Legality of an Employer Lockout in Korea: Korean Labor & Employment Law Basics

Korea, in the eyes of many domestic and foreign companies, has been lax in the enforcement of the rights of employers to run a business. One notable case that led to a decision by the Supreme Court of Korea comes to mind. Because of a labor strike at a major automobile parts manufacturer and the physical blocking of the use of replacement workers and employer machinery by the employees, the employer implemented a partial unpaid lockout of certain employees (employees were employed by a unit of the employer), thus disallowing certain workers from entering the workplace to prevent further disruption of the manufacturing process. The employees physically blocked production, preventing certain orders from being fulfilled and affecting the employer’s business. The case is a great case to demonstrate Korea’s Lockout Law.

Following the lockout, the locked-out employees expressed, on several occasions, a desire to return to work while requesting that the lockout be lifted. However, the employer determined that, since the request was not made in good faith, it refused it. However, the employer lifted the lockout based on a provisional injunction nullifying the legality of the lockout. This led the Plaintiffs, on the grounds that the lockout was unlawful, to seek payment from the employer equivalent to wages they could have received had they been able to continuously work during the lockout period.

Decision by the Korean Supreme Court

The Supreme Court noted that:

“As prescribed under Article 46 of the Trade Union and Labor Relations Adjustment Act, a lockout can be acknowledged as a lawful industrial action by an employer only if there is reasonable ground (i.e., countermeasure against industrial action by workers), in light of the details of circumstances such as the negotiating stance and process between the employer and workers, the purpose and method of industrial action by workers, the impact on the employer therefrom, etc.  However, lawfulness cannot be acknowledged in cases where a lock-out goes beyond the purpose of countering a trade union’s industrial action and constitutes a preemptive and aggressive lock-out for the purpose of weakening the union’s organizing ability.  In such cases, an employer is not exempt from the duty of paying wages to workers during the lock-out period.

Moreover, even if a lockout conducted by an employer is deemed lawful in light of the details of the circumstances such as workers’ strike, in cases where the lock-out continues — albeit the workers having discontinued their strike after a certain point in time and expressed their genuine desire to return to work — and becomes aggressive with the purpose having shifted from countering the industrial action by workers to weakening the trade union’s ability to organize, lawfulness of the subsequent lockout is lost and accordingly, the employer cannot be exempt from the duty of paying wages during the lockout period.”

Based on this rationale, the Supreme Court reversed the decision of the lower court, because, inter alia:

“ . . .based solely on its stated reasoning, the lower court acknowledged the lawfulness of the Defendant’s lockout, rather than confining it (the lawfulness to the period prior to the promise of the employees to return to work) to the lock-out after March 2010. . .  In so determining, it erred by misapprehending the legal principles as to the lawfulness of a lockout, which led to a failure to exhaust all necessary deliberations, thereby affecting the conclusion of the judgment.  The allegation contained in the grounds of appeal assigning this error is with merit.” 

Thus, the Supreme Court imposed the affirmative duty of an employer to “exhaust all necessary deliberations” even if it has indications that the representations of the employees are not acting in good faith. We shall update the reader when more is known.

To schedule a call with Sean Hayes please: Schedule a Call

Sean Hayes is the first non-Korean attorney to work for the Korean Court System, and he is consistently rated a top attorney working in Korea, while IPG Legal is ranked a top-tier law firm in dispute resolution.