Amendment to Korea’s Occupational Safety and Health Act in 2019

The amended Occupational Safety and Health Act of Korea (hereinafter as “OSHA”) entered into force on January 15, 2019. One major aspect of the revision is that it has raised the risk of liability of representatives of institutions and companies and companies for workplace industries in Korea. The amended Korean OSHA law is expected to increase the risk to company management, increase liability of companies and increase options for employees that are perceived to have been harmed because of the actions or inaction of employers. Korean OSHA Basics Importer or Manufacturer of harmful and/or dangerous chemicals should draft a Material Safety Data Sheet and send it to the Ministry of Employment & Labor for approval. The Material Safety Sheet is publicly published – in most cases. Hazardous work shall not be contracted out by companies to third parties. However the amendment provides some notable exceptions (beyond the scope of this

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Sean Hayes attended the Korea Business Forum

The Korean Business Forum is one of the leading private groups of senior executives in leading companies doing business in Korea. The group meets, at least, monthly to discuss major issues affecting businesses in Korea. I, highly, recommend applying for membership in the Korean Business Forum. This month’s meeting addressed issues facing the Korean economy, the new labor policy of the Moon Administration, and major reasons why Korea is still important for international businesses. Some interesting takeaways: Korea is the 11th largest economy by nominal GDP in the world. Korea is the 4th largest economy in Asia. Korea is the leading chip manufacturer and shipbuilder in the world. Korea is the 4th largest oil producer and 6th largest car maker in the world. Korea is the 6th largest exporter in the world. Korea’s household debt is one of the highest in the world. Korea ranks low in the World Competitive

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“Probationary Periods” in Korean Employment Contracts for Newly-Hired Workers

Korean companies should consider negotiating stipulations to create “probationary periods” at the start of employment to train and assess newly-hired Korean workers. Often companies wish to evaluate workers over a set period of time after concluding a labor contract to assess the worker’s abilities and intelligence, and to allow the worker time to gain familiarity with the work.  This period of employment is called a “probationary period.” The practice is relatively unregulated by the government. The Labor Standards Act of Korea provides, among other things, minimum standards for conditions of employment, prohibits discrimination and the use of force or violence against workers.  But, it provides little guidance on regulating “probationary periods.”  The only guidance the Labor Standards Act provides can be found within Article 35, which states that employers do not need to provide 30 day notice of dismissal to workers under a “probationary period” and within Article 77, which

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Is your Korean Employee a Dispatched Worker and Thus a De Facto “Employee” under the Korean Labor Standards Act?

In 2015, the Korean Supreme Court detailed standards in determining if a Subcontracted Worker in Korea is actually a Dispatched Worker and, thus, a de facto employee of your Korean Company.  The designation has implications for retirement benefits, employment security and the payment of benefits. Dispatched Workers vs. Subcontracted Workers Companies employ, in Korea, often workers via manpower supply companies and via subcontracting agreements.  These employees are not retained directly by the Company, but are retained via a manpower company (“Dispatched Worker”) or a subcontracting agreement (“Subcontracted Worker”). The difference in these two type of relationships lies in the control over the workers – not in the mere nature of the retention according to the Korean Courts.  If the Company has a sufficient degree of control over the worker, in the eyes of the specific Korean court, the worker is deemed a Dispatched Worker and, thus, an employee of the

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Consequences of a Business Transfer in Korea: Employee Transfer?

In Korea, there is no statutory provision for the protection of employees in the event of a business transfer. Therefore, it has been left to the Korean courts to decide whether, and in what circumstances, employee transfer may occur as part of a business transfer.  The following is a basic explanation of the law of business transfer in Korea as it relates to the relationship between an employer and an employee. The Korean courts have generally held that, in the event of a business transfer, unless the employee objects, the employment relationship between the employee and employer (transferor) will automatically transfer to the transferee (without any need for the specific consent of the employee) – inclusive of the terms and conditions of the employment relationship existing at the time of closing of the business transfer, unless otherwise agreed to.  However, while it is a fairly well-established principle, this right to

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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 a law or jurisdiction other than Korea. For example, if a employer hiring someone for

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Employment Background Checks in Korea: Not so Different from China

My friends over at the China Law Blog posted an article quoting the Chinese Business Leadership blog that noting that: “We were placing a GM for a Western family owned factory. They are small and troubled.  We found 15 thoroughly qualified candidates for the position. We had candidates tell us they worked at a company 5 years when they only worked. We had candidates tell us they were super valuable,  and the company does not want to let them go. We were able to find out that they were fired a year before while still in probation. As the last of the group of 15 refused to come clean and give us an accurate resume, we shook our heads in dismay. We are excellent at interviews and interview 90 minutes as our goal is to know. Despite that, we were unable to uncover these issues before the background check. We

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7 Musts to Succeed in Business in Korea

We have the unique pleasure to have a bird’s-eye view of numerous clients’ businesses in Korea.  At this stage of our experience in Korea we are, typically, able to determine which companies will, likely, succeed and which companies will, likely, fail.  We are far from perfect, but companies that succeed in Korea, normally, have the following seven things in common: 1.  Comprehensive Understanding of the Korean Market by a Neutral Local Consultant This understanding, normally, comes from one of the few business consultants, in Korea, that are capable of providing a decent market overview with a detailed list of potential targets and contacts within these targets.  We, only, work with a handful of Korean consultants, since most, we find, don’t have the skills necessary to proactively assist client, but still sell market research reports that seemed to be, only, obtained through a Google search. 2.  Great Initial Representative Director for

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Korean Independent Contractor Risks: Korean Labor Standards Act Basics

The Korean Court System has been less reluctant, in recent years, to deem a Korean independent contractor an “employee” under the Labor Standards Act (LSA).  This fact remains true even when an employer establishes that the independent contractor is aware that he/she was contracted as an independent contractor, thus, not a regular employee of the Korean company. Upon the establishment of the status as “employee” in Korea, the individual is entitled to all of the benefits of an employee including, inter alia, severance and employment security, thus, increasing the compliance, tax, payroll and other risks to the foreign-capital invested Korean company. Obligations to Employees under the LSA The obligations to employees under the LSA are extensive and beyond the scope of this short article.  The more significant and obvious are the Korean legal requirement to provide severance benefits and employment security. With regard to severance benefits, a company must pay,

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Korea’s Occupational Safety and Health Act Amendments for 2018 (OSHA Korea Updates)

Because of the perceived need, in Korea, to protect workers’ emotional and physical health in the service sector, the Occupational Safety & Health Act of Korea (“OSHA Korea”) was amended.  The major OSHA Korea amendments impose a: Duty on Employers to Protect the Emotional & Physical Health of Employees  The OSHA Korea Amendment mandates employers, in the service sector, to protect the emotional and physical health of employees from abusive acts of customers.  We do not, yet, have substantial details on the actions needed to be taken by employers to meet these legal obligations.  Enforcement actions against employees and an enforcement decree shall shed light on the specifics and we shall update the reader when more is known.We advise that employers in the service sector review policies in place in order for employers to not run afoul of the new OSHA law.  It seems like a proactive approach that includes

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Dismissal of Employees in Korea: Supreme Court of Korea Precedent

The Korean Supreme Court ruled, in March of 2018, that a company may terminate employees for one incident of employee gambling.  The case stems from the termination of drivers that were caught on one occasion gambling prior to driving buses. The lower courts ruled, in short, that gambling was not a serious enough offense to justify termination since: The act of gambling, only, occurred on one occasion and thus trust between the employee and employer has not broken down; The employees performed their job functions adequately; and The non-termination of employment of the employees would not significantly interfere with the ability of the employer to successful continue its business- if the employees do not engage in these acts in the future. The Supreme Court reversed the decision of the lower court and noted that: Gambling could effect the rest period of the drivers and the job of the drivers requires

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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 it 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 to Article 56 of the Korean Labor Standards Act, an employer must pay 50% of the Ordinary Wage plus the Ordinary Wage for overtime, night and weekend work performed by the employee. Because of the potential for a large unknown future liability, this issue became the most significant issue, in the last few years, among domestic and foreign employers in labor and employment law in Korea. The basic Korean test is

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Civil Liability of Companies for Actions of Employees Off the Company Property and After Work Hours

Korea imposes, in some cases, liability on companies for actions of employees of companies even when the employee conducts an intentional wrongful act outside the workplace, after the work hours and beyond the duties imposed by the employer.  The employer is not relieved of civil liability by a mere limiting the scope of duties of employees, warnings to employees or having comprehensive sexual harassment education programs. A, typical, sexual harassment situation, related to this issue, occurs after a company office party.  The manager takes his team out to dinner and drinks.  After the dinner and drinks, the inebriated co-worker is asked by the manager to a local motel.  The inebriated co-worker alleges, in the morning, that she was incapable of consenting to the sexual advances or that she was pressured either implicitly or explicitly by the manger to have sexual relations with the manager.  The courts even when a employer

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Infertility/Subfertility & Childcare Leave Law in Korea

The recent Moon Administration is making drastic changes to Korea’s Employment & Labor Law.  A prior article on promises made by the Moon Administration was posted earlier in the year.  Two interesting changes relate to “Subfertility Leave” and “Childcare Leave.”  We shall be updating the reader over the next couple weeks on numerous other issues that are important for employers and employees to understand about Korean Employment & Labor Law.  Check back often and subscribe via the link to Right.   Fertility Leave Law in Korea Employees facing fertility issues may receive three days off per year with one of these days off being a paid day off – exceptions, however, exist.  This amendment shall, likely, come into effect from May of 2018. Childcare Leave Law in Korea The present childcare leave law, in short, provides 40% of the regular salary in leave up to a maximum of KRW 1 million/month. 

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Non-Compete Restrictive Covenant in Employment Contracts in Korea

Korean courts have invalidated numerous, non-compete agreements, reduced the amount of time of the non-compete period and/or have reduced liquidated damage amounts for violation of non-compete agreements.  Courts typically balance the freedom to work (an ability to work outside the specific field) with the significance of the interest in the employer to enforce the covenant not to compete.  The primary factors courts utilize in determining whether to enforce a non-compete agreement are: if compensation was paid in exchange for the covenant not to compete; if the interest being sought protection over includes valuable trade secrets and other valuable intellectual property; if the position of the employee was such that the employee would be able damage the future of the employer; if the employee was terminated for justifiable reasons; if the industry practice is to enforce covenants not to compete; and if the employee is harmed by the covenant not to

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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 noted cases that lead 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 to enter the workplace in order to prevent further disruption of the manufacturing process.  The employees physically blocked production and thus did not allow certain orders to be fulfilled by the employer, thus affecting the employer’s business. The case is a great case to demonstrate Korea’s Lockout Law. Following the lockout, the locked-out employees, on several occasions, expressed

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IPG’s Korean Employment & Labour Law Chapter in Global Legal Insights 2018

IPG is proud to announce the contribution of the Korean chapter to GLI’s 2018 Edition of Employment & Labour Law.  The publication contains chapters from 29 different countries.  The publication may be found at: Employment & Labor Law, Sixth Edition. Key Issues addressed are, among others,: -General Labour Market Conditions in Korea -Employment Policies under the Moon Administration -Litigation Trends in Korea -Definition of “Ordinary Wage” in Korea -Korean Supreme Court’s Regular Interval Bonus Case -Director as an Employee for Korean Employment Security Purposes -Korean Employee Lockouts -Layoffs and Dismissals Based on Fault of the Employees in Korea -Korean Restrictive Covenants Law -Trade Secrets Protection in Korea -Severance Payments in Korea -Childcare Leave in Korea -Maternity Leave in Korea -Paternity Leave in Korea -Annual Leave in Korea Please see the other articles below and via the Employment Law Tag. [ABTM id=1137] (c) Sean Hayes – SJ IPG. All Rights reserved.

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Part-time Worker Annual Paid Leave Obligations under the Korean Labor Standards Act

Employers, in Korea, are in most cases required to grant annual paid leave to full-time and even part-time workers working in Korea-based companies.  Exceptions to this Korean annual paid leave law exist for Korean workers that work, on average, less than 15 hours per week for these Korean-based companies. Article 18 of the Korean Labor Standards Act notes that: “(1) The terms and conditions of employment of part-time workers shall be determined on the basis of relative ration computed in comparison to those work hours of full-time workers engaged in the same kind of work at the pertinent workplace.” However, annual paid vacation leave and other articles/obligations under the Korean Labor Standards Act do not apply to “workers whose contractual work hours per week on an average of four weeks (in cases where their working periods are less then four weeks, then, based on such period of work) are less

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EEOC Complaints in Korea at Yongsan Army Garrison, Camp Humpreys and Area I: EEO Korea Complaints

This law firm’s U.S. lawyers handle EEOC Korean complaints from our office in Korea; Merit System Protection Board (MSPB) appeals from Korea; grievances under the Negotiated Grievance Procedure from Korea; complaints to the Equal Employment Opportunity Commission (EEOC); lawsuits in U.S. federal court for federal employees working at Yongsan, Camp Humphreys, Area I and throughout the Korean peninsula.  We, also, on occasion handle matters stateside and throughout other parts of Asia.  These matters are all personally handled by Sean Hayes and his team. Some of the employment law work, in these matters, are essential to be performed in Korea when actions of the U.S. government occur in Korea, thus, IPG has developed a team to handle these matters along with a NY-based associated employment law firm.  The majority of our clients working for the U.S. Military are either facing discrimination, a hostile work environment or have been terminated from employment. The

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Equal Employment Opportunity Commission Attorney in Korea for U.S. Military Employees

Yes. Some U.S. lawyers in Korea are experienced handling appeals to the Merit System Protection Board (MSPB), grievance under the Negotiated Grievance Procedure and complaints to the Equal Employment Opportunity Commission (EEOC). Regrettably, only a small group of lawyers in Korea are experienced in U.S. government employment matters for government workers working for the Department of Defense in Korea. Most U.S. lawyers would, only, know where Yongsan is and wouldn’t know Camp Red Cloud from Camp Humphreys. A great deal of the employment law work, in these matters, are necessary to be performed in Korea when actions of the U.S. government occur in Korea, thus, IPG has developed a team to handle these matters along with our NY-based associated firm. Typically, it is advisable to hire a U.S. lawyer, in Korea, to handle these matters if an administrative action is necessary. These actions shall occur, in most cases, in Korea

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