Aug 22, 2014

Unfair/Wrongful Dismissal of Foreign Executives under Term Contract with Korean Chaebols

Expat executives in Korea are typically hired by Korean conglomerates based on two or three year contracts. These employment contracts often have three to six-month at-will termination clauses. In many cases, these contracts are in violation of the Korean Labor Standards Act.

Many foreign executives, recently, have been pushed out of these Korean conglomerates with nothing more than a few months salary and a bitter taste in their mouth.

These actions are giving Korea a bad image amongst potential foreign employees and foreign employees are too often letting the conglomerates get away with these actions because of ignorance of Korean law. I was told by an employee-side executive recruiter that he always advises clients to choose China over Korea, since he believes that, in Korea, you have a far greater chance of not completing your contract.

We are normally on the business-side of litigation for foreign companies, but the increase in these actions by the Korean big fish has led many foreign executives to our doors and in an unusual stance by my team (me), we have warmly welcomed suits against the big fish Korean employers.

Korea is in need of foreign executives and in need of Korean companies that will not prejudice Korea in the eyes of potential foreigner employees. If President Lee’s vision of a globalized Korea is to come to be – the government and attorneys must give these companies a wake-up call.

If the foreign executive is an “employee” under Korean labor law, the termination clause will, in most cases, be deemed in violation of Korean labor law, thus, allowing the employee to continue employment until the termination of the agreement if no cause exists to terminate. In some cases, the employee may even be entitled to employment until retirement.

Additionally, even if the agreement does not provide for severance, the employer is required to pay severance in most cases, where an individual is deemed an employee.

Even representative directors and directors may be protected by Korean labor law.
Korean labor law, in most cases, deems a representative director, director or general manager as an “employer,” thus, not providing the majority of protections afforded by Korean labor law. Numerous exceptions apply. The case law on this matter has been well settled by the Korean Supreme Court. A recent Supreme Court case has detailed the settled principles:
Even when a person is registered as a representative director of a corporation, in exceptional cases when his status as a representative director is only formal/nominal - that he holds no power to execute internal business operations of the company, and also the external business operations are only being executed under his name for the sole reason that he is the one who holds the registered name and that there is an actual manager other than him who actually makes the decisions in such business operations, and that the nature of his payment is compensation to his labor itself rather than his managerial achievements or business performance since he only provides labor under the specific individuals instruction/supervision of the actual manager, such person shall be classified as an “employee” as defined in Industrial Accident Compensation Insurance Act.” (The Industrial Accident Compensation Insurance Act and the Labor Standards Act share identical definitions of “employee.”)
Additionally, the Supreme Court has noted that the form of an agreement is of little concern in determining if an individual is an “employee”:
Whether a person shall be classified, as an “employee” as defined in the Labor Standards Act shall be decided substantially - that is regardless of the form of the contract, in accordance to whether the person has been providing his labor to the employer under a subordinate relationship for the purpose of receiving wages.
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SeanHayes@ipglegal.com

Aug 14, 2014

Choice of Law Issues in Employment Disputes in Korea

Choice of law/jurisdiction issue often arise in Korea when an agreement chooses a law/jurisdiction for resolution of a dispute other than Korea, internal conflicts in the agreement exist (yes this happens) or no choice of law/jurisdiction clause was chosen and the agreement seems to be better handled by a foreign court, or by the law of the foreign jurisdiction, because of, inter alia, the locale of witnesses and the subject matter of the agreement. 

Choice of law/jurisdiction issues are governed in Korea mainly by Korea's Private International Act (KPIA).  However, other acts often trump the KPIA, or else the courts use built-in "public policy" arguments to allow Korean law to trump the non-Korean chosen law.

For example, in the majority of employment law disputes, Korea courts have invalidated choice of the law and jurisdiction clauses that note law and jurisdiction other than Korea.  

For example, if a employer hiring someone for work to be performed primarily in Korea places into an employment agreement, NY Law with resolution in a NY state court, the Korean courts will likely invalidate this clause and apply Korean law and apply the Korean law in the Korean court. 

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Sean may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He has, recently, been ranked as one of only two non-Korean attorneys as a Top Attorney working in Korea by AsiaLaw.

Aug 13, 2014

Smuggling in Korea (밀수출입죄)

The Offense of Smuggling, in Korea, is proscribed by Article 269 of the Custom Act - along with various other Korean acts.

Article 269(2) notes that: "Any of the following persons shall be punished by imprisonment for not more than five years, or by a fine equivalent to ten times the amount of custom duties or the cost of the relevant goods, whichever is lower."

In order not to violate the law, please fill out a Customs Declaration under Article 241 (1) and (2) or 244 of the Customs Act if the items you are importing are not personal items. Essential.

We are dealing with a smuggling charge at this time and the ramifications for not filing out this form are jail and, potentially, a fine that you will be unable to pay.

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Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.

Aug 11, 2014

Criminal Lawyers in Korea: Defense Lawyer to Hire and Not to Hire?

In all cases, in Korea, where you are accused of a crime and you fear that you may be sentenced to time in jail, may be deported or the conviction may harm your future, hire, quickly, an experienced and proactive Korean criminal attorney prior to any interrogations by the Korean police or prosecution.

Sadly, few lawyers, in Korea, are useful for criminal matters, since few lawyers are proactive when it comes to matters concerning the Korean government, experienced in criminal matters for foreigners or willing to upset the status quo (aggressively engage the prosecutor and court).

Please do your future a favor,  forgo any options provided at no or low cost unless you have no other options.

If you can't afford an attorney, the Korean court, normally will appoint an attorney to assist you.  In most cases, the appointment of the Korean government-appointed attorney will be useless for your defense/sentence, since the appointment will be after interrogations, after the decision of the prosecutor to indict and often is an attorney that will only be going through the basic processes necessary for him to complete the matter and go on to the dozens of other matters that he has in front of him/her.

If you are in the U.S. military, the military will appoint you an attorney.  Also, the attorney will be appointed too late in the investigation stage.   The attorney appointed, overwhelmingly, in the cases that I have seen will simply go through the motions.

The handful of attorneys picked by the military are some of the least proactive attorneys I have seen in Korea and want, in the majority of the cases, to simply be on the good graces of their bread-and-butter (a Korean employee of the U.S. military).  If you are convicted of a crime, you will be discharged from the military.   This was not true a decade ago, but the military, even for "minor" violations of law have been quick to discharge soldiers.

Signs that you May Have Hired the Wrong Korean Lawyer
  • Your Korean lawyer is not operating based on a contingency fee (success fee: not guilty/no time served in jail etc.).   The best arrangement is a discounted hourly fee combined with a success fee, since you will receive a bill noting what the attorney is doing and the attorney will be motivated to do work on the matter even when the chance of "success" is slim.
  • Your Korean lawyer is too young (Early 30s) or too old (70s).  The lawyer will, likely, not have the experience necessary to handle the matter or will, simply, not be handling the matter.
  • Your Korean lawyer is directing you, consistently, to talk with a less experienced lawyer.  The less experienced lawyer is likely, only, doing the work and the more experienced lawyer is simply a rainmaker.
  • Your Korean lawyer has poor English language skills.  Without someone fluent in English, you run the risk of never getting your side of the story heard. 
  • Your Korean lawyer has few non-Korean clients.  Handling criminal matters for foreigners is vastly different than handling a typical criminal matter for a Korean.  Often, deals can be obtained with the prosecutor in non-violent crimes for foreigners, that are unavailable to Koreans.  Also, violent and public crimes, often, need to be handled with a decree of media and cultural savvy, since judges and prosecutors are heavily affected when the victim is a Korean and the perpetrator of the crime is a foreigner. 
  • Your lawyer never speaks.  A lawyer that never speaks is, typically, not a proactive lawyer.  Criminal cases are best handled with strategy and a proactive counsel willing to engage the police investigators, prosecutor and judge.  If your lawyer won't speak to you, he won't be speaking to anyone else and will likely simply go through the process, receive a guilty verdict and the typical sentence.
  • Your lawyer seems not to be listening.  Too often, lawyers, ignore clients.  Great defense lawyers  in Korea develop great defenses by listening and responding to clients.  If you have a lawyer that is not listening, he will likely just go through the process, receive a guilty verdict and the typical sentence.
  • Your lawyer in Korea has too many cases.  If he seems too busy he probably is too busy.  Criminal cases, often, need a great deal of time.  If the lawyer is not able to spend the time to talk with you, you may never be able to get the attorney to provide the time necessary to handle the matter.
  • Your lawyer in Korea hates you.  Koreans are passionate people.  If the lawyer hates you, he will likely take your money and do nothing for you.    Passion, too often, can lead Korean lawyers to be less than reasonable.   As we know, this is not only a Korean trait.
Related Articles
What do you think?
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SeanHayes@ipglegal.com
NY attorney Sean Hayes is the only non-Korean to have worked as a government attorney for the Korean court system.  He leads the Korea Practice Team at IPG

Aug 8, 2014

Korean Distribution Agreements: So you Want to Work with a Korean Distributor

We have noted, on a number of occasions, that the drafting of a Korea-centric distribution agreement and a good deal of due diligence of the anticipated distributor/agent is necessary for avoiding the issues that will require our litigation services.  Some of the articles on Due Diligence matters may be found below:
I have been informed by one of my more frugal of clients that his company would appreciate a basic rundown of a decent distribution agreement (I know you will be drafting this on your own - don't) - so here we go.

The basic clauses we include in most of our Korean Distribution Agreements are as follows:
  • Exclusivity:  Exclusive/Non-exclusive
  • Territory & Products
  • Term of Agreement
  • Renewal/Termination
  • Pricing & Payment Terms
  • Report Requirments
  • End-User Disclosure
  • Sales Methods Allowed
  • Sales Performance
  • Legal Compliance (FCPA etc.)
  • Competition
  • Warranty/Defects
  • Technical & Sales Support
  • Marketing Materials
  • Intellectual Property - protection of trademarks, copyrights, trade secrets, patents etc.
  • Damages - Liquidated Damages
  • Breach - Material Breach
  • Dispute Resolution -Venue, Arbitration, Choice of Law
  • Standard Clauses related to integration, language etc.
This is a decent start.  Please, however, don't take this as enough to just start drafting on your own or picking a draft off the internet.  I know many lawyers that screw this up - please get the basics done at the start and you can avoid the hourly rates of my retired judge partner. 

Other articles that may be of interest
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.

Aug 7, 2014

So you Want to Hire a Korean Independent Contractor?

We receive many requests for drafting independent contractor agreements and we, normally, decide with the client, that it is better to have a distribution or agency agreement with a company, because of uncertainity in Korean Labor & Employment law and other reasons.  Korea's court decisions on Korean Labor Law is predictable as the Korean weather and the standard to determine if one is an independent contractor or an "employee" is as clear as a Beijing sky.

The factors a Korean Court will, typcially, look at to determine if one is an "employee" are:
  • Does the company have decision making power over the content of work of the individual?
  • Are company rules of employment applied to the individual?  
  • Does the individual have business risks associated with working with company? 
  • Does the company substantial control over the work processes of the individual?  
  • Does the company set the time and date and other specifics of work of the individual?  
  • Does the company own the work assets of the individual?
  • Can individuals use a third party to replace the work of the individual?
  • Are earnings based on work - not success/sales?
  • Does individual near exclusively depend on the work from the particular company?
  • Is the work with the company continuous,thus, not temporary?  
  • Is the individual deemed an employee under the Social Security System? 
The "independent consultant," also, when explained the reality - finds this type of arrangement more advantageous.  Normally, having a business, allows, tax benefits for the independent consultant. 

We have written a good deal on this blog on distribution agreements in the past.  Please take a look at these, below, articles for more details on doing business in Korea, Korean employment law and distribution and agency agreements.
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.

Aug 6, 2014

Chinese are Coming: Huawei Phones in Korea?

It was reported, yesterday, in local Korean vernaculars that Huawei is testing phones in Korea.  It seems like Huawei has applied to the Korean government for testing of its phones via the LG Uplus network.

Huawei phones will, likely, sell for near half the price of Samsung phones.  As I have been noting for a long time, if Samsung does not lower costs (near impossible) or create innovative technology/native software - we will see Samsung in the same situation as Nokia.

I have used a Huawei phone.  My partner in China has one.  The phones are similar in quality and features as Samsung phones.

Is it too late for Samsung?
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.

Aug 5, 2014

Protecting Products from Parallel Imports into Korea: Trademark/IP in Korea?

A trademark, in brief, under Korean Law is defined as a method of expression used to distinguish one's goods from those of others.  The concept is simple, however, the law on trademarks in Korea and abroad is far from simple. 

The use of another person of company's trademark (need to register trademarks in Korea - see posts below) is a violation of the rights of the holder of the trademark entitling the holder to an injunction and, potentially, damages. 

An issue arises when a Parallel Importer utilizes the trademark to sell goods in Korea of a trademark held by a Sole/Exclusive Importer.  In the, typical, case the Exclusive Importer is not the holder of the trademark, but has a license to use the trademark. 

For example, lets say a company is the Parallel Importer of footwear branded My Left Foot and the Sole/Exclusive Importer of My Left Foot footwear has registered the trademark with the Korean Intellectual Property Office.  Then, the Parallel Importer commences to advertise the product to consumers in Korea. 

In similar cases, Korean courts have ruled, in brief, that if their is not a likelihood of confusion for consumers (example: cyber squatting domain name My Left Foot Footwear) of who is selling the product, even the usage of the trademark in advertising is not a violation of law.  The lower courts have deferred to the general holding of the Burberry Case discussed at: Grey-Market Parallel Importing is Legal in Korea: Protect your Brands in Korea.  

Thus, here comes the parallel importers. Exclusive Importers can protect their brands in Korea.  However, it is, typically, not possible via trademark law unless advertisement copy is being copied by the parallel importer. 

Other blog posts that may be of interest:
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Sean Hayes may be contacted for a consultation by emailing him at: SeanHayes@ipglegal.com or via the numbers shown to the left.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He assists clients in their contentious, non-contentious and business developments needs in Korea and China. He has, recently, been ranked as one of only two non-Korean attorneys as a Top Attorney working in Korea by AsiaLaw.

Aug 4, 2014

Hiring/Terminating an Employee/Contractor in Korea: Employment Law in Korea

One of the largest areas of Korean law that we consult on is labor & employment law.  Because of, inter alia, the lack of the conception in Korea of an "at-will" worker - many non-Korean employers get their feet into hot water when structuring agent, consultant, employment and even distribution agreements with Korean individuals.  Some of these arrangements - lead to us needing to defend employers in court.  An expense - that would have, typically, not been necessary.

The reality is that the most important aspect of ensuring that you will not have a large employment liability is to:

  1. Adequately vet the anticipated hire.  This does not, simply, mean having a call and meeting the person. A Korean "old hat" is, normally, necessary in flagging issues that, often, do not seem to be issues by those not, deeply, familiar with Korean employees and Korean realities;
  2. Don't trust "salary tables."  In our opinion, they, are way too high for most employees;
  3. Don't use foreign employment, distribution, agency, and consultant agreements.  Typically, these will lead to issues in Korea - that lead to litigation;
  4. Don't hire a headhunter when a headhunter is not necessary.  The best way to hire is through the grape vine and foreign "old hat" consultants and lawyers are the best at finding appropriate individuals through the grapevine.  If they fail - seek a headhunter.  Many headhunters in Korea are interested in making the placement -not making the proper placement, because of the, often, lack of appropriate compensation for not making a placement.  Additionally, foreign headhunters, often, are just outsourcing services to affiliated agencies with little oversight.
  5. Korea is not China or Japan.  Realities in Korea, are, often, not realities in China and Japan.  

Other articles on Korea's Labor & Employment Law that may be of interest to the readers of the Korean Law Blog:


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Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.

Jul 31, 2014

Weekly Korean Legal News From International Law Firm - IPG Legal for the Week of July 28, 2014

Weekly Korean Legal News From International Law Firm - IPG Legal for the Week of July 28, 2014
Korean Legal News Reported by the Media on the Week of July 28, 2014
Most Recent Posts from the Korean Law Blog
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Sean Hayes may be contacted at: SeanHayes@ipglegal.com. Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked, for Korea, as one of only two non-Korean attorneys as a Top Attorney by AsiaLaw.

Jul 30, 2014

Samsung Faces Challenges as It Tries to Win Smartphone Wars

CNBC released an interesting article on how the largest smartphone maker can win the smartphone war.

The article pointed out that despite the recently lowered guidance, Samsung is likely to deliver strong results.

The article also mentioned four points that Samsung needs to improve in order to retain its edge in the smartphone market.
  • User interface - "In order to retain its lead over the long term, Samsung needs to build a platform that's as compelling for app developers and users as Apple."
  • Customer service - "Good communication between users and the smartphone company is crucial to long term" success.
  • The OS challenge - "Even if Samsung is able to differentiate itself through better customer service and improved user experience, it may face other challenges as it tries to build out Tizen, its first attempt at its own operating system."
  • Profit margin - "Profit is increasingly important as analysts see a plateauing of the global smartphone market with more than 65 percent of people in advanced markets owning smartphones."
The full article may be found at: How Samsung could win the smartphone wars
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info@ipglegal.com