A Miswritten HR Document Can Lead to Legal Proceedings
"I was prosecuted for violating the Personal Information Protection Act because the employment certificate included personal information."
"I received a ruling to compensate 50 million won for improperly drafting a disciplinary document."
"The content of the performance evaluation report was problematic, leading to a human rights complaint of gender discrimination."
These stories were actual concerns posted on Korea's largest HR community 'HR OO'. These are cases that frequently occur in domestic SMEs and startups.
Why do these issues persist?
This is because small businesses or startups often lack professional HR staff. Seeking help from lawyers or labor consultants every time is costly, often resulting in the company leaders handling all documents themselves.
However, without in-depth knowledge of employment, labor, and HR-related laws, drafting complex documents leads to problems. The standard documents provided by the government are just templates and often aren't thorough enough, often leaning towards the employee rather than the employer.
To resolve these issues, companies need to create HR documents tailored specifically for their own needs. It doesn't require spending millions of won on hiring experts.
This article outlines everything from how SME leaders can properly draft HR documents to eliminating labor risks using AI in just 10 minutes.
HR and Labor Issues Commonly Seen in SMEs and Startups
Types of HR Documents That Can Lead to Disputes, Lawsuits, or Fines if Done Incorrectly
HR documents include all papers recording and managing an employee's journey from hiring to termination.
Employment certificates, performance evaluation reports, disciplinary documents, workplace harassment response documents, safety management documents are examples.
HR documents are not mere records or paperwork. They should be treated as a legal shield protecting the company from labor risks.
If HR documents are drafted without awareness of standard practices and legal requirements, there's a high probability of getting involved in legal disputes.
Labor Risks Arising from Inadequate HR Documents
Personal Information Leakage Incidents
Cases where unnecessary personal information like resident registration numbers and family details are included in HR documents
Discrimination and Unfair Treatment Lawsuits
Arise when HR practices involve unclear evaluation criteria, subjective assessments, and opaque promotion and compensation processes
Unfair Dismissal Judgments
Occur due to inadequate disciplinary procedures, lack of hearing opportunities, or insufficient procedural fairness
Legal Liabilities and Fines
In case of violations of the Personal Information Protection Act, Labor Standards Act, Serious Accidents Punishment Act, etc.
Preventing Privacy Violations with Employment Certificates
Draft Employment Certificates with Only the 'Minimum Required Information'
Small Enterprise A included an employee's resident registration number, family relations, and military service details in the employment certificate. When an external institution receiving this certificate had a data leak, a fine of 3 million won and corrective measures were imposed for violating the Personal Information Protection Act.
Many companies mistakenly think of employment certificates as mere formal documents and include excessive personal information. This can lead to punishment for violating the Personal Information Protection Act.
The principle of drafting employment certificates is to include only the minimum information necessary for their issuance purpose.
Recommended Details for Employment Certificates
Name, date of joining, position, issuance purpose, etc.
Include tailored information based on issuance purpose
For loans: Employment status, position, salary level (if required)
For visa: Employment period, current status, company details
For job change: Current employment status
Other personal information like full resident registration numbers, family information, detailed addresses included in employment certificates is unnecessary.
Before issuing an employment certificate, make sure to check its purpose and include only essential items.
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Performance Evaluation Reports: A Lack of Fairness is a Labor Risk Bomb
Objective Criteria are Essential for HR Evaluations
"I never thought an evaluation written without objective criteria could be considered evidence of discrimination."
A female employee at IT Company B, excluded from a promotion evaluation, filed a complaint with the Human Rights Commission claiming gender discrimination. The evaluation criteria and point distribution were vague, and the records were subjectively written, causing issues. Ultimately, Company B had to issue an apology and pay a settlement of 30 million won.
After reading this example, did you question, 'Why is it problematic as I just wrote honestly?'
The subjectivity in performance evaluations is a leading cause of discrimination lawsuits. Accurate HR evaluations require defining clear quantitative and qualitative criteria.
Criteria Ensuring Fairness and Objectivity in Performance Evaluations
Set quantitative targets like KPI and contribution to sales
Clearly justify qualitative evaluation items like collaboration skills and leadership
Record the evaluation basis and feedback content in writing
Establish customized criteria for each department
For example, vague criteria like 'lack of enthusiasm' are hard to defend in court for fairness.
Having clear evidence documented helps protect the company in case of any later disputes.
Disciplinary Documents: Ignoring Procedures Leads to 50 Million Won in Compensation
The Formal Requirements of Disciplinary Procedures Are Critical
Startup C decided to terminate an employee due to frequent absences and behavioral issues. However, they failed to provide a prior opportunity for explanation and didn't convene a disciplinary committee. As a result, the termination was judged as unfair, and the company had to pay 50 million won in compensation, suffering considerable damage to its image.
Ignoring procedures and terminating employees can lead to recognition of 'unfair dismissal', causing significant losses for the company. Simply conducting a disciplinary process without following procedures renders all disciplinary actions invalid.
Disciplinary Procedures Ensuring Procedural Justification
Prepare the statement of disciplinary reasons
Provide an opportunity for explanation (specify the notification and response deadline)
Convene a disciplinary committee and prepare meeting records
Send out the disciplinary notice
The statement of disciplinary reasons should detail the violation facts and the evidence base. It's crucial to offer the disciplined party a chance to provide justification within a specified period after receiving the statement.
The disciplinary notice effectively communicates the final decision and implementation date in writing.
Workplace Harassment Cases Must Be Documented Diligently
Initiate Document Processes Immediately in Workplace Harassment Cases
"An anonymous report suddenly came in, and I didn't know how to respond, so I initially responded verbally. I ended up being classified as a co-perpetrator for passively handling the situation as the CEO."
Workplace harassment is not just an issue of other companies. As of 2025, the number of workplace harassment cases reported daily exceeds 50, hitting an all-time high.
Many SME leaders become confused when receiving a report. Often unprepared with proper procedures or documentation, this exposes the company and leaders to legal risks.
If the investigation process is neglected after a report, the company may be held responsible for neglecting victim protection and face substantial fine requirements.
For example, a well-known retailer D faced an incident of workplace harassment but only issued verbal warnings without forming an investigation committee or preparing reports, resulting in an onsite inspection by the Ministry of Employment and Labor, a 10 million won fine, and compensation to the victim.
What Should SMEs Do First When Workplace Harassment is Reported?
Workplace Harassment Reporting Response Procedures
(Source: Seoul City Recommended Manual)
Workplace harassment isn't just an emotional conflict; it often requires legal responses. Especially in SMEs without clear HR departments or insufficient internal processes, it can easily lead to a situation where the company must compensate either or both the victim and the perpetrator.
The key is ‘prompt and objective initial response’.
If a report is received, follow the 5-step response process below.
Workplace Harassment Reporting Response Process (For SMEs and Startups)
1. Receive Report and Conduct Confidential Counseling
Anyone, including the victim or a third party, can file a report
Counseling should be conducted in a separate space, listening intently to the victim and ensuring confidentiality
If the victim does not wish for official procedures, record the incident but conclude with unofficial support
2. Determine Investigation Necessity and Officially Request an Investigation
If the victim desires official procedures or an investigation is deemed necessary, form an internal investigation team or request an external investigation
Determine compliance with legal requirements like the relationship between the perpetrator and victim, recurrence, work environment deterioration
3. Immediately Separate Perpetrator and Victim
Preventing secondary harm is crucial
Implement separation through team transfer, paid leave, or workspace change
Consider the victim's opinion as imperative
While listening and accommodating the reporting party's words, maintain objectivity as siding solely with the reporter may result in legal disputes from the perpetrator
4. Report Investigation Results and Implement Discipline or Mediation
If workplace harassment is confirmed, initiate disciplinary procedures (warnings, suspension, etc.)
Formation of a disciplinary committee and keeping meeting records are essential
Even if not confirmed, recommend education to improve organizational culture
Notify both the victim and perpetrator of the results via official letters or emails
5. Post-Management and Preventive Education
Regular monitoring of the victim (at least every six months)
Conduct training for reoccurrence prevention targeting the perpetrator and all employees
Ensure relevant contents are reflected in the employment rules
Essential Documents for SMEs and Startups to Equip for Workplace Harassment Response
1. Employment Rules
Include clauses on workplace harassment prevention and measures (Article 93 of the Labor Standards Act)
▶ Examples: Definition of harassment, reporting procedures, investigation methods, victim protection, perpetrator discipline, etc.
2. Workplace Harassment Prevention Manual
Documents specifying response procedures and designating responsible personnel
▶ Step-by-step manualization of who receives reports, conducts investigations, and under what circumstances decisions on discipline are made
3. Official Reporting Form
Official form available for the victim or a third party to complete
▶ Include name, date, content of damage (based on the 5W1H principle), and desired measures, etc.
4. Counseling Record Sheet
Record sheet completed during initial counseling (to determine official or unofficial response)
▶ Fill out information like counselor, counseling date and time, location, counselor's signature, victim's declaration, etc.
5. Investigation Plan and Investigation Report Forms
Used for official investigations
▶ Include investigation schedule, scope, list of subjects, investigation content, evidence analysis, etc.
6. Victim Protection Request Form and Result Notification
Form for requesting protective measures (like paid leave, workplace change) for victims
▶ Keeping records of such requests helps prevent future disputes
7. Perpetrator's Explanation and Disciplinary Decision Form
Document granting the perpetrator an opportunity to confirm facts and explain themselves
▶ Used for issuing internal notice of disciplinary decisions
8. Post-Management Record Sheet (Over Six Months)
Regular monitoring record sheet for the victim
▶ Check for secondary damage, recovery status, availability of legal support, etc.
9. Preventive Education Materials and Attendance Confirmation
Preventive education should be conducted at least once a year (not mandatory but recommended)
▶ Preserve educational materials, attendance lists, and signatures
10. Confidentiality Agreement (for Counselors, Investigators, Mediators)
Confidentiality agreements obtained from all team members involved in handling cases
▶ A legal safeguard preventing privacy breaches and secondary damage
For workplace harassment cases, following complex recommended procedures accurately is critical.
Clearly document victim protection measures and subsequent actions regarding the perpetrator to avoid legal liabilities.
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Serious Accidents Punishment Act: An Unexpected Event Could Happen to You
The Serious Accidents Punishment Act is Now Applied to All Companies
The Serious Accidents Punishment Act (SAP, also known as Act on Punishment for Major Accidents) imposes penalties on executives if a major accident occurs due to a lack of safety and health measures at a workplace.
As a law stronger than the Industrial Safety and Health Act, violating the SAP can result in complete business suspension for the company, and even imprisonment for the representative.
In practice, SME H was fined several hundred million won, and its CEO was sentenced to imprisonment for lacking adequate safety management documents.
The application of the SAP has expanded to workplaces with 5 to 49 employees from January 27, 2024. Previously applied only to workplaces with more than 50 employees, it now applies to virtually all businesses.
10 Essential Documents for SMEs/Startups to Address the SAP
Management Representative's Safety and Health Policy Declaration
-> Official declaration drafted in the name of the CEO
-> States that upholding safety and health is the top management priority
Plan for Establishing a Safety and Health Management System
-> Who (organization) will do what (tasks) and how (by time) → detailed execution plan
-> Includes designated responsible persons and timetable for risk assessments
Risk Evaluation Report
-> Identify hazardous and risk factors → establish and implement improvement plans
-> Perform at least once a year with written records essential
Standard Operating Procedures for Each Task (SOP)
-> Safety work guidelines for high-risk tasks (machinery, chemicals, electricity, confined spaces)
-> Non-manufacturing sectors are not exempt (e.g., server rooms, high-altitude work)
Management Record of Safety and Health Education Completion
-> Plan and maintain records of required education for regular/new/special education
-> Includes external contractors and short-term workers
Regular Inspection and Voluntary Inspection Records
-> Periodically record inspection details of facilities, machinery, offices, fire equipment, etc.
-> Set inspection intervals to be monthly or quarterly
Emergency Response Manual for Industrial or Fatal Accidents
-> Specify procedures for internal reports, initial measures, reporting to external agencies in case of accident
-> Integrating regular training is essential
Emergency Contact List and Cooperation System with External Experts
-> List emergency medical institutions, industrial safety consultants, legal/labor advisory offices
-> Includes accident response and control tower system
Accident Report and Investigation Report Form
-> Document investigation content, cause analysis, and plans for recurrence prevention after an accident
-> Essential for legal/insurance responses
Safety and Health Meeting Minutes and Implementation Details of Improvement Measures
-> Regular holding of internal safety and health meetings (or small business councils)
-> Include evidence that improvements were implemented after meetings
“We don't even have a factory, why the SAP?”
IT startup leaders creating software or platforms often think the SAP doesn't apply to them. However, even if you're involved in online-based businesses without manufacturing or logistics, it's crucial to have proper documents prepared for the SAP.
The SAP focuses on 'whether the management has fulfilled its preventive responsibilities' rather than the 'form of the accident'. This means that if an employee collapses from overwork in the office or falls on the building’s stairs, the CEO (representative) can be held criminally liable if preventive systems were absent.
Document Templates for SAP Compliance Even Startups Must Prepare
The key is to prove, "We have an established safety management system and have thoroughly trained our staff."
The SAP determines penalties based on ‘whether the management took actions to prevent accidents’. Demonstrating the extent of effort is only evidenced through documents.
Labor experts, therefore, recommend that even SMEs or startups prepare the following documents.
Safety and Health Policy Declaration
Draft a statement in the CEO's name declaring our company's commitment to prioritizing employees' safety and health.
This serves as the starting point for a safety culture and will likely be the first document reviewed during an investigation.
Plan for Establishing a Safety and Health Management System
Document concretely who is responsible for what in our organization, what will be inspected, and improvements implemented. Essentially, it serves as an 'internal safety constitution'.
Checklist for Risk Factors and Self-Inspection Records
Regularly perform inspections on actual workspaces or equipment (e.g., outlet overheating, chair damage, server room environment, long-seated posture, etc.) and record the details.
System Evaluation Records for Job Stress and Preventative Measures Against Overwork
For predominantly office-based companies, mental health is essential, particularly relating to workload, overtime/weekend work, and interactions with leadership. Surveys on these aspects and minutes from meetings discussing improvement are crucial prevention evidence.
Confirmation of Regular Education and Training
It is recommended to conduct industrial safety and health education for all employees, provide safety education for new hires/external workforce/short-term contract workers, and distribute guidance on work-at-home considerations.
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The 4-Step Process for Automatically Creating Legally Risk-Free HR Documents with AI
Step 1: Automatically Generate HR Documents for the Intended Purpose
Basic HR and labor document templates necessary for a company are provided
Enter requests through AI chat for automatic generation
Step 2: Create Custom HR Documents for Our Company
Based on standard HR document templates
Automatically complete custom drafts tailored to industry, workplace size, key risk factors, and purpose
Employment Certificate: Automatically recommend objective evaluation indicators aligned with industry, job, and regulations
Disciplinary-related Documents: Enable generation of essential disciplinary documents such as statement of disciplinary reasons, explanation notice, disciplinary meeting minutes, and notice of disciplinary action
Workplace Harassment Reporting and Investigation Documents: Complete drafts from creating the investigation committee list to the outcome report within 10 minutes
Mandatory Safety Management Documents for SAP Compliance: Analyze industry, workplace size, and key risk factors to propose a tailored system for the company
Step 3: Automatically Review Legal Risks According to the Latest Regulations
While generating documents, AI trained on all South Korean regulations automatically checks for legal risks
Immediate notifications for any missed steps or items, with suggestions for correction
Upon completion, the AI evaluates the compliance with legal procedures and risk status
Step 4: Final Review
Check for missing essential clauses
Cross-check and double-check for contradicting contents within the document
Output in formats suitable for the company, such as Hangul, Word, PDF, etc.
Create a Custom AI HR Document Solution Perfectly Suited for Our Company
With inline AI, create legally safe HR documents quickly and accurately, even without a professional HR staff. SME leaders, startup CEOs, no need to be swayed by legal risks anymore.
