One of the more significant developments in late 2014 is very likely to continue to be of significant interest to employers throughout 2015.
On November 24, 2014, the Deputy Prime Minister of Economic Affairs claimed that the government must address the excessive protection provided to regular employees (as opposed to non-regular employees such as fixed-term and dispatch employees). This statement sent ripples through the industry.
In response, the Government agreed to convene the Special Labor Market Restructuring Committee of the Korean Tripartite Committee (Special Committee) for purposes of discussing and agreeing on ways to refine the labor market. The Special Committee will continue to meet twice per month in this regard. However, we note that the Ministry of Employment and Labor (MOEL) has not yet agreed to take measures to mitigate the protection of regular employees at this time.
One of the major topics discussed so far by the Special Committee was the MOEL’s “comprehensive measures for addressing non-regular employees” (Comprehensive Measures), which the MOEL proposed on that same day. Specifically, the Comprehensive Measures attempt to prevent discrimination and/or abuse of non-regular employees, address the differences in working conditions between non-regular and regular employees, and alleviate the tension caused by this two-tiered (i.e., non-regular and regular employees) system and the consequent polarisation.
We understand that some industry observers, however, have been quick to question the MOEL’s Comprehensive Measures, stating that the proposed measures would (1) promote the hiring of employees as non-regular employees; (2) potentially make it easier to terminate employees; and (3) reduce job security. Some have also claimed that the proposed measures will increase labor costs and impose a financial burden on employers who would have to pay Employment Transfer Allowances and/or statutory severance payments to non-regular employees.
To date, the Special Committee has not specifically addressed any possible changes to the requirements for employee termination. Further, there are no indications of when, if ever, the Special Committee will discuss this very important matter. The MOEL is said to be preparing a guideline for employers to follow when drafting provisions in their rules of employment on termination of under-performing employees. However, the final draft of this guideline is not expected until all negotiations within the Special Committee have concluded.
All the matters currently being discussed by the Special Committee, the Comprehensive Measures and the expected MOEL guideline on the termination of under-performing employees are not yet finalised at this time. However, we believe that resistance to any major change is and will be fierce. Strong opposition from the Korean Confederation of Trade Unions, which is currently not represented in the Tripartite Committee, is anticipated by industry observers.