KOREALabor Laws

Labor law system aims to protect individuals

Laws related to employment and labor in the Republic of Korea (hereinafter referred to as "Korea") uniformly apply to foreign nationals working in Korea, as well as Korean nationals, and even if a governing law of another country is chosen at the time of concluding a contract, workers are protected under such laws related to employment and labor.

The main sources of law that prescribe employment-related matters are the Constitution, the Labor Standards Act (law corresponding to the Japanese Labor Standards Act) (hereinafter referred to as the "Labor Standards Act" or the "Act"), the Minimum Wage Act, and the Employee Retirement Benefit Security Act; the working conditions of workers are mainly prescribed under these laws.

The Labor Standards Act prescribes the minimum standards for working conditions, broadly protects workers who work in Korea, and supersedes provisions that are disadvantageous to workers. Thus, for example, if there are any inconsistencies between the labor contract concluded by the worker and the Labor Standards Act and when the conditions of the labor contract fail to satisfy the standards set forth in the Labor Standards Act, the labor contract is invalid. Meanwhile, it should be noted that a special agreement whose terms are more favorable to workers compared to the standards of the Labor Standards Act would remain valid. In other words, a labor contract that contains any inconsistent provisions does not invalidate the entire contract; the parts of the labor contract prescribing working conditions that fail to satisfy the standards set forth in the Labor Standards Act are deemed invalid and replaced with statutory standards.

Furthermore, a company must not dismiss a worker without a justifiable reason. According to the court, a "justifiable reason" for dismissing a worker must be a critical factor in which the continuation of employment of such worker would become an excessive burden on the company. When a company is to dismiss a worker, the company must notify the worker at least 30 days in advance, and if the company fails to notify the worker at least 30 days in advance, the company is required to pay more than 30 days' worth of standard wages to the worker. (This obligation for a dismissal notice was revised on January 15, 2019, as detailed in 5-1(4).)

Meanwhile, the rules are similar in Japan - when a company is to dismiss a worker, such dismissal is not deemed a lawful dismissal unless it is based on objectively rational grounds that are acceptable under social standards. The company is also obligated to send a dismissal notice to the worker at least 30 days in advance.

In this regard, there are minor differences between the two countries. For instance, in Korea, when a company intends to dismiss a worker, it is necessary to notify the worker of the grounds for the dismissal and the intended date of dismissal in writing. The specific restrictions on dismissal for managerial reasons are clearly set forth in the Labor Standards Act, but there is no crucial difference. Because both Japan and Korea prescribe strict procedures and require lawful and rational grounds for dismissing workers, it is obvious that both countries are taking the stance of strongly protecting workers. Moreover, the recent Employment Protection Legislation (EPL) index announced by the OECD also indicates that both Japan and Korea are positioned equally as countries that stress the protection of regular employment.

In light of the above, both countries have similar labor laws that strongly protect workers based on a system where companies cannot easily dismiss workers.

Acquisition of visas

When a foreign national is to work in Korea, the person is required to attain the status of stay eligible for employment activities (Immigration Control Act, Article 18).

Whether a foreign national may engage in employment activities is classified according to the issued visa. Generally, a foreign national is required to acquire the proper visa prior to entering Korea for the purpose of business or work. A company must not employ a foreign national who does not have a proper visa. Thus, the acquisition of a proper visa becomes important, and it is standard practice to acquire the visa of Supervisor (D-7) or the visa of Corporate Investor (D-8) in Korea when a Japanese company is to expand business to Korea or when a Japanese national is to start a business in Korea.

It generally takes roughly one to one and one-half months to acquire a visa, and the cost is normally less than $100. Based on the foregoing period and cost, while it may appear that a visa can be quickly and easily acquired in Korea, the screening process for determining whether the applicant has the qualifications for employment and to what area the applicant may conduct activities is extremely strict, and permission is not granted unless the applicant has sophisticated skills, expertise, or a degree; therefore, it is not easy to acquire a visa in Korea.

Meanwhile, when a foreign company is to conduct business in Japan, the company is required to file and acquire from the Immigration Bureau a status of residence that permits its workers to work in Japan (work visa). The cost of this visa is roughly the same as in Korea, and it usually takes roughly three to four months for this visa to be issued. While there are standards for screening visa applicants, the details thereof are considerably vague, and the standards of judgment by the visa officers are also unclear. Thus, judgment standards are sometimes changed pursuant to the social conditions and international affairs at such point in time. Accordingly, similar to Korea, it is also not easy for applicants to acquire a visa and work in Japan.

When comparing the foregoing current conditions, while there are slight differences between the systems, both countries do not issue work visas easily, and maintain a strict screening process.

Trade unions

There are various organizational forms of trade unions; namely, craft unions, industrial unions, enterprise unions, general unions, and national centers, among which the highest organizational form is national centers, which are nationwide central organizations of trade unions. As national centers in Korea, there are the following two major trade unions; specifically, the Federation of Korean Trade Unions (FKTU) and the Korean Confederation of Trade Unions (KCTU). FKTU has 25 industrial organizations under its wing, and many of the members belong to the sectors of metal, finance, automobiles, taxies, chemicals, and public services. FKTU was established in 1961, and during the military occupation that lasted for 30 years thereafter, FKTU was predominantly a company-dominated union that accepted the labor control of the government. Nevertheless, after democratization was achieved pursuant to the start of the civilian regime in 1993, FKTU made a clear departure from the conventional pro-government line, such as through a general strike by organizations under FKTU and a joint struggle with KCTU.

Furthermore, while FKTU previously participated in the policymaking process based on an agreement among the government, workers, and companies, FKTU withdrew from the Tripartite Commission because the conflict between the government and companies with regard to the revision of labor-related laws had become intense, and participation in the policymaking process had not always worked well.

KCTU has 16 member organizations under its wing, and in addition to industrial organizations that include government officials, teachers, metal, finance, public transportation, and construction, KCTU also has female trade unions and a union of non-regular personnel of schools. The nongovernment labor force that grew by taking advantage of the South Korean strike wave of 1987 known as the Great Workers' Struggle established KCTU in 1995. One reason that the number of unions of KCTU is considerably smaller than FKTU is due to the integration of unions pursuant to the promotion of industrial unions. Furthermore, while the number of members of KCTU is roughly 200,000 fewer in comparison to FKTU, many major corporations, such as Hyundai Motor, are members, and when a labor dispute arises, in many cases, the labor dispute becomes large scale and serious.

Meanwhile, KCTU is focusing on the organization of non-regular workers, and independent unions of non-regular workers are often established with the support of KCTU.

Overview of labor-related statutes

The main labor-related statutes in Korea are as follows.

Overview of the main sources of law is described below.

Constitution:

The Constitution of Korea clearly states the basic principles of employment. Article 32 of the Constitution prescribes that all citizens shall have the right to work, and additionally prescribes that the State must guarantee human dignity by establishing laws related to minimum wage and working conditions. Article 32 of the Constitution additionally prescribes the prohibition of sexual discrimination in terms of employment and working conditions, special protection for working children, and preferential opportunities for the employment of wounded veterans and policemen and members of the bereaved families of military servicemen and policemen killed in action.

As described above, the Constitution protects the right to work of all citizens as the most significant concept. While various labor laws have been established in order to realize the right to work prescribed under the Constitution, the labor laws of Korea can be largely classified as individual labor laws and collective labor laws.

The former is characterized in that the State guarantees a certain level of standards or higher with regard the contents, conclusion, and types of labor relations, and as examples, there are the Labor Standards Act, the Act on the Protection, etc. of Fixed-term and Part-time Employees, the Employee Retirement Benefit Security Act, the Minimum Wage Act, and the Act on Equal Employment and Support for Work-Family Reconciliation. As for Labor Standards Act, a proposed amendment was voted by the Korea National Assembly on February 28, 2018, and passed by a majority vote. The latter includes legal systems that prescribe the standards of collective autonomy between companies and workers, and as examples, there are the Trade Union and Labor Relations Adjustment Act, the Labor Relations Commission Act, and the Act on the Promotion of Worker Participation and Cooperation.

Main laws that correspond to individual labor laws

1. Laws related to labor standards

   (i) Labor Standards Act (ii) Minimum Wage Act, (iii) Certified Labor Affairs Consultant Act, (iv) Wage Claim Guarantee Act, (v) Employee Retirement Benefit Security Act, (vi) Act on the Protection, etc., of Dispatched Workers, (vii) Act on the Protection, etc. of Fixed-term and Part-time Employees, (viii) Framework Act on Labor Welfare

2. Laws related to equal employment

   (i) Act on Equal Employment and Support for Work-Family Reconciliation, (ii) Act on Employment Promotion and Vocational Rehabilitation for Disabled Persons, (iii) Act on Prohibition of Age Discrimination in Employment and Aged Employment Promotion, (iv) Act on the Promotion of the Economic Activities of Career-Break Women, etc.

3. Laws related to vocational training and qualifications

   (i) Workers Vocational Skills Development Act, (ii) Vocational Education and Training Promotion Act, (iii) National Technical Qualification Act, (iv) Workers Vocational Skills Development Act, (v) Basic Act on Qualifications, (vi) Act on Human Resources Development Service of Korea

4. Laws related to industrial safety and health

   (i) Industrial Safety and Health Act, (ii) Act on the Prevention of Pneumoconiosis and Protection, Etc., of Pneumoconiosis Workers, (iii) Korea Occupational Safety and Health Agency Act

5. Laws related to employment/industrial accident insurance

   (i) Employment Insurance Act, (ii) Act on the Collection, Etc., of Premiums for Employment Insurance and Industrial Accident Compensation Insurance, (iii) Industrial Accident Compensation Insurance Act

6. Laws related to employment services

   (i) Basic Employment Policy Act, (ii) Occupational Safety and Health Act, (iii) Social Enterprise Promotion Act, (iv) Act on the Employment Improvement, Etc., of Construction Workers, (v) Juvenile Activity Promotion Act, (vi) Act on Foreign Workers' Employment, Etc., (vii) Act on Trade Adjustment Assistance Following the Free Trade Agreements

7. Laws related to labor-management cooperation

   (i) Act on the Promotion of Worker Participation and Cooperation, (ii) Labor Relations Commission Act, (iii) Act on the Tripartite Commission for Economic and Social Development, (iv) Act on Enactment of Labor Day, (v) Act on Support for Development of Labor Management Relations

Main laws that correspond to collective labor laws

1. Laws related to trade unions

   (i) Trade Union and Labor Relations Adjustment Act, (ii) Act on the Establishment and Operation, Etc. of Public Officials' Trade Unions, (iii) Act on the Establishment and Operation, Etc. of Trade Unions for Teachers

Overview of main sources of laws prescribing employment relations

(1) Labor Standards Act:

The purpose of the Labor Standards Act is to set forth the minimum standards related to wages, working hours and other working conditions to thereby secure and improve the living standards of workers and achieve the well-balanced development of the national economy. The Labor Standards Act serves the central role among labor-related laws and prescribes the minimum working conditions, including the standards of overtime allowance, paid leaves such as holidays and others, retirement allowance, and other allowances and payments to be provided by a company to its workers.

On February 28, 2018, a bill to amend the Labor Standards Act was enacted. The revised Act has been applied to workplaces and public institutions with 300 or more workers from July 1, 2018. Meanwhile, the Act will be applied to workplaces with 50 to 299 workers from January 1, 2020 (the latest announcement made on this issue is detailed in 4-3(1)), and to workplaces with 5 to 49 workers from July 1, 2021.

Major revisions of the Act are as follows:

1. Lowering of practical upper limit of maximum weekly working hours including holidays (52 hours)
2. Temporary approval to extend working hours for workplaces with less than 30 workers
3. Lowering of upper limit of maximum working hours for working minors under 18 years old
4. Clarification of premium pay rate for holiday work
5. Revision of the business types specified as exceptions in terms of working hours
6. Guarantee for the payment of wages for holidays designated by Presidential Decree

The Labor Standards Act applies to all companies that continuously employ five workers or more. Furthermore, the condition of employing five workers or more includes foreign workers and is similarly applied to all workplaces in Korea. The violation of a specific provision of the Labor Standards Act is punishable by criminal sanctions.

To prohibit harassment in the workplace, the Labor Standards Act was amended on July 16, 2019, as detailed in 3-4.

(2) Minimum Wage Act:

The purpose of the Minimum Wage Act, as revised on January 1, 2015, is to stabilize the living standards of workers and improve the quality of the labor force by guaranteeing the minimum wage level of workers and thereby contribute to the robust development of the national economy. This Act applies to all businesses and workplaces that employ workers (Scope of Application); however, the following wages that correspond to those prescribed by the Minister of Employment and Labor are excluded from the scope of calculation of minimum wage:

1. Wages other than the wages regularly paid on a monthly basis
2. Wages other than the wages paid based on prescribed working hours or prescribed workdays
3. Other wages deemed inappropriate for inclusion in the amount of the minimum wage

The minimum wage system is a system in which the government sets and enforces a minimum wage level to protect low-wage workers.

Although the minimum wage increase rate in 2021 is not high compared to the previous year, it has been raised from 8,590 won (minimum wage in 2020) to 8,720 won (1.5% increase) per hour. The minimum wage from January 2022 has been raised to 9,160 won (an increase of 5.1% from 2021), which is 73,280 won for daily wages (8-hour standard) and 1,914,440 won for monthly wages (40-hour weekly standard/ 209-hour weekly standard).

In 2023, the minimum wage increase rate is about 5% to 9,620 won, which is 76,960 won for daily wages (8-hour standard) and 2,010,580 won for monthly wages (40-hour weekly standard/ 209-hour monthly standard). Each workplace shall check whether the current salary payment has reached the minimum wage and if it has not, it must be adjusted so that the wages that meet the minimum wage from January 2023 (see 4-1 for details).

It should also be noted that discussions have begun regarding the elimination of the weekly holiday allowance in 2023 (see 4-1 for details) (see 4-1 for details).

(3) Employee Retirement Benefit Security Act:

The Korean government requires all workplaces to implement a severance payment plan. However, while this Act applies to all businesses and workplaces, it does not apply to businesses that only employ relatives living together and employment within the family.

The purpose of this Act is to secure the workers' stable livelihood in old age in preparation for an aging society. However, it should be noted that the application of this Act is exempted with regard to workers whose continuous years of services are less than one year and part-time workers (workers who work less than 15 hours per week based on a four-week average).

The Small and Medium Enterprise Retirement Pension Fund System is scheduled to come into effect on April 14, 2022. The Small and Medium Enterprise Retirement Pension Fund System is a public system to ensure a stable retirement for workers in small and medium companies (companies that employ 30 or fewer workers at any one time). The workers and the company each contribute a certain amount, and the joint fund is operated as a public pension service that pays retirement salaries to the workers.

(4) Trade Union and Labor Relations Adjustment Act:

Beginning with the 1953 Trade Union Act and the Labor Dispute Adjustment Act, and, after the enactment of the 1997 Trade Union and Labor Relations Adjustment Act, this Act was partially revised in 2014. The purpose of this Act is to maintain and improve working conditions, as well as the economic and social status of workers, by securing their right to organize, right to bargain collectively, and right to act collectively under the Constitution (Purpose (i)) and to contribute to the maintenance of industrial peace and the development of the national economy by preventing and resolving labor disputes through fair adjustment of labor relations (Purpose (ii)).

(5) Acts relevant to the revised Industrial Safety and Health Act

In order to protect workers from industrial accidents, the Ministry of Employment and Labor drastically revised the Industrial Safety and Health Acts (Industrial Safety and Health Act, Industrial Safety and Health Act Enforcement Regulations, and Industrial Safety and Health Act Enforcement orders) for the first time in 28 years, and the revised Act took effect on January 16, 2020. Major revisions are as follows:

• Expanding the scope of protection from "workers" to "persons providing labor."
• The scope of responsibility for the prevention of industrial accidents has been expanded from "employer" to include "representative director," "construction orderer," and "franchise membership headquarters."
• To strengthen safety control for subcontracted workers, the scope of responsibility of contractors (main contractors) was expanded, and the implementation of safety control was strengthened.
• The in-house subcontracting of work related to harmful and hazardous substances, which had been approved before the revision, is no longer allowed, in principle, and it is only allowed with the approval of the Minister of Employment and Labor.
• Safety control for the construction industry, where accidents and disasters occur frequently, was strengthened.
• The scope of persons who are obligated to prepare and submit safety data sheets (MSDS) for chemical substances has been expanded from solely "those who transfer and/or provide (chemical substances)" to include "manufacturers and importers (of chemical substances)."

(6) Serious Accident Punishment Act

The Serious Accident Punishment Act came into effect on January 27, 2022. The law is applicable when there is a significant breach of duty in ensuring safety by the employer or the person in charge of management.

In the long term, the law will apply to all companies with five or more than five employees, but in order to reduce confusion in the field, the law will be postponed for two years for companies with less than 50 employees or with a construction value of less than five billion won. (The law will apply from January 1, 2022, for companies with more than 50 employees or with a construction value of five or more than five billion won, and from January 1, 2024, for companies with five to less than 50 employees or with a construction value of less than five billion won.)

"Serious Accident" can be divided into "Serious Industrial Accident" and "Serious Civil Accident." "Serious Industrial Accident" is classified as one in which one or more people die or two or more people are injured requiring treatment for six months or more at an industrial site, or in which three or more people suffer from occupational diseases in a year. "Serious Civil Accident" is defined as an accident caused by a defect in the design, manufacture, installation, or management of specified raw materials or products, facilities for public use, or means of public transportation.

For both types of accidents, criminal penalties are imposed if it is found that the person in charge of management failed to comply with safety and health obligations, and an accident occurred. In particular, if a worker dies, the person in charge of management will be imprisoned for at least one year or fined up to 1 billion won, and the company or institution will be fined up to 5 billion won.

The Ministry of Labor states that this law is not particularly focused on punishing employers and managers but rather a law focused on preventing major accidents and urges the establishment of a safety and health management system.

(7) Gender Equality in Employment and Support for Work and Family Balance Act

On May 19, 2022, the Labor Relations Commission's remedy system for violations of measures to protect victims of sexual harassment in the workplace due to gender discrimination in employment will come into effect (enforcement of Gender Equality in Employment and Support for Work and Family Balance Act).

When a worker is subjected to discrimination in recruitment, hiring, wages, or other aspects of employment on the basis of gender, or when a company fails to fulfill its obligation to implement the appropriate measures or treats a victim of sexual harassment in the workplace in a disadvantageous manner, the victimized worker may apply to the Labor Relations Commission for relief.

If a victim of discriminatory treatment (sex discrimination in employment and violation of measures to protect victims of sexual harassment in the workplace) files an application for rectification with the Labor Relations Commission, the Labor Relations Commission shall be able to issue an order for rectification, including the cessation of discriminatory treatment, and an order for appropriate compensation after a process of investigation and questioning. A company that fails to implement the corrective order confirmed by the Labor Relations Commission shall be subject to a fine of up to 100 million won.

(8) Release of Recommendations by the Future Labor Market Study Group

The general framework of the labor market reorganization being promoted by the current administration was announced in December 2022 by the Future Labor Market Study Group, an expert discussion mechanism established to promote labor market reform. The main contents of the recommendations are to diversify the management unit of extended working hours, which are currently regulated on a weekly basis, to monthly, quarterly, semi-annual, and yearly basis, and to introduce a flexible operation system.

In addition to the flexible management of overtime hours, it was also proposed to introduce an "interworking interval system" that would provide an 11-hour rest period (interval) between the end of one workday and the start of the next day's work. However, some have criticized this system as going against the trend toward shorter working hours, as because it would allow workers to work up to 80.5 hours per week instead of the current maximum of 52 hours per week. It remains to be seen how this review will affect the Korean economy.

Duty to prepare Employment Handbook

In Korea, similar to Japan, a company that constantly employs 10 workers or more is obligated to prepare an Employment Handbook and report thereof to the Minister of Employment and Labor. Based on Article 93 of the Labor Standards Act, a company is required to specify the following matters in its Employment Handbook.

If a company violates Article 93 of the Act, it will be punished by a fine not exceeding 5 million won pursuant to Article 116, Item 2, of the Act.

The decision-making process for working conditions in Korea is basically the same as in Japan; specifically, the Labor Standards Act determines the overall minimum level of working conditions, and the labor agreement, the Employment Handbook, and individual labor contracts determine the detailed working conditions.

The procedures for preparing and revising the Employment Handbook are required and follow the same process as in Japan.

When a company is to prepare or revise the Employment Handbook, the company is required to listen to the opinions of a trade union, in cases where there is a trade union composed of a majority of the workers, and to listen to the opinions of a majority of the workers if there is no such trade union. In the foregoing case, it would be sufficient for the company to listen to their opinions, and the company is not obligated to be bound by those opinions. If a company violates the foregoing procedures for listening to opinions, the company will be punished by a fine not exceeding 5 million won pursuant to Article 114, Item 1, of the Act.

In line with the amendment to the Labor Standards Act made on July 16, 2019, which prohibits harassment in the workplace, the matters to be described in the Employment Handbook have been changed; this also needs attention (see 3-4 for details).

Subordination of legal binding force of Employment Handbook

All valid Employment Handbooks prepared and revised by a company have the effect of prescribing labor relations. The stance of judicial precedents is that, unless there is tangible proof, interpretations and findings that ignore the objective meaning of the wording must be made carefully and strictly.

In addition to the Employment Handbook, the details of labor relations may be prescribed by labor contracts, collective agreements, and laws related to labor relations, and there is an order of superiority among these rules and laws in terms of their effect. In other words, according to Article 96 of the Act and Article 33, Paragraph 1, of the Trade Union and Labor Relations Adjustment Act, an Employment Handbook must not be in violation of any laws or in breach of the collective agreement applicable to the workplace, and an Employment Handbook containing any provisions in violation or breach thereof is null and void. Nevertheless, as a general rule, under a labor contract, an Employment Handbook is applied preferentially over individual agreements. Accordingly, a labor contract that prescribes working conditions that fail to satisfy the standards set forth in an Employment Handbook is invalid with regard to such part, and such invalid part will be subject to the standards set forth in the Employment Handbook.

Disadvantageous revision of Employment Handbook

The principle of requiring a collective agreement has been well established in Korea when an employer is to disadvantageously revise the Employment Handbook in Korea.

Similar to Japan, a debate has continued in Korea regarding the disadvantageous revision of working conditions pursuant to the revision of the Employment Handbook as a major problem. What differs from Japan is that, in Korea, an explicit decision to the effect that a collective agreement is required for a disadvantageous revision was rendered in 1977. Furthermore, subsequently when the Labor Standards Act was revised in 1989, a rule that required a collective agreement for a disadvantageous revision of the Employment Handbook was clearly established; however, a judicially created doctrine that permitted a disadvantageous revision, so as long as it was rational, also continued to be used by the courts.

Article 94, Paragraph 1, (Procedures for Preparation and Amendment to Rules) of the existing Labor Standards Act prescribes as follows: "An employer¹ shall hear the opinion of a trade union if there is such a trade union composed of the majority of the workers in the business or workplace concerned, or otherwise hear the opinion of the majority of the workers if there is no trade union composed of the majority of the workers, with regard to the preparation or alteration of to the rules of employment. However, if the rules of employment are to be amended unfavorably to workers, the employer shall obtain their consent thereto."

Accordingly, pursuant to the proviso of the foregoing provision, any disadvantageous revision of working conditions under the Employment Handbook requires the consent of a majority of the members of a trade union or a majority of the workers (this differs from the "representative of a majority" in Japan). This proviso is a stipulation of the judicially created doctrine of 1977 pursuant to the revision of the Labor Standards Act in 1989. Nevertheless, as described above, while the principle has been stipulated, it should be noted that courts continue to maintain and argue the rationality theory against the foregoing principle under the statute, and conflicting rules continue to coexist.

Meanwhile, under the laws of Japan, the legal principle of the reasonable revision of the Employment Handbook, which is a judicially created doctrine, has been enacted without any change.

The principle of the collective agreement by a majority that has been established under the statute appears to be, at a glance, a generous protection for workers. Nevertheless, from a different perspective, the fact that provisions can be changed in a collective agreement by the majority, even though such changes may be detrimental to the interest of workers, means that the changes will be enforced once they are approved, and the minorities opposing the changes will be bound thereby, irrespective of such detrimental nature; this may cause a significant infringement of the rights of workers. Which is why it appears that courts are keeping their doors open to enable changes, so as long as the changes are rational, even without a collective agreement in order to prevent the occurrence of substantial infringement of human rights or other irrational issues, and reasonably implementing measures as needed in relation to complex labor-management relations.

Enforcement of the revision of the Labor Standards Act prohibiting harassment in the workplace:

To prohibit harassment in the workplace, the revised Labor Standards Act went into effect on July 16, 2019. The following are some of the key points that companies should be aware of:

• The Employment Handbook shall contain ▼prohibited acts of power harassment ▼ preventive education ▼ case handling procedures ▼ protection measures for victims ▼ sanctions to perpetrators ▼ measures to prevent recurrences.
• When a new disciplinary provision is established for harassment perpetrators in the workplace, it is necessary to obtain the consent of the majority of workers since it constitutes a disadvantageous revision of the Employment Handbook.
• A company shall promptly initiate an investigation to confirm the facts in the event that a report regarding harassment has been made in the workplace or when such a case is recognized.
• In these processes, a company should take protective measures, such as providing paid leave to victims. Also, if the harassment is confirmed to be true, a company should implement measures, such as disciplinary action and/or changing the work location of the perpetrator.

Executives of companies that inadequately respond to the above may be sentenced to imprisonment of up to three years or a fine of up to 30 million won (approximately 2,750,000 yen). This is practically the first time that such specific regulations requiring companies to respond to harassment have been established in Korea, thus companies need to take note of these regulations.

Wage

Overview

Under the Minimum Wage Act, which was enacted on December 31, 1986, and thereafter revised on and enforced from January 1, 2015, the Minister of Employment and Labor calls for a discussion on the minimum wage. The Minimum Wage Council thereafter discusses the minimum wage within 90 days, and the Minister of Employment and Labor announces the result of the discussion. If objections are raised by workers or the company's representative, additional discussions are requested as needed, and the Minister of Employment and Labor thereby determines and announces the minimum wage. The application period is from January 1 of the following year to December 31 of that year. The Minimum Wage Council is composed of a total of 27 councilors - 9 councilors each representing workers, companies, and the public interest - who are appointed by the president once they are nominated by the Minister of Employment and Labor.

While the minimum wage applies to all businesses and workplaces that employ one or more workers, a reduction in the minimum wage applies to certain workers. For example, there are measures in which an amount, which is roughly 10% less than the minimum wage, is applied as the minimum wage to workers during a training period (approximately three months). A company must pay wages to its workers in an amount that is not less than the announced minimum wage. A labor contract in violation of this rule is invalid, and it will be treated as if it were originally a contract for paying an amount equal to the minimum wage. A violation of this rule will result in imprisonment of up to three years and/or by a fine not exceeding 20 million won.

The minimum wage is decided annually by the Minimum Wage Council pursuant to the Minimum Wage Act.

The hourly minimum wage applied from 2017 was increased by 7.3% from 2016 (6,030 won) to 6,470 won. The minimum wage for 2017 was decided upon an unprecedented prolonged discussion period. This was because the companies did not want to change the 6,030 won (per hour) of 2016 while workers wanted an increase to 10,000 won, and companies and workers fiercely confronted each other from the very beginning; while heated arguments continued with both sides being adamant regarding their original plan, the discussions remained as far apart as ever with neither side offering any amendment of its plan. Ultimately, without any progress whatsoever, the foregoing minimum wage was adopted and decided by the Minimum Wage Council on July 16, 2016, and announced by the Minister of Employment and Labor on August 5.

Recent Trends

It should also be noted that the minimum wage has been significantly increased since January 2018. In recent years, the minimum wage in Korea has increased by about 7% every year. Furthermore, in 2018, the Council unexpectedly decided to increase the minimum wage by 16.4%, as a result of which the minimum wage was increased to 7,530 won. Although there have been strong reactions from companies against the substantial increase in the short term, it has been officially enforced from January 2018 in nationwide.

Minimum Wage in 2020

The minimum wage was further raised to 8,590 won from January 1, 2020 (8,350 won in the previous year), which is an increase of 240 won (3%) from the previous year. Based on the monthly wage (209 hours), it was 1,795,310 won per month, up by 50,160 won from 1,745,150 won in 2019. The monthly working hours as a basis of the monthly wage are 209 hours because weekly holiday allowances are included. The weekly holiday allowance is a holiday allowance paid to a worker who has completed the prescribed number of workdays in a week and is paid to a worker who has worked 15 hours or more per week irrespective of the form of employment.

Minimum Wage in 2021

In January 2021, the minimum wage was raised from 8,590 won (minimum wage in 2020) to 8,720 won (1.5% increase) per hour. The 1.5% hike is lower than the 2.7% hike in 1998 at the time of the Asian currency crisis. This rate of increase is the lowest since 1988 when the minimum wage system was introduced and resulted in stopping the sharp upward trend that continued until the previous fiscal year.

Initially, while the workers demanded 10,000 won, a 16.4% increase compared to FY 2020, the employers offered 8,410 won, a 2.1% decrease. As the gap between the parties was difficult to fill, the proposal suggested by the expert was ultimately taken. The Korean economy has been in a critical situation due to the spread of COVID-19, and the rate of increase seems to have been kept low in consideration of the business difficulties of SMEs and the micro self-employed.

Minimum Wage in 2022

The Ministry of Employment and Labor in Korea decided on August 5, 2021, that the minimum wage (hourly wage) for 2022 shall be 9,160 won, an increase of 5.1% over the previous year. If calculated on a daily basis (based on 8 hours), the wage shall be 73,280 won, and if calculated on a monthly basis (based on 40 hours per week), the wage shall be 1,914,440 won. It is estimated that the number of workers affected by the minimum wage shall be approximately 768,000 to 3.55 million nationwide (4.7 to 17.4% of the working population in Korea).

Prior to the decision by the Ministry of Employment and Labor, the Minister of Employment and Labor announced that the amount of the minimum wage, which was approved by the Minimum Wage Committee at the 9th Plenum (held on July 12, 2021), would be made public, and that a final decision would be made after hearing the opinions of interested parties. There were no objections from the labor side to the amount of the minimum wage, and although there were objections from three management organizations, their objections were not accepted in consideration of the Minimum Wage Act and the deliberations and decisions of the committee. The minimum wage is applied uniformly to all industries in Korea.

Minimum Wage in 2023

The minimum wage for 2023 in South Korea, where prices remain high due to soaring import prices of resources and food, has been set at 9,620 won, an increase of 5.0% over the amount in 2022. The growth rate was maintained at the previous year's level, 98% higher than 10 years ago.

The Minimum Wage Committee, which consists of experts and academics from both labor and management, explained that the result reflects the outlook for economic growth and price hikes by the government and the Bank of Korea.
The minimum wage in Korea has doubled over the past decade, with the minimum wage increasing significantly to 16% in 2018 and 11% in 2019. However, this rapid wage increase has led to the closure of stores and restaurants by self-employed workers who operate them, and this has led to years of holding down the rate of increase to 3% in 2020 and 2% in 2021.

As of 2023, the adoption of a uniform national minimum wage system has been criticized. There is a possibility that after 2024, minimum wages might be established by regional standards, as in Japan.

Provisions related to overtime pay

Labor Standards Act, Article 56 (Extended Work, Night Work and Holiday Work)

For any extended work (referring to work that was extended pursuant to the provisions of Article 53, Article 59, and the proviso of Article 69), night work (referring to work provided from 10 p.m. to 6 a.m.) or holiday work, 50% or more of ordinary wages shall be added to the ordinary wages that the company is required to pay.

It was determined that, from 2018, the amount of wages to be paid to workers for holiday work would be specified more clearly in Article 56 of the Act. It should be noted that 150% of the ordinary wages shall be paid for holiday work within eight hours, and 200% of the ordinary wages shall be paid for holiday work exceeding eight hours.

When a company and a worker reach an agreement, overtime work exceeding the statutory working hours, up to 12 hours per week, is allowed.

In addition, the number of types of business that are eligible for a provision which allows a company to have its workers work over 12 hours per week as exceptional cases upon obtaining a written agreement with such workers has been substantially reduced by the revision of the Act in 2018. The provision has been criticized for a long time since the scopes of business that may force overtime work are too broad. Following the revision in 2018, the number of the types of business was reduced from 26 to 5. In accordance with the revision, it was further stipulated that the company shall provide workers with at least 11 hours of breaks until the start of the next work if the company's business falls under the revised scope.

[Scope of business stipulated in the Act before revision]　

1. Transportation business, goods sales and storage business, and finance and insurance business
2. Movie production and entertainment business, communication business, educational study and research business, advertising business
3. Medical and sanitation business, hotel and restaurant business, incineration and cleaning business, and barber and beauty parlor business
4. Other businesses determined by the president in consideration of the character of a business and public conveniences (social welfare business)

[Scope of business stipulated in the revised Act]

1. Land transportation and pipeline transportation business (excluding passenger car transportation business based on Article 3 (1) item 1, of the Passenger Car Transportation Business Act)
2. Water carriage business
3. Air transportation business
4. Insurance business

Also, in Korea, the system of using leave as compensation has been introduced pursuant to Article 57 (System of Using Leave as Compensation) of the Labor Standards Act. Thus, upon reaching a written agreement with workers, the company may, in lieu of paying additional wages, grant leaves to workers to compensate for the extended work, night work, and holiday work prescribed in Article 56 of the Act. The former Act stipulated that a violation of the foregoing system would be punished by imprisonment up to two years or by a fine not exceeding 10 million won (former Labor Standards Act, Article 110); however, after the revision, the fine was increased to 20 million won; the revised Act has been implemented as of May 29, 2018.

Discussion of Abolishing Weekly Holiday Allowance

Discussions have begun on the abolition of the weekly holiday allowance.

The weekly holiday allowance is a paid holiday system under which an additional day's pay is given to employees who work at least 15 hours per week and who fulfil the specified number of working days.
This system was enacted at the time of the enactment of the Labor Standards Law to compensate for long hours of low-paid work by providing an additional day's wages for those who faithfully fulfil the prescribed number of workdays and work 15 hours or more in a week.

The weekly holiday allowance system must be paid to all employees, including day laborers, short-term part-timers, and contract workers, if they meet the conditions, and it is also applicable to workplaces with fewer than five employees.

The abolition of this system is still under consideration, so it is necessary to pay attention to future trends, but if it is decided to abolish the system, the minimum monthly salary amount will change based on the condition of an 8-hour workday.

Employee Retirement Benefit Security Act

A company is required to establish one or more severance payment plans (retirement allowance plan and retirement benefit plan [Defined Benefit and Defined Contribution]), and the company is required to obtain the consent of a majority of the workers (majority of members of the trade union) when selecting or changing the type of severance payment plan.

Defined Benefit:

A retirement pension plan under which the level of benefits a worker will receive is determined in advance, and the company's burden of contributions will vary depending on the investment results of the fund.

Defined Contribution:

A retirement pension plan under which the level of contributions a company should make to pay benefits is determined in advance, and the amount of pension to be received by the worker will vary depending on the investment results of the fund.

When a company is to establish a retirement benefit plan, the company is required to prepare a retirement pension agreement, obtain the consent of a majority of the workers, and notify the Ministry of Employment and Labor.

A retirement pension agreement corresponds to a design sheet of a retirement benefit plan of individual workplaces and must satisfy the requisite items and statutory minimum standards (establishment of severance payment plan).

Services related to the management of the retirement benefit plan (investment management services and asset management services) must be entrusted to retirement pension business operators (financial institutions) (management method of retirement benefit plan).

The term "investment management services" refers to the services of presenting the fund’s investment policy and managing the records of the investment status, and the term "asset management services" refers to the services of receiving the company's contributions and maintaining/managing the funds. A business operator handling the retirement pension as a qualified financial institution of retirement pension (retirement pension business operator) is required to satisfy certain requirements and register with the Minister of Employment and Labor (entrusted to the Financial Services Commission). Furthermore, a retirement pension business operator is required to explain and educate the members, at least once a year, on the investment status of the retirement benefit plan. Registration requirements include asset management companies, insurance companies, banks, securities firms, and other equivalent institutions that satisfy the financial robustness standards and personnel/physical requirements set forth by the president. In cases where the received lump-sum payment is to be deposited in a personal retirement account upon switching jobs, the imposition of tax is deferred, and workers are guaranteed a certain amount of payment.

Working hour system

The Labor Standards Act prescribes that the statutory standard working hours shall not exceed 8 hours per day and shall not exceed 40 hours per week, excluding recess hours (Labor Standards Act, Article 50), as one of the important working conditions and furthermore prescribes that an agreement between the parties is required for any work exceeding the foregoing statutory standard working hours.

On February 28, 2018, as the former provision may have been construed as allowing the maximum working hours per week up to 68 hours, a revision was enacted to explicitly lower the limit to 52 hours.

Currently, the working hour system of 40 hours per week is applicable to a workplace of five workers or more. However, because the provisions related to working hours and holidays under the Labor Standards Act do not apply to workplaces of less than five workers, it should be noted that the system of two days off per week does not apply to these workplaces.

1. General rule of statutory working hours

   Labor Standards Act, Article 50 (Working Hours)

   (i) Working hours per week shall not exceed 40 hours excluding recess hours.

   (ii) Working hours per day shall not exceed 8 hours excluding recess hours.

   (iii) In calculating the working hours pursuant to Paragraph 1 and Paragraph 2, the standby time pursuant to the instructions or supervision of the employer shall be deemed the working hours.

   Primarily, the Labor Standards Act was revised (August 2003) to realize a five-day work week system (40-hour working system), and pursuant to the foregoing revision, the statutory working hours were gradually shortened from 44 hours per week to 40 hours per week from July 2004 onward in accordance with the number of workers in the workplace. From July 2011 onward, this system became applicable to all businesses, excluding workplaces with fewer than five workers, but it should be noted that an important amendment was enacted on February 28, 2018.

   While the previous Labor Standards Act stipulated that the maximum working hours per week shall be 40 hours, and only 12 hours of overtime work shall be permitted, the Employment Office interpretation was that holiday work hours were not included in the calculation of 40 working hours per week. That is, it was understood that the practical maximum working hours per week were 68 hours, including 12 hours of overtime and 16 hours of holiday work in addition to 40 hours of ordinary work from Monday through Friday. However, as the problem of long working hours gained international attention in recent years, the Act was revised to amend the definition of one week under Article 50, which was the basis of calculating the working hours per week, to mean seven days, including the weekend, so that it would no longer be permitted to work over 52 hours per week, including the weekend.

   The revised Act has been applied to workplaces and public institutions with 300 or more workers from July 1, 2018. It will also be applied to workplaces with 50 to 299 workers from January 1, 2020, and to workplaces with 5 to 49 workers from July 1, 2021. It remains unchanged that this 40-hours-of-work regulation is applicable only to workplaces with five or more workers.

   From January 1, 2020, the above revision has been applicable to workplaces with 50 to 299 workers as scheduled. However, based on the announcement made by the Ministry of Employment and Labor on December 11, 2019, the first year is considered a trial period and any violation that occurs within the period will not be subject to the restriction. In addition, even if a complaint is filed by a worker and a violation is confirmed, a maximum period of six months will be granted to a company, and if the company resolves the issue independently within that given period, the case will be closed without penalties.

   In January 2021, the grace period for introducing the revision that had been granted since 2020 ended, and a system that limits the maximum work hours to 52 hours per week was fully applied to companies with 50 to 299 workers. The new system is scheduled to be applied to companies with 5 to 49 workers from July 2021.

2. Overtime work, night work, and Sunday/holiday work

   When an agreement is reached between the company and the worker, overtime work in excess of the statutory working hours is permitted up to 12 hours per week. For overtime work, night work (from 22:00 to 6:00) and Sunday/holiday work, the company is required to pay 50% or more of the ordinary wages as extra wages. Furthermore, when an agreement is reached between the worker and the company, the company may also offer a substitute holiday in lieu of the prescribed working hours instead of paying the foregoing extra wages.

3. Flexible working hour system

   Labor Standards Act, Article 51 (Flexible Working Hour System)

   1. An employer may have a worker work in accordance with rules of employment (or any rules or regulations equivalent thereto) for a specific week in excess of the working hours prescribed in Article 50 (1) or for a specific day in excess of the working hours prescribed in Article 50 (2) on the condition that average working hours per week in a certain unit period of not more than two weeks do not exceed the working hours under Article 50 (1); however, working hours in any particular week shall not exceed 48 hours.
   2. Where an employer reaches an agreement in writing with a workers' representative on the following enumerated items, the employer is allowed to have a worker work for a specific week in excess of the working hours under Article 50 (1) or for a specific day in excess of the working hours under Article 50 (2) on the condition that the average working hours per week in a certain unit period of not more than three months do not exceed the working hours under Article 50 (1). However, working hours for a specific week and for a specific day shall not exceed 52 hours and 12 hours respectively:
      　(a) Scope of workers subject to this paragraph
      　(b) Unit period (a unit period not exceeding 3 months must be prescribed)
      　(c) Workdays in a unit period and working hours for each workday
      　(d) Other matters prescribed by the president
   3. The provisions of paragraphs (1) and (2) shall not apply to workers aged between 15 or older and less than 18 and pregnant female workers.
   4. If an employer needs to have a worker work in accordance with the provisions of paragraphs (1) and (2), the employer shall prepare measures to ensure that the existing wage level is not lowered.

   The term "flexible working hour system" refers to a system where it will not constitute a violation of the working hours even when the standard working hours are exceeded on a specific day or in a specific week to the extent that the working hours of one day or one week do not exceed the statutory working hours by taking a certain period, such as two weeks or three months as the average, and the company is not required to pay extra wages for the extended work. By extending the working hours when the company is busy and shortening the working hours when the company is not busy, the company is given flexibility in managing the working hours of its workers.

   Not more than two weeks

   Time restriction:

   Even when a flexible working hour system of not more than two weeks is introduced, the working hours of a specific week must not exceed 48 hours. Nevertheless, because there is no specific restriction regarding the working hours on a specific day, it could be interpreted that, from a legal perspective, all-night work is permitted on a specific day.

   Extended work in implementing flexible working hour system:

   Even when a flexible working hour system is implemented, workers may also engage in extended work to the extent of not exceeding 12 hours per week pursuant to the provisions of Article 53, Paragraph 2, of the Act.

   Provisions in Employment Handbook:

   A flexible working hour system of not more than two weeks may be implemented by prescribing the system in the Employment Handbook or an equivalent document. When a flexible working hour system is specified by preparing or revising an Employment Handbook based on lawful procedures, the consent of individual workers is not required.

   Specification of working hours in advance for each corresponding workday:

   Because a labor contract and an Employment Handbook are required to specify the starting time and finishing time of work, when introducing a flexible working hour system of not more than two weeks, the company is required to specify in advance the starting time and finishing time of a specific week.

   Effective term:

   Under the law, there are no specific provisions regarding the effective term. Because the operation of the system is to be pursuant to the Employment Handbook, if the effective term is not separately prescribed, the system may be implemented without restriction in terms of length.

   Not more than three months

   Written agreement with workers' representative:

   A flexible working hour system of not more than three months is restricting requirements with respect to the point that the target period is longer than a flexible working hour system of not more than two weeks, and the company and the workers' representative must reach a written agreement. When this system is introduced and implemented based on a written agreement between labor and management, the company is not required to separately obtain the consent of individual workers.

   Contents of written agreement with workers:

   In order to introduce a flexible working hour system of not more than three months, the company and the worker must reach a written agreement with regard to the following matters:

   1. Scope of workers subject to this system: Duties and job descriptions that are subject to this system are prescribed, and workers that correspond to such duties and job descriptions will be subject to this system.
   2. Unit period: A unit period is determined to be a certain period of three months or less, and average workdays in the unit period hours per day and per week are respectively prescribed for the period.
   3. Workdays in a unit period and working hours for each workday: To enable applicable workers to comprehend their work schedule in advance, the adjustment period, workdays during the adjustment period, and working hours for each workday are clearly prescribed.
   4. Effective term: The effective term is prescribed in a written agreement to prevent the abuse of this system.

   Time restriction:

   When a flexible working hour system of not more than three months is introduced, it should be noted that the working hours of a specific week must not exceed 52 hours, and the working hours on a specific day must not exceed 12 hours.

   Not more than six months

   It should be noted that the unit period for a flexible working hour system has been extended to a maximum of six months since 2021.

   Under the flexible working hour system prior to the revision of the Labor Standards Act, the unit period could be selected from two weeks to three months, but the revision extended the range up to six months. When the flexible working hour system is adopted for the period from two weeks to six months, an agreement with the representative of the worker shall be required; and the work hours shall not exceed 52 hours per week and 12 hours per day.

4. Selective working hour system

   Labor Standards Act, Article 52 (Selective Working Hour System)

   Where an employer has reached a written agreement on each of the following subparagraphs with the workers' representative regarding a worker who is entrusted with the decision as to when to begin and finish work in accordance with the rules of employment (including those equivalent to rules of employment), the employer may have workers work in excess of the working hours per week set by paragraph (1) of Article 50, or the working hours per day set by paragraph (2) of Article 50 on the condition that average working hours per week computed on the basis of adjustment period not more than one month do not exceed the working hours prescribed in paragraph (1) of Article 50:

   1. Scope of workers subject to this paragraph (excluding workers between the age of 15 and of 18)
   2. Adjustment period (a finite period not more than one month must be prescribed)
   3. Total working hours within an adjustment period
   4. Starting and finishing time of working hours if a mandatory work period is in force
   5. Starting and finishing time of working hours that are allowed to be selected by workers
   6. Other matters as determined by the president

   Description:

   The term "selective working hour system" refers to a system where workers are allowed to decide the starting time and finishing time of work prescribed in the Employment Handbook, and by prescribing an adjustment period of not more than one month through an agreement with the workers, the workers are allowed to independently decide the starting time and finishing time of work and the working hours per one day within the scope of total working hours. In other words, workers may work in excess of the statutory standard workings on a specific day or in a specific week to the extent of not exceeding the average working hours or 40 hours per week during the adjustment period. Because applicable workers are allowed to independently decide the starting time and finishing time of work and the working hours per one day, in addition to being able to improve the work efficiency of professionals and researchers, it is possible to promote the employment of housewives.

   Provisions in Employment Handbook:

   In order to introduce a selective working hour system, the company must foremost prescribe the details of the system in the Employment Handbook. Because the core of the selective working hour system is for workers to independently decide their starting time and finishing time of work, rules need to be specified in order to ensure the system.

5. Temporary approval for extending working hours for particular work

   Permission to extend working hours for particular work up to eight hours per week

   Article 53 of the Act was amended to temporarily allow a company to permit workers to extend working hours up to eight hours per week in addition to the extended working hours pursuant to Article 53 (1) and (2) under the Act; provided, however, that a written express agreement by a worker on certain matters (reasons for extension, working hours, and scope of workers) is necessary. This is an exceptional application only for a company with less than 30 workers at all times, and the Article will be applied only for a limited period from July 1, 2021, to December 31, 2022. This article will not be applied to workers older than 15 but under 18.

6. Family Care Working Hour Reduction System

   Family Care Working Hour Reduction System

   The Ministry of Employment and Labor has announced that the Family Care Working Hour Reduction System shall be expanded to cover establishments with one or more employees from January 1, 2022.

   The Family Care Working Hour Reduction System systematically guarantees the right of workers to apply to their employers for a reduction in working hours (the right to request a reduction in working hours) for reasons, such as family care. The system shall first go into effect in 2020 for public institutions and establishments with more than 300 employees and shall be expanded in stages by company size until 2022.

   Required reasons for the reduction include family care, health reasons for the employee, preparation for retirement (age 55 or older), and studies. Workers will be given the right to request shorter working hours for those reasons, and companies will be obligated to allow them if they meet the requirements. Workers are given the right to apply for shorter working hours for such reasons, and companies are obligated to allow this if the requirements are met. However, company is given the option of not allowing the reduction of working hours if there are acceptable exceptions, such as when it is impossible to hire a replacement or when it would seriously interfere with the normal operation of the business. Working hours shall be reduced in line with the hours applied for by the worker within the range of not less than 15 hours and not more than 30 hours per week.

   The company shall not dismiss or otherwise treat the worker in question unfavorably because of the reduction in working hours. In addition, the company may not make any adverse changes to working conditions nor may it require a worker with reduced working hours to work longer hours. In addition, at the end of the period for which the reduction in working hours has been applied for, the company shall be obligated to return the employee to the same job as before the reduction in working hours or to a job that provides the same level of pay.

   Wolabel Employment Incentive Program

   On the other hand, the Ministry of Employment and Labor supports companies with Wolabel Employment Incentives to reduce the burden of shortened working hours. The company that approves the shortening of working hours can receive support for indirect labor costs and compensation for the reduction in wages through the Wolabel Employment Incentive, and the worker can receive partial support for the reduction in wages through the company.

7. Recess period and holidays

   Recess hours per day

   A company must allow, during the working hours, a recess period of more than 30 minutes when the working hours of a worker are four hours, and a recess period of more than one hour when the working hours of a worker are eight hours. A recess period may be freely used by workers, and recess hours are not included in the working hours.

   Holiday per week

   A company must allow a worker on average one or more paid holidays per week.

   Guaranteed payment for holidays designated by the Presidential Decree

   The revised Act 2018 clearly stipulates that companies, as applicable under the Act, must guarantee payment for workers for all holidays designated by the Presidential Decree. By this revision, workers at small to medium-sized companies without such paid holiday protection under the collective agreement or employment handbook will receive benefits. There will be a considerable advantage especially for workers who once have been forced to take unpaid leave to be off on a holiday; however, it should be noted that this may be changed with written approval by a labor representative. The provision will be enforced gradually in two years starting from 2020.

   From January 1, 2020, guaranteed payment for all holidays designated by the Presidential Decree began to apply to companies with 300 or more workers. This will apply in stages, from January 2021 to the companies with 30 or more workers and from January 2022 to the companies with 5 or more workers. If a worker works on a designated holiday, another workday may be substituted for the holiday by written agreement with the worker's representative. Work done on a designated holiday must be paid an extra fee. It should be noted that any failure to comply may result in imprisonment for up to two years or a fine of up to 20 million won.

   This has been applied since January 2022 to companies with more than five employees.

8. Annual paid leave

   A company must grant at least 15 days per year of annual paid leave to workers who have work for 80% or more of the prescribed working hours in one year. The number of days of annual paid leave is incremented by one day every two years of service (maximum of 25 days). When a company implements the following measures for urging a worker to use annual paid leave but the worker still does not take the leave, the company is exempted from its obligation to compensate the worker for any unused leave:

   1. The company notifies each worker of the number of unused leave days within the first 10 days of the six months before the termination of the period that the annual paid leave can be taken (one year after being granted), and urges the worker in writing to decide when the person will use the leave and will inform the company of the decided leave period.
   2. Despite the foregoing urging, the worker fails to decide when to use the whole or a part of the unused leave and does not inform the company of the decided leave period within 10 days after receiving the notice, then the company can decide when the worker is to use the unused leave and notifies the worker of the decided leave period in writing at least two months before the termination of the period that the annual paid leave could be taken.

9. Revision of the Law Concerning Childcare Leave and Reduced Working Hours for Childcare

   From October 1, 2019, the period applicable to childcare leave and reduced working hours for childcare was extended from one year to two years, which were originally guaranteed up to one year in total (can be acquired consecutively or separately).

   In 2021, new change was made regarding the acquisition for childcare leave. Under the previous system, the childcare leave was allowed to be divided only once, but from 2021, it can be divided up to two times. The change is made in consideration of workers who need childcare leave in various forms under the influence of COVID-19.

   Strengthen the protection to the pregnant workers

   From November 2021, it will be possible for pregnant workers to take childcare leave with a maximum of 1.5 million won for three months of childcare leave salary and up to 1.2 million won thereafter. In addition, for pregnant workers between 12 weeks and 35 weeks of pregnancy, for whom the protection system has been relatively weak, a system to shorten working hours has been opened, allowing them to change their working hours while maintaining their daily working hours.

   Until now, only workers with children under 8 years old or in the second grade of primary school have been granted the right to use childcare leave, and it has been pointed out that the limitation of this system is that pregnant workers have not been able to make use of childcare leave when they need it to protect their health. In the future, it will be possible for pregnant workers to use childcare leave, and if they wish to use childcare leave during pregnancy, they will only need to apply to the company at least 30 days before the planned start of the leave.

   If the employee wishes to change her working hours, she can do so by submitting an application form with a doctor's note confirming her pregnancy to the company at least three days before the scheduled start of the change. The company must allow a pregnant employee to change her working hours unless there are special reasons for doing so. However, in exceptional cases, such as when there is a serious disruption to the normal operation of the business, the obligation to allow such changes may be deferred.

Restriction on dismissal

Labor Standards Act, Article 23 (Restriction on Dismissal, etc.)

No employer shall dismiss, lay off, suspend, or transfer a worker, reduce wages, or implement other punitive measures against a worker without justifiable reasons.

Certain restrictions on dismissal are prescribed under the Labor Standards Act with respect to a company unilaterally declaring its intent and terminating the labor contract against the will of the worker.

The Labor Standards Act prescribes that a company must not implement punitive measures, such as dismissal, without a justifiable reason and specifies that there must be a justifiable reason in order for a company to implement punitive measures against or dismiss a worker.

While the justifiable reasons for dismissal are not specified in the Act, they are classified into cases that are attributable to the worker, such as the worker's willful intent, gross negligence, or inefficiency in light of social standards and cases that are attributable to the company, such as inevitable personnel cuts for managerial reasons.

Unless it falls under the exception of the subject matter of dismissal notice mentioned in (4) below, legitimate dismissal shall require justifiable grounds and a dismissal notice.

1. Dismissal for personal reasons of workers (ordinary dismissal)

   A company must not dismiss a worker without a justifiable reason.

   Among the justifiable reasons for dismissing a worker are when a worker is responsible to the extent that the labor contract can no longer be maintained and such provision is provided in the labor contract or the Employment Handbook and if the dismissal of that worker is reasonably acknowledged in light of social standards without violating the Labor Standards Act, then it will be deemed to be a dismissal with a justifiable reason.

   Examples: Poor work attitude, illegal acts, misrepresentation of background, etc.

   If a worker refuses an order given in the course of assigned duties, such refusal could be used as grounds for punitive measures. However, it should be noted that if such an order is not valid within the scope of the labor contract as explained below, then any punitive measures implemented against that worker would be deemed wrongful.

   1. Because the authority to order job transfers generally belongs to a company, reasonable discretion is granted to the company; however, if the order for a job transfer is in violation of the Labor Standards Act or corresponds to the abuse of authority, the lawfulness of such order is invalidated. For an order for a job transfer to be deemed lawful, the company must follow the procedures required under the principle of good faith and trust in consideration of the business necessity of the order, comparison of the degree of discretion of the company, and disadvantages in living by the worker due to the job transfer, as well as discussions with the trade union or the worker.
   2. While extended work may be permitted if there is an agreement between the company and the worker (Labor Standards Act, Article 53), it is also possible to have a collective agreement between the parties to the extent that the individual contracts (labor contracts) with the respective workers and the rights of agreement of the respective workers are not restricted. Nevertheless, if there is no agreement, the company must not take disciplinary action against a worker who refuses to perform extended work, or, even if there was an agreement when the worker joined the company, if the company demands that the worker perform extended work beyond the initially anticipated scope, the worker may lawfully refuse such demand.
   3. If a worker who engaged in an illegal activity refuses to submit a written apology, such refusal in itself corresponds to the refusal of an order in the course of assigned duties and may separately constitute grounds for disciplinary action. Nevertheless, it would not be lawful for a company to demand a written apology or note in breach of the worker's freedom of conscience (e.g.: in cases where the worker deeply regrets the action, the company causes that worker to pledge to accept any form of punishment if any similar action is taken again in the future), and even if the worker refuses to submit such written apology, it would not constitute grounds for disciplinary action.

2. Punitive dismissal

   Punitive dismissal in Korea closely resembles the punitive dismissal system in Japan, and no significant difference can be observed. Punitive measures may be implemented when a worker engages in an extremely malicious disciplinary offense or misconduct, and the requirements thereof need to be specifically prescribed in the Employment Handbook or the labor contract to enable the company to implement such punitive measures. In the case of punitive dismissal, the dismissal notice required in other dismissal procedures is not required.

3. Dismissal for managerial reasons

   In order for a dismissal for managerial reasons to be lawful, all of the following matters must be satisfied:

   1. There are urgent managerial needs to reduce personnel in relation to acquisition or merger at the time of dismissal.
   2. The company made every effort to avoid dismissal.
   3. The company has established rational standards and fair criteria upon selecting workers to be dismissed and has fairly applied the same; provided, however, that, in establishing and applying the foregoing standards and criteria, the company must give consideration to the disadvantage that will be suffered by the worker, such as difficulty of re-employment and impact on living standards.
   4. The company has explained the necessity of dismissal, its efforts to avoid dismissal, and standards and criteria upon selecting workers to be dismissed, upon presenting specific supporting materials, to workers to be dismissed (if such workers belong to a trade union, then including the trade union), a trade union, in cases where there is such a trade union composed of a majority of the workers, and to the representative presenting a majority of the workers if there is no such trade union composed of a majority of the workers (foregoing workers and trade unions are hereinafter collectively referred to as the "workers, et al."), and exerted efforts to discuss the issue with the workers, et al.

   Meanwhile, when dismissing a worker on grounds of reorganization in Japan, the following four requirements must be satisfied based on a judicially created doctrine:

   1. Necessity in terms of business
   2. Rationality of selection standards
   3. Performance of duty to explain to unions and workers
   4. Performance of duty to avoid dismissal

   It can be understood that Japan basically adopts the same standards as the four requirements prescribed under the Korean Labor Standards Act described above.

4. Dismissal notice

   When a company is to dismiss a worker (including dismissal for managerial reasons), the company is required to give notice at least 30 days in advance. When a company fails to give a dismissal notice, the company is required to pay more than 30 days' worth of standard wages to the worker. However, this excludes cases corresponding to the reasons prescribed in the Labor Department order as cases where the continuation of business becomes impossible due to calamities or other inevitable reasons, or cases where the worker willingly causes serious obstruction to the company's business or causes serious property damage to the company.

   Provided, however, that the regulation on the dismissal notice has been revised as of January 15, 2019. This revision modifies the exceptions that are not subject to the obligation to give a dismissal notice. Any of the following events shall fall under the exception and shall not be subject to the obligation to give notice.

   Article 26 Labor Standards Act (Dismissal Notice)
   -Article 35 of the previous Act is deleted.

   1. When the period during which a worker has provided labor continuously for less than three months
   2. When the continuation of business becomes impossible due to calamities or other inevitable reasons
   3. When a worker intentionally has caused serious obstruction to the company's business or caused serious property damage to the company as stipulated by the Ministry of Employment and a Labor Order

5. Remedies against wrongful dismissal

   If a company wrongfully dismisses a worker without a justifiable reason, the person may apply for relief with the Labor Commission. This application must be filed within three months from the day of unfair dismissal.

   When the Labor Commission receives the submission of evidence from related parties and questions the relevant parties and acknowledges that the dismissal was unfair, a relief order is issued against the company. If the worker does not wish to be reinstated to the current position, the Labor Commission may also issue a monetary compensation order in an amount that is not less than the amount of wages during that period.

Types of visas

There are several types of visas that permit foreign nationals, including Japanese nationals, to work in Korea: Supervisor (D-7), Corporate Investor (D-8), Working Holiday (H-1), Professional Employment (E-5), Technical Instructor (E-4), Entertainer (E-6), and Vessel Crew (E-10). Among the above, the visas that are generally acquired by Japanese companies wishing to enter into the Korean market or by Japanese nationals wishing to start a business in Korea are Supervisor (D-7) and Corporate Investor (D-8).

When a Japanese national is to stay in Korea for a period that does not exceed 90 days for the purpose of sightseeing, transit, simple visits, short-term business engagements, or participation in meetings, the person is not required to acquire a visa. However, even in cases where the period of stay does not exceed 90 days, any person wishing to enter Korea for short-term employment activities or commercial activities for the purpose of gaining profits through temporary performance, advertisement, fashion modeling, lecture, seminar, research, or technical instruction is required to acquire a visa for short-term employment (C-4) or similar visa.

As indicated below, Supervisor (D-7) and Corporate Investor (D-8) are visas that are mainly used by transferees.

Recent trends concerning foreigners

In Korea, measures are being implemented to cope with the declining working-age population due to the aging of the population and the falling birthrate. As one of these measures, the acceptance of foreign workers is being actively promoted, and the number of foreign residents is increasing year by year.

Korea's policy for accepting foreign workers can be broadly divided into two categories: Strategies for attracting excellent specialized foreign workers and the efficient utilization of non-specialized foreign workers. Strategies for attracting excellent specialized foreign workers include activation of investment immigration, attracting and strengthening management of foreign students, the issuance of electronic visas, enforcement of the point-count immigration system. Another representative policy related to the efficient utilization of non-specialized foreign workers is the employment permit system. The employment permit system is a system under which Korean companies that are unable to hire domestic workers can legally hire foreign workers by obtaining an employment permit from the government.

The Economic Policy Direction for 2023 by the Korean Ministry of Planning and Finance announced that the quota of foreign human resources (the number of people to be accepted) will be expanded to 110,000 (41,000 additional people) in order to solve the population decline and economic human resource difficulties. This is expected to promptly promote the entry of an average of more than 10,000 people per month by 2023.

In addition, in 2023, the application of employment insurance for foreign workers will be expanded (after the revision, the insurance will be extended to workplaces with less than ten workers), and the number of permitted industries for working visit (H-2) visas will be increased (accommodation industry will be added).