Fixed-term and part-time employees
Collection of insurance
On February 1 2012, as a follow-up to its comprehensive plan to improve the protection of non-regular employees announced on September 9 2011, the government promulgated amendments to:
- the Act on the Protection of Dispatched Workers;
- the Act on the Protection of Fixed-Term and Part-Time Employees;
- the Framework Act on Employment Welfare;
- the Act on the Collection of Premiums for Employment Insurance and Industrial Accident Compensation Insurance;
- the Labour Standards Act; and
- the Minimum Wage Act.
All of these acts were passed by the National Assembly between December 29 2011 and December 30 2011. The amended acts on dispatched workers, fixed-term and part-time employees, employment welfare and labour standards will come into effect on August 2 2012 (ie, six months after the promulgation), and the amended acts on the collection of insurance and minimum wages will come into effect on July 1 2012.
This update highlights some of the changes introduced under the amended acts.
Under the current Dispatched Workers Act, an employer is required directly to employ a dispatched worker (ie, an employee hired through an employment agency and seconded to the employer) when the term of the dispatch, whether legal or not, exceeds two years.
However, Article 6-2(1) of the amended act requires an employer directly to employ the dispatched worker immediately, even if the term of dispatch does not exceed two years, if the dispatch is found to be illegal.
The Ministry of Employment and Labour may issue an order for corrective measures on its own initiative without a request for relief by the employee concerned. A fine of up to KRW100 million may be imposed on employers that do not comply with orders for corrective measures issued by the ministry (Article 21(2)).
Fixed-term and part-time employees
Under the amended Fixed-Term Employees Act, when an employer discriminates against a fixed-term or part-time employee, the ministry may directly demand that the employer take corrective action without the employee concerned applying for relief. Furthermore, the Labour Relations Commission may issue an order for corrective measures if the employer does not comply with the ministry's demand. If the employer does not comply with the commission's order, a fine of up to KRW100 million will be imposed (Articles 15-2 and 24).
The amended Labour Standards Act introduces new measures for wage payment protection, including increased penalties against employers that fail to pay wages. Furthermore, in connection with contract work involving multiple tiers of subcontractors, the scope of joint liability for failure to pay wages has been extended to all higher-tier contractors, including the primary contractor (Articles 44(1) and (2)).
Other types of additional protection are as follows:
- Non-working time during which the employee is under the supervision and control of the employer will be included in the calculation of working hours (Article 50(3)).
- An employee is entitled to one day of paid leave for each month of full attendance if he or she has worked for less than 80% of a year and is thus not entitled to the full 15 days of annual leave (Article 60).
- For high-risk pregnancies, maternity leave may be used at any time before the birth of the child (Article 74(2)).
- Employers are now required to notify and encourage employees to use their annual paid leave days six months before the expiration of the period in which the annual leave days are determined (instead of the three-month limit under the current Labour Standards Act).
Under the current Minimum Wage Act, the minimum wage of a probationary employee who has been under probation for up to three months is 90% of the regular minimum wage. However, the amendment does not allow for a reduction in the minimum wage during a probationary period for employees under fixed-term employment of one year or less (Article 5(2)(1)). In addition, contractors may be jointly liable for any violations of the act by their subcontractors (Article 28(2)).
As an incentive for companies to provide the benefits of an employee welfare fund to their subcontractors and dispatched workers, the amended Basic Employment Welfare Act increases the maximum amount of assets that may be used for an employee welfare fund if the amount used for the employees of subcontractors and dispatched workers by a company with an established employee welfare fund exceeds the amount prescribed in the order by the ministry (Article 62(2)).
As a measure to increase the participation rate in employment insurance by low-wage workers employed by small companies, the amended Act on the Collection of Insurance provides a basis for insurance subsidies to be given to employers and employees, limited to Koreans (Article 21), which may be applied directly to the individual employee's portion of the insurance premium (Article 16-3(1)).
For further information on this topic please contact Hee-Chul Kang, Sang Wook Cho or Raymond Kang at Yulchon by telephone (+82 2 528 5200), fax (+82 2 528 5228) or email ([email protected], [email protected] or [email protected]).