Inline with the labor union and employee-focused promises of the President Moon Administration, the Ministry of Employment & Labor has withdrawn the impeached President Park’s Guidelines on Rules of Employment & Guidelines on Fair Personnel Management to the regret of most of industry. The withdraw of the Guidelines does not change the present state of Korean Labor & Employment Law. Ex-President Park’s Guidelines on Rules of Employment, inter alia, noted procedures to amend the rules of employment of a company even without the mandated consent of the employees and the Guidelines on Personnel Management noted a procedure and reasons to terminate poor performing employees. The Guidelines, together, were a means, in part, to express an opinion and clarify issues, seemingly, with the purpose to to add more labor flexibility to a system that is perceived to be overly protective of employees. Korea, in international surveys, is rated as have one
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Statutory Severance Obligations in Korea after Acquisition of Company in Korea
Korean employers have, attempted, in many cases unsuccessfully, through mergers, to reduce the statutory severance obligations of a Company through a company acquiring a Company with a workforce with large outstanding severance obligations. The acquired company, in most cases, is strapped with debt and an inefficient workforce. The acquiring company, inter alia, often alleges that as a separate legal entity it owes no duties to the employees of the acquired company. The acquiring company, thus, alleges that the employees of the old Company are not obligated to receive the accumulated years of severance, thus, reducing vested employee obligations. The Korean Supreme Court has ruled, on numerous occasions, that if an employee has continued work with the new acquiring company that the duties owed to the employees by the acquired company in Korea is owed to the employees by the acquired company, thus, often negating the benefit of the merger. Some
Continue readingHiring English-Speaking Korean Labor Lawyers in Korea
In most cases involving employment issues concerning foreign language teachers and hagwons (not company executives), Korean labor lawyers may not be a cost-effective means of handling your dispute. Often a Nomusa (노무사) is an adequate means to resolve the dispute with your employer. A Nomusa is, however, often not adequate for high-net worth individuals, company executives and for complex cases. These type matters, often, should be filed to a court or shall be, likely, appealed from a Korean Labor Board to a court. A Nomusa may not handle cases in Korean Courts. Additionally, often the skills and experience of Korean lawyers are essential in the more complex, unique and many cases concerning foreigners. Simple, a Nomusa is a licensed labor professional (not a “Labor Lawyer”). These individuals, often, market themselves as Korean Labor Attorneys, however, this title is not an accurate title for these individuals. A Nomusa is not an
Continue readingIncreased Scrutiny of Employers by Korean’s Ministry of Employment & Labor under President Moon’s Administration: HR Audit Needed by Korean Employment Lawyers
Many Korean Employment Lawyers are taking note of the recent initiative by Korea’s Ministry of Employment & Labor. At the end of June of 2017, the Ministry announced an “Unfair Labor Practice Eradication Initiative.” This Initiative intends to investigate and punish perceived “unfair labor practices” of employers in Korea by having the Ministry of Employment & Labor conduct more audits of companies and provide punishment for those perceived to be in violation of Korea’ Labor Law. It is time to do an internal audit of the labor practices of your company. The audits completed by Labor Lawyers (not actually lawyers usually- usually NoMusa – licensed labor professionals) is, often, not adequate. These individuals are unable to take cases to the court and, typically, do not have the nuanced necessary to adequately advise on more complex labor matters concerning strategy. The “Unfair Labor Practice Eradication Initiative” shall: Increase the Frequency &
Continue readingEnglish-speaking Korean lawyers and International Lawyers at International Law Firm in Korea discussing issues of Korean Law
IPG Legal is a leading client-focused international law firm with offices in Korea that is, often, selected over the ubiquitous Korean Law Firms when success is essential and success depends on nuanced street-smart advice, proactive and unconflicted representation. Our attorneys are, intentionally. different from the crowd. From our retired judge partners to our junior associates, we are all trained with an intense focus on client success, lawyer proactivity, and to understand the nexus between your commercial and legal needs. Our attorneys shall never push to you useless memos, non-nuanced legal advice or get you into litigation without an honest assessment of the merits and shortcomings of the matter. We are – intentionally different from the crowd. Globally Experienced – Locally Connected. We are IPG. Korean Legal Practices Korean Antitrust, Competition & FTC Arbitration, Int’l & Domestic Korean Civil Litigation Korean Criminal Defense Korean Corporate Law & Compliance Korean Employment, Labor &
Continue readingTermination after Childcare Leave in Korea: Childcare Leave Law in Korea
Korea’s generous Childcare Leave Law poses difficulties to many smaller employers in Korea. The Childcare Leave Law, in Korea, allows for a one year period of leave per child under the age of seven. Employers, often, are required to hire a replacement employee when the employee departs for this childcare leave. This situation, often, leads to an employee returning to employment with little to no work to do. So can an employer, in Korea, layoff the returning Korean worker for the lack of a position for the worker? The answer is, typically, NO. Notwithstanding, the issue of tenure and the selection criteria for layoffs, the law specifically notes the following. I. Childcare Leave Law: Prohibition of Termination of Employee based on Childcare Leave Equal Employment Opportunity and Work-Family Balance Assistance Act Art. 19 notes: (3)”No employer shall dismiss or take any disadvantageous measure against a worker on account of childcare
Continue readingCan you Revise Employment Rules in Korea without the Agreement of Employees?
The Guidebook on Wage System Reform, published by the Korean Ministry of Employment & Labor, has sparked more interest, in the private sector, than the revamping of Korea’s wage system based on seniority. The major issue, in this regard, is if the Rules of Employment of a company may be amended, without violating the Labor Standards Act of Korea (“LSA”), when “wage system reform” is not consented to by a majority of the employees or the trade union. Numerous Korean government agencies have successfully moved to a more merit-based promotion and bonus system from a strict seniority-based wage system. The private sector has carefully watched this trend, because of public failures by noted international conglomerates. The private sector, to date, has been slow to move to a merit-based wage or like system because of these public failures. The MOEL’s Guidebook on Wage System Reform (“Guidebook”) was drafted to be a
Continue readingEnglish-Speaking Korean Labor & Employment Lawyers in Korea
This Korean Law Blog is brought to you by English-speaking Korean labor lawyers & employment lawyers working for IPG Legal – an international law firm with offices in Korea. Sean is the author of this blog and English-speaking Korean lawyers contribute to the blog. Please find below a few of the most recent matters we have worked on. Leading rating services have rated IPG attorneys as leading lawyers working in Korea and throughout Asia. To learn mall, please drop us an email or give us a call. IPG’s Korean Labor & Employment Law Team Experience Drafted Korean employment agreements, employee handbooks, employment rules and formed a pension and corporate compliance system for a NASDAQ-listed company with a subsidiary in Korea. Oversaw a leading manufacturer’s reduction of 5% of the headcount in China and Korea. Prevailed in cases of foreign employees of Korean companies who were wrongfully dismissed
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Korean Employment Law & Labor Law amendments under Pres. Moon Administration
President Moon President Moon promised during his presidential campaign to make major changes to Korean Labor Law & Korean Employment Law . President Moon intends to make Korean Labor Law more protective and beneficial for workers. The major changes, in short, promised by the new administation are the following: Create 810,000 New Jobs via expanding Korea’s Public Sector President Moon has vowed to create over 340,000 new government social service jobs and over 140,000 new government jobs in public safety and security while converting 300,000 non-regular workers to permanent workers. Impose Limitations on the Utilization of Non-Regular Workers in Korea President Moon has vowed to propose a bill that some have named the “Special Act on Preventing Discrimination Against Non-Regular Workers.” This Bill would, among other things, according to the President Moon Administration: Impose limits on the use of part-time and fixed-term workers to only work that is seasonal or
Continue readingNon-Registered Company Director (Executive Director/Senior Managerial Worker) in Korea deemed Employee under Korean Labor & Employment Law
Article 27 of the Labor Standards Act of Korea stipulates that all “employees” must be notified in writing of the reason for dismissal. In most cases, 30-days notice or 30-days pay in lieu of notification is required. Employees may, also, only, be terminated for “fault attributable to the employee” or “urgent managerial necessity.” The burden is on the employer to prove “justifiable grounds for termination.” All good proactive employment lawyers in Korea have detailed programs in place that assist in justifying termination. However, sadly, it is very difficult to find good proactive employment lawyers in Korea. Directors are, typically, not deemed “employees” under Korean Law. However, exceptions exist. We wrote an article on these exceptions at: Factors in Determining if a Worker is an “Employee” under the Korean Labor Standards Act of Korea. A recent cases filed against TongYang by an unregistered “director” sheds light on the risks associated with terminating
Continue readingRestructuring of Korean SMEs a Potential Lucrative Business in Korea
Bloomberg has an interesting article on “Zombie” companies in Korea. Many of these companies have decent cash flow, but because of Korean corporate realities many have been less than capable of controlling costs. The Bloomberg article, in part, notes: “One of the biggest concerns is so-called “marginal” or “zombie” companies, usually defined in Korea as businesses that haven’t been able to make payments on interest from operating profit for three years. A prolonged period of low interest rates has led to an increase in marginal companies and there is an “urgent” need for restructuring, Bank of Korea Governor Lee Ju Yeol said this month. Financial Services Commission Chairman Yim Jong Yong has warned that unless the problems at these companies are addressed, they will become a burden to the economy. The number of marginal companies jumped to 3,295 last year, from 2,698 in 2009, according to the central bank. They
Continue readingEnforcement of Covenants Not to Compete in Employment Agreements in Korea: Restrictive Covenants in Korea
It is getting easier for an employer to enforce non-compete restrictive covenants in employment agreements in Korea, because of recent judgments by lower Korean courts noting, among other things, the value of trade secrets in competitive industries in Korea. Korean Non-Compete Agreements Recently, a interesting case, in a Seoul, Korean court, concerning the wedding planning business was handed down by the Seoul Central District Court (2104NA63529). The Court upheld a three non-compete clause against an employee, but reduced a liquidated damage clause from KRW 1,000,000 per day to KRW 100,000 per day. The relevant restrictive covenant noted that: “the Employee shall not work at another company in the same field for three years after termination of employment and the Employee shall pay indemnification of KRW 1,000,000 per day if this Agreement is breached by the Employee.” The business of the company was the wedding planning business. The business is very
Continue readingVoluntary Resignation of an Employee in Korea: Employment Law Updates
A Seoul Central District Court ruled in favor of the employer in a case of an employee claiming damages for, inter alia, the not accepting of the voluntary resignation of an employee. The dispute was between the Industrial Bank of Korea and an employee under a criminal investigation for alleged work-related malfeasance. The Korean bank has an internal rule that an employee may not receive “special” severance payments if the employee, in question, is under investigation for work-related malfeasance. The employer provides increased severance payments for employees that retire before a certain age and for other reasons. The employee was acquitted of the criminal charges and prevailed in a civil case against his accuser. The employer requested to resign from the company, seemingly, in order to receive “special” severance payments allocated to these certain classified employees (reached the age of 55) and the company refused to accept the resignation, since
Continue readingTransfer of Employee in Korea to Lower Position in Company May not be Wrongful Termination: Seoul High Court Precedence
The Seoul High Court, recently, ruled that the transfer of an employee from the position of vice president of a security guard company to the position of Supervisor of an apartment complex managed by the security guard company does not equate to an “unreasonable transfer” if the transfer was necessary because of “human resources or management necessity.” Mr. Choi was dismissed by a security guard company for, among other things, allegations of accepting bribes. The Korean Labor Commission ruled that the firing was a wrongful dismissal and ordered Mr. Choi to be reinstated. During the period of Mr. Choi’s termination, the company reorganized and eliminated Mr. Choi’s vice president position within the company. Upon Mr. Choi’s return to work he was ordered to be a Supervisor within an apartment complex. The company, however, maintained the same pay and retirement age as his previous job. In ruling in favor of the
Continue readingMust I grant Male Employees Maternity/Paternity Leave in Korea?: Korean Labor/Employment Law Updates
Article 19 of the Korean Labor Standards Act (LSA), in part, governs whether an employer must grant an employee unpaid maternity leave. Any employer, under the LSA, must grant a male or female employee maternity leave (Literal translation: Temporary Retirement for Childcare) if the child of the parent is taking care of the child and the child is under the age of 8 (Western/Legal Age). The employer is required to give the employee a maximum of one year unpaid leave, the employer may not dismiss the employee or otherwise disadvantage the employee during this leave period and the employer must include this period in the employee’s “continuous employment” and must pay the employee, at least, the same wage amount as when the employee commences the leave as when the employee returns to work. More articles on employment law that may be of interest to the reader. IPG’s Labor & Employment
Continue readingNon-Compete Clauses in Employment Agreements in Korea
The enforceability of non-competition clauses in Korea is an area of contention, that, often, leads to enforcement actions via criminal and civil suits. The criminal suits, usually, come in the form of an allegation of the expropriation of trade secrets. In general, carefully crafted non-compete clauses coupled with tailored actions leading to termination leads, typically, to the enforceability of non-compete obligations by Korean courts. The Korean Supreme Court in Case # 2009Da82244 (March 11, 2010) iterated a test to determine the enforceability of non-competition covenants in employment agreements in Korea. No factor, in of itself, is intended to be determinative, however, the Fourth Factor – not paying compensation to the employee in exchange for the execution of the covenant is considered, in most cases in Korea, the most important factor in the determination by Korean courts. The Supreme Court of Korea noted that courts should analyses the following factors in
Continue reading“Cause” Needed to Terminate During Probationary Period in Korea?
Korean Labor & Employment law is a labyrinth that the majority of our clients struggle with on a near daily basis. For many foreign-capital invested companies, doing business in Korea, the major risk shall be from employees. One issue that a client has, recently, requested answered is if an employer needs “cause” to terminate an employee during a contractually imposed 3-month probationary period. The answer is a resounding YES. An employer must provide some reason to an employee for termination even under a contractually imposed probationary. The Supreme Court has noted that: “An employers have a broad right to cancel a contract. However, even in (the case of a probationary employee), the reasons of dismissal must be rational, objective and should be considered a proper decision based on social norms” Supreme Court and lower court decisions have applied a lower standard than the typical “cause” standard applied by the
Continue readingIPG’s Labor & Employment Law Practice: Proactive, Efficient & Unconflicted
Introduction to the Korean Labor & Employment Law Practice GroupOne our largest practices is our Labor & Employment Law Practice in Korea. We handle matters, mainly, for foreign companies and foreign executes working for Korean conglomerates. We are, chosen, over the ubiquitous Korean law firms, often, because of our proactive and unconflicted practice of law. We are, intentionally, different from the crowd. For example: We have, recently, worked on a post M & A matter caused by a lack of proactive representation related to the potentiality of assuming the liabilities for severance payments of dispatched workers. Sad case – led to the termination of the manager in charge of the merger. Obvious matter- Dispatched workers pose a risk relating to severance and employment security. Proper M & A structure is required or this risk passes with the sale of the Company; and We, also, worked on a criminal matter
Continue readingUnfair/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
Continue readingHiring/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: 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; Don’t trust “salary tables.” In
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