mark Zuckerberg's announcement on the 9th (local time) that about 11,000 employees, or 13% of the total 87,000 employees worldwide, will be laid off. Currently, Meta Korea has about 100 employees, so a 13% reduction would mean letting go of around 10 people.

A Meta Korea representative said, "The personnel reduction applies globally, so the Korean branch is also affected," adding, "No details have been provided regarding the scale or criteria of the restructuring." The downsizing is expected to be conducted by individually notifying the affected employees. Although this is Meta's first large-scale restructuring overall, some analyses suggest the impact on the Korean subsidiary will be minimal, as there has been about a 10% annual workforce adjustment and nearly a 30% increase in staff this year.

Earlier, when Twitter abruptly laid off half of its employees at the Korean branch including headquarters staff, there were speculations that other foreign IT companies would follow with layoffs, but the industry explains this is not true. While there is a trend to halt new hiring due to recession concerns, large-scale layoffs are difficult under domestic labor laws.

Korean labor law follows the principle of territoriality. Even if the decision comes from overseas headquarters, employees hired by the Korean branch cannot be laid off in violation of domestic labor laws. Therefore, layoffs are only possible under urgent business necessity or if the company makes every effort to avoid layoffs. Even then, the selection of employees must be based on reasonable criteria, and the criteria must be notified and negotiated at least 50 days in advance.

Foreign IT companies must comply with Korean labor laws, so the Twitter case is considered highly unusual. The Ministry of Employment and Labor is currently investigating whether Twitter Korea's layoffs constitute unfair dismissal.

On the 4th, Twitter sent layoff notification emails to nearly half of Twitter Korea's employees, reducing the staff from about 30 to the teens. The layoffs included developers, and the public relations (PR) team was completely disbanded. It is reported that no severance package or consolation pay was provided to those laid off. This large-scale reduction was driven by Elon Musk's efforts to improve management efficiency after acquiring Twitter.

A foreign company official said, "There might be special provisions allowing layoffs in certain management situations such as acquisitions, but Twitter-style layoffs are unprecedented," adding, "Since employment contracts and layoff procedures are not different from domestic companies, blocking company accounts and notifying layoffs via email is unacceptable."

Even when downsizing occurs, it is common to offer voluntary retirement with severance pay ranging from six months to as much as 50 months' salary. Layoff notices are typically given at least two months in advance, and retirement conditions are negotiated with employee consent.

Ultimately, Twitter-style mass layoffs are being interpreted as Elon Musk's 'eccentricity.' In 2020, he also ordered the disbandment of the headquarters PR team, completely reorganizing Tesla Korea's PR team. After the recent Twitter layoffs, there were even incidents where some employees were asked to return to work.

A representative from a global IT company said, "Seeing that Twitter dismissed all existing executives and the board, it appears they are using the recession as an excuse to build an organization that suits the new CEO's preferences," adding, "It is hard to predict future actions, whether they intend to proceed recklessly even if it violates domestic labor laws or are prepared to face lawsuits."