What Constitutes an “Employee” under Korean Law?

Who is an Employee/Worker under Korean Law with the Rights and Protections under Korean Labor Standards Acts and Related Laws & Regulations? The definition of an employee in Korea is a topic that had filled books. The following is a brief introduction to an issue that IPG Legal litigates for foreign employees of Korean companies and for foreign companies doing business in Korea. IPG Legal is the go to law firm for expats and foreign companies doing business in Korea

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Renewal Rights/Terms for Commercial Leases in Korea Under Amended Commercial Building Lease Protection Act of Korea

The Korean Commercial Building Lease Protection Act (“CBLP”) came into force on August 13, 2013.  The Korean CBLP amendments, mentioned below, will solely come into force for leases entered into after August 13, 2013.  The changes will assist those with large deposits from being evicted by a landlord in Korea based on no apparent reasons. Please note a new law has come into effect and we shall be writing on this new law within the next couple of weeks.  Please

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Definition of “Ordinary Wage” in Korea: Korean Employment & Labor Law Basics

The courts of the Republic of Korea, for years, has struggled to find a consistent interpretation of an “Ordinary Wage.” The definition of Ordinary Wage, under Korean Law, was clarified by the Korean Supreme Court in two decisions handed down on December 18, 2013. The calculation of Ordinary Wages is important, since the calculation is utilized to calculate statutory entitlements, and thus has an impact on the aggregate amount of contributions necessary to be paid to employees. For example, according

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Drafting of Korean Distribution Agreements for your Distributor in Korea.

Drafting of a Korea-centric distribution agreement and a good deal of due diligence of the anticipated distributor/agent is necessary for avoiding issues that may require the litigation services of a law firm.  Some of the articles posted by IPG Legal on Due Diligence may be found at: Doing Business in Asia: Due Diligence, Agreements, Attorneys and Street Smarts Listen to My Mother: JVs in Korea (Translated from Korean) Debt Collection Cases in Korea on the Rise: Due Diligence Brother I have

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Korean Independent Contractor Risks and Obligations under Korea LSA Speech to Amcham Korea

During a recent speech the head of the Korean Labor & Employment Law Team and I gave to the American Chamber of Commerce in Korea, a few interesting topics came up that seemed to be of particular interest to participants.  For the Power Point of the presentation click HERE. Factors Courts use to Determine if an Individual is an Employee and Thus Obligated to Provide Severance and Employment Security etc. Under the Korea Labor Standards Act (LSA). These following factors

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Contracts Necessary for Doing Business with a Korean Company?

If you would like to avoid Korean court expenses and headaches related to your business in Korea, please do yourself a favor and have you Korean contracts drafted by an experienced Korean professional prior to doing business with a Korean company.  Many of the standard agreements utilized in the West are not adequate for Korea. We handle litigation and arbitration matters for many clients that either used a Korean attorney without adequate experience or that have foregone the use of

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How to Successfully Manufacture OEM in Korea: First Break Products Down to the Threads

While China is the factory to the world, Korea is, still, a great choice for those that enjoy less headaches.  Even though Korea tends to be easier to painlessly manufacture OEM in, Korea is not without risk or pains.  Thus, we advised over the years on these pages to, always, do your due diligence in Korea.   We see an alarming number of cases of fraud and, also, an alarming number of cases where a product infringes on a patent or

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Audit Proof your Independent Contractor Expenses

I just read a great post on an even better blog entitled the New York Small Business Law Blog. The blog post – Tips on Making your Independent Contractors Audit Proof – notes that the feds are increasing their efforts to crack down on misclassified independent contractors. They advise the attorney gave on how to avoid the scrutiny of the government would have also been useful for a client of ours that ran into an issue with the Korean National Tax Service and the Ministry

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Korea’s Fairness in Subcontracting Transactions Act Amendments of July 2021

The Korean National Assembly passed a bill in July of 2021 that amends the Fairness in Subcontracting Transactions Act (“Subcontracting Act”). The Act makes major changes with regard to discovery in litigation and aims to protect the intellectual property/confidential data/technical data (“Technical Data”) of subcontractors from poaching by prime contractors. For another article on Korea’s Subcontracting Act please see: Fair Transactions in Subcontracting Act of Korea: So Buyer Beware or Simply Avoid the Risk and Buy the Seller. 2021 Amendments

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Alternative Legal Fee Arrangements at Korean-based Law Firms: Limited Scope Representation Explained

Many Korean law firms have been willing to work in relationships based on a non-time charge flat-fee or contingency basis for Korean clients.  However, many of these law firms in Korea have been unwilling to work on alternative fee arrangements with non-Korean clients, because of, among other things, the requirement to represent the client in a far different manner than that of a Korean client and, also, reduced competition in the foreign-client market, because of the reality that only a

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International Arbitrations in Korea under the IBA Rules

Procedural Arbitration rules are key to the efficient and effective adjudication of arbitration disputes in Korea and, also, worldwide.  These arbitration rules govern and set out the framework for the arbitration process. Evidence gathering and presentation are important aspects of the above procedure, and yet, institutional and ad hoc rules that provide arbitration guidelines on other matters such as the appointment of arbitrators and the nature of award and costs are, usually, silent on this point. Advantages of such a

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Adhesion Contract in South Korea: Regulating Unfair Terms and Conditions

Adhesion Contract is a contract drafted by a party with stronger bargaining power and signed by a party with lesser bargaining power. The party that has weaker bargaining power does not have the capacity to negotiate the terms and conditions of the contract and they just adhere completely to what the party with the upper hand has to offer. In South Korea, in order to avoid such unfair one-way contract and prevent business persons from imposing unfair terms and conditions

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Calculation of Korean Hourly Wage Rate under the Minimum Wage Act of Korea

Korea’s minimum wage as per the Korean Minimum Wage Act in 2019 is determined by the Minister of Employment & Labor as KRW 8,350 per hour. The latest decisions of the Supreme Court developed a calculation standard/method for determining an hourly wage rate that is not in line with the opinion of the Ministry of Employment & Labor. In many such cases, a Ministry, simply, pushes to amend the law. This matter is important, since the standard hourly wage rate

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Korea Due Diligence for Joint Ventures, Licensing, OEMs and Buying a Korean Company

Intending to execute a joint venture agreement with a Korean company? Buying a Korean company? Licensing technology to a Korean company? OEM with a Korean supplier? Selling to a Korean company?Before going to bed with a Korean company (or individual) do a little due diligence.  The motivation for this article is an article by my friends over at the China Law Blog. Due diligence in Korea is not much different than due diligence in China.  However, don’t forget what is

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Starting a Manufacturing Business in South Korea: Top 14 Things to Know Before you Start a Business in Korea

Korea, in most cases, is a much better choice for the manufacturing of chemical, petroleum, construction equipment, complex crafted metals, specialty steel, automotive parts, semi-conductor, medical and pharmaceutical equipment and goods than China and most nations in Asia, because of Korea’s skilled work force, government incentives and increasingly transparent business practices. In many cases, manufacturing in Korea will not, in the end, be more costly than manufacturing in China, because of the increased efficiency of Korean workers and the, often,

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How Foreign Importers Entering Korea May Prosper from the Korean Middle Class in Korea being Screwed by Inflation: Screwflation

This is an older article we posted nearly eight years ago.  However, we fear the same is occurring today. Inflation may be a serious issue for Korea in the next couple of years.  The Korea Times has reported that stagnant wages and food inflation is leading to “Screwflation” in Korea.  This phenomenon is a potential opportunity for importers with an eagerness to directly access the market.  The term Screwflation was coined by Wall Street guru Doug Kass.  Kass explains the

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Liquidated Damages v. Penalties in Korean contracts

As a NY attorney, it’s a bit strange for me to read a Korean contract and see how the word “penalty” is used.  In the United States (as well as other common law jurisdictions), when a contract contains a “penalty,” the clause is, often, invalidated. Korea, however, allows some “penalties” in contracts. Cutting to the chase, this is merely an issue of confusing and overlapping terminology.  But since its confusing, it is worth explaining. To start with, a bit of

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Jurisdiction and Choice of Law Issues in Agency Agreements

In drafting and negotiating a Korean commercial agency agreement between a principal located in one country and an agent located in another country, proper consideration needs to be given to the choice of law regarding the governing law and jurisdiction of such an agreement. Jurisdiction determines which country’s courts will hear any proceedings that may be brought in relation to the agreement, whilst governing law is the law that shall be applied by the courts hearing any such proceedings that

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Termination of Commercial Agent/Distribution Agreements in Korea: Korea’s Agent Compensation Rule

In many cases of termination of a distribution/agent agreement in Korea compensation must be paid to the commission agent.  In many cases, the same rules are applied to distributors.  The law on the termination of Commission Agent-type agreement is governed, mainly, by the Commercial Act of Korea and its enforcement decrees.  Korea law does not facially differentiate between termination and expiration of agent/distribution agreements. The following explanation is, only, a brief overview of Korea’s Distribution/ Agency Law relating to termination of

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Distribution Agreements in Korea: Crawl before you Walk

Prior to going into any relationship with a distributor/agent in Korea, please read my post entitled: Finding a Korean Distributor: The Top 10 Things to Know Before Going to Bed with a Distributor in Korea. Please read that post in combination with this post, prior to engaging a distributor in Korea. We see too many Korean distribution and agency agreements that are mere spun U.S. or European agreements.  Please have your Korean distribution agreement and all agreements you have in Korea drafted

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