Employment law in the Republic of Korea - an overview

inbrief Employment law in the Republic of Korea – an overview Inside The employment law landscape Commencing employment Key minimum employment rights Terminating employment Other important matters of employment, it is advisable for employment contracts to be in writing. Terms and conditions can be also implied into the contract based on a course of conduct over a period of time. The contract does not have to be in Korean although this is highly recommended, especially for local employees. Employers of 10 or more employees must prepare Rules of Employment - basically an employee handbook covering matters such as the calculation of wages, hours of work and paid leave. These must be filed with the Ministry of Employment and Labour (“MOEL”), the relevant regulatory authority. The Rules of Employment, as well as other company policies regarding the terms and conditions of employment – and even well-established workforce practices – are legally binding on the employer and override any inferior terms in an employment contract. Key minimum employment rights Annual leave An employee who works a full year is entitled to 15 days of annual paid leave. This entitlement can rise up to a maximum of 25 days according to length of service. Eligible employees are only entitled to minimum statutory annual leave if they have at least 80% attendance during the previous year, while employees who do not meet the overall yearly requirement of 80% attendance in the previous year must be afforded at least one day of paid annual leave for each full month of attendance. Sick leave Employees are not legally entitled to time off in relation to non-work related illnesses or injuries. However, it is general practice for employers to allow this. Practices vary widely but generally several months of unpaid leave and/or up to several weeks of paid leave is not uncommon, if the illness or injury requires it. Employers are required under the LSA to provide paid leave for work-related illnesses or injuries (though workers compensation will often fully or partially relieve the employer of the obligation to pay during The employment law landscape The Korean labour market is highly regulated and very employee friendly, with powerful labour unions and stringent employment protection laws. Some employment rights are even enshrined in the national constitution. In general, employees are well informed about their employment rights and often challenge dismissals. Although weakening somewhat, as in Japan, there is still a cultural expectation of career long employment with the same employer. Korea has a civil law system although court decisions have strong precedent value, especially decisions of the Korean Supreme Court. The Labour Standards Act (“LSA”) is the principal statute regulating the employment relationship and providing minimum employment standards. Commencing employment Employees can be employed on a permanent basis (commonly referred to as “regular”) or on a fixed-term basis for up to two years (fixed-term and part-time employees, and dispatched agency workers, are referred to as “non-regular”). An employee employed on a fixed term for more than two years may be deemed employed for an indefinite term, subject to some exceptions. Agency-type working arrangements (known as “dispatch”) are very popular, partly because the workers are employed directly by a dispatch agency and so any problems with terminating employment can be avoided. However, such arrangements are coming under continued scrutiny and are highly regulated – caution is advised. Failure to comply with dispatch regulations may result in criminal sanctions. If the dispatch arrangement is unlawful or a dispatched worker has worked for more than two years for the same company they may be deemed a company employee, subject to certain exceptions. Employees can be engaged on a full-time or parttime basis. The employment contract Since certain key terms of an employment contract (e.g. wages and working hours) must be given in writing to all employees at the start Introduction The Republic of Korea (often referred to as South Korea and in this in-brief as Korea) has one of Asia’s strongest performing economies and is home to some of the world’s largest brands. Despite its fast ageing population and a chronically low level of productivity, Korea continues to be popular place to invest for foreign companies. This in-brief provides a snapshot of some of the key aspects of employment law in Korea. Our Hong Kong office was recently opened to meet a growing demand from many of our clients for coordinated employment and immigration/global mobility support across the Asia Pacific region (including Korea). This publication provides general guidance only: expert advice should be sought in relation to particular circumstances. Our Hong Kong office can source Korean law advice through its links with local firms in Korea. inbrief discrimination. Employees are able to claim before the courts and the Labour Relations Commission, a quasi-judicial body set up by statute, as well as the National Human Rights Commission. Protecting the business The courts generally enforce restrictive covenants if they are reasonable and do not unreasonably interfere with an employee’s freedom to work. Business transfers On a business transfer, the employment relationship transfers unless employees decide otherwise. The transferee assumes the employment of the transferring employees under the same terms and conditions as applied before the transfer. Employees are protected against dismissal (before or after the transfer) unless there is just cause. Resolving disputes Employees can bring unfair dismissal claims before the relevant Regional Labour Relations Commission. Employees dismissed without cause may also initiate civil proceedings in the District Court. Courts and he Labor Relations Commssion will routinely, order reinstatement of unfairly dismissed employees (along with back pay). Employee representation Employees are free to form a labour union that may negotiate a collective bargaining agreement with the employer. Generally, the agreement applies only to union members, but it may also apply to other employees if the union represents at least one half of the employees of the same kind. Each workplace with 30 or more employees must have a Labour Management Council to discuss workplace matters, made up of an equal number of members representing employers and workers. treatment). Public holidays Other than Labour Day, an employer is not obliged to provide paid leave on public holidays but in practice it is very common to do so. Working time There is a limit on working hours of 8 hours per day and 40 hours per week. Overtime of up to 12 hours per week, and additional hours on weekends, are permissible subject to the payment of an overtime premium. Employees in managerial or supervisory positions and employees handling confidential information are not subject to the statutory limits on working hours. Whether hours of work done during weekly days off (generally Saturdays and Sundays) are included in “weekly” working hours for purposes of calculating overtime pay is currently a major controversy, with cases pending before the Supreme Court that should decide the issue. Family leave Pregnant employees are entitled to 90 days’ paid maternity leave which can be used before and after childbirth, provided at least 45 days must be used after the birth. Additional paid leave is available in the event of multiple births. The employer must pay for the first 60 days while the remainder is paid by the government. Fathers are entitled to three days’ paid paternity leave and two additional days of unpaid leave, which can be taken at the employer’s discretion within 30 days of the child’s birth. Unpaid childcare leave and reduced hours for childcare purposes are also available in certain circumstances. Wages and social insurance A minimum wage applies to all employees with some exceptions, for example employees in their probationary period. The minimum hourly wage rate for 2017 is KWR 6,470. Employers must contribute to mandatory social security schemes such as the National Pension, the National Health Insurance, the Unemployment Insurance and the Industrial Accident Compensation Insurance. Terminating employment Unfair dismissal laws only apply to employers with five or more employees, who are prohibited from dismissing an employee without a “just cause”. The courts have generally held that just cause only exists in very limited circumstances and it is exceedingly difficult to terminate employment lawfully. Behaviour that would often be taken as a given for justifying termination in other countries often will not amount to just cause in Korea. For example, in performance cases, an employee’s poor performance must be well documented and severe, and an employer must give the employee an opportunity to rectify it or risk having the dismissal overturned. A very high threshold must be met in order to justify redundancies: there must be an “urgent business necessity” to make the redundancies and certain other procedural requirements must be met. An employer must generally demonstrate financial losses over a period of time, although certain other causes such as adoption of new technology can also constitute an urgent business necessity. In the case of collective redundancies (generally if 10% or more of the workforce will be made redundant), an employer must file a report to the MOEL. Employers must provide at least 30 days’ written notice or pay in lieu of notice, with some exceptions. Employers must also make a statutory severance payment to any employee with at least one year’s service, equating broadly to 30 days’ pay for each year of employment. This must be paid regardless of the reason for termination and whether it was voluntary or for cause. Maintenance of a qualifying severance pension plan with respect to an employee can satisfy the obligation to pay severance. Discrimination Discrimination against employees on the grounds of sex, age, nationality, religion or social status is prohibited. Employers are obliged to protect employees from sexual harassment in the workplace. Disabled employees, female employees, foreign workers and non-regular employees are also given statutory protection from inbrief This publication provides general guidance only: expert advice should be sought in relation to particular circumstances. Please let us know by email ([email protected]) if you would prefer not to receive this type of information or wish to alter the contact details we hold for you. © May 2017 Lewis Silkin LLP For further information on this subject please contact: Kathryn Weaver Head of Employment Law Hong Kong T + 852 2972 7133 [email protected] Soyoung Lee Associate T + 44 20 7074 8446 [email protected] inbrief Universal Trade Centre 3 Arbuthnot Road Central Hong Kong T +852 2972 7100 E [email protected] www.lewissilkinemployment.com Data protection Korea has a well-developed data protection regime. Under the Personal Information Protection Act, an employee may inspect, ask for correction of and suspend any use of any of their personal information handled by the employer. In addition, the employer must obtain the consent of the employee to collect, process, manage or transfer to a third party any of the employee’s personal information.