Labor & HR Management
Employment contract
Employment contract must be in writing and delivered to the employee concerned.
In particular, it should specify the details of wage structure, method of wage calculation, employment hours, working and non-working days, and annual paid leave.
Any employment contractual provisions that fall short of the Labor Standards Act (the “LSA”) are deemed invalid and the relevant clause in the LSA would be applicable instead.
Fixed term contract employees are valid for up to 2 years.
The contract concerned would be terminated upon the expiration of the contractual period.
Probationary period is permissible but one cannot dismiss probationary employees without a justifiable ground; provided, however, one may dismiss such employee without any termination notice in the first 3 months period based on a justifiable ground.
Fixed term contract employees and part-time employees are protected under law as long as their employment contracts continue in force.
In particular, it should specify the details of wage structure, method of wage calculation, employment hours, working and non-working days, and annual paid leave.
Any employment contractual provisions that fall short of the Labor Standards Act (the “LSA”) are deemed invalid and the relevant clause in the LSA would be applicable instead.
Fixed term contract employees are valid for up to 2 years.
The contract concerned would be terminated upon the expiration of the contractual period.
Probationary period is permissible but one cannot dismiss probationary employees without a justifiable ground; provided, however, one may dismiss such employee without any termination notice in the first 3 months period based on a justifiable ground.
Fixed term contract employees and part-time employees are protected under law as long as their employment contracts continue in force.
Employees with fixed term contract of 2 years or more are deemed as having entered into employment contracts with undetermined period.
However, the following cases can be employed for a fixed term of more than 2 years as a matter of exception: employment with a period fixed to conduct a certain task, temporary replacement employee, completion of education and training period, and personnel with professional knowledge and technology as set forth in the Presidential Decree.
Dispatched workers can be employed pursuant to dispatch contracts between businesses (who will use the workers’ services) and dispatch work agencies.
Workers in the specific industries designated under the Act on the Protection of Dispatched Workers – except those personnel directly involved in the manufacturing industry – can be dispatched.
Where temporary workers are required due to maternity leaves, sick leaves, or injuries, dispatched workers can be employed pursuant to the Act on the Protection of Dispatched Workers unless they fall under prohibited cases.
Dispatched workers can never be used in the construction industry, freight transportation industry, and dangerous jobs in relation to work safety and health.
Where businesses that use the workers’ services (i.e., “employer”) use the dispatched workers’ services for 2 years or more or for works not falling under the permissible industries for dispatch work, such businesses must immediately employ such dispatch workers.
However, the following cases can be employed for a fixed term of more than 2 years as a matter of exception: employment with a period fixed to conduct a certain task, temporary replacement employee, completion of education and training period, and personnel with professional knowledge and technology as set forth in the Presidential Decree.
Dispatched workers can be employed pursuant to dispatch contracts between businesses (who will use the workers’ services) and dispatch work agencies.
Workers in the specific industries designated under the Act on the Protection of Dispatched Workers – except those personnel directly involved in the manufacturing industry – can be dispatched.
Where temporary workers are required due to maternity leaves, sick leaves, or injuries, dispatched workers can be employed pursuant to the Act on the Protection of Dispatched Workers unless they fall under prohibited cases.
Dispatched workers can never be used in the construction industry, freight transportation industry, and dangerous jobs in relation to work safety and health.
Where businesses that use the workers’ services (i.e., “employer”) use the dispatched workers’ services for 2 years or more or for works not falling under the permissible industries for dispatch work, such businesses must immediately employ such dispatch workers.
Wages and Salaries
Korean labor law provides for “average wages” and “ordinary wages” and these two concepts are used for different purposes.
Ordinary wage
Ordinary wages are wages regularly paid to all employees with the certain requisite conditions in return for the certain amount of work hours. Ordinary wage is a basis for additional wages in the form of extended work, holiday work, and night work and allowance for advance notice of dismissal.
Average wage
Average wage is the total amount of wages paid to the relevant employee for the immediately previous 3 months prior to the reference date for the calculation divided by the total number of days in the said period. The same shall be applicable for employees who were employed less than 3 months ago. Average wage is a basis for severance pay, business suspension allowance, and accident compensation.
Allowances for unused annual leaves are based on either ordinary wage or average wage.
Minimum wage
The Ministry of Employment and Labor determines and announces the country’s minimum wage every year.
Employers must pay hourly wages that at least meet the level of minimum wages to employees. Any employment contracts with less than the level of minimum wages would be deemed invalid.
Minimum wage is applicable to all employees under the Labor Standards Act regardless of nationality and form / type of employment. Therefore, it is applicable not only to regular employees but also to temporary, daily, and hourly employees as well as foreign employees.
Ordinary wage
Ordinary wages are wages regularly paid to all employees with the certain requisite conditions in return for the certain amount of work hours. Ordinary wage is a basis for additional wages in the form of extended work, holiday work, and night work and allowance for advance notice of dismissal.
Average wage
Average wage is the total amount of wages paid to the relevant employee for the immediately previous 3 months prior to the reference date for the calculation divided by the total number of days in the said period. The same shall be applicable for employees who were employed less than 3 months ago. Average wage is a basis for severance pay, business suspension allowance, and accident compensation.
Allowances for unused annual leaves are based on either ordinary wage or average wage.
Minimum wage
The Ministry of Employment and Labor determines and announces the country’s minimum wage every year.
Employers must pay hourly wages that at least meet the level of minimum wages to employees. Any employment contracts with less than the level of minimum wages would be deemed invalid.
Minimum wage is applicable to all employees under the Labor Standards Act regardless of nationality and form / type of employment. Therefore, it is applicable not only to regular employees but also to temporary, daily, and hourly employees as well as foreign employees.
Working hours
Statutory working hours
The maximum statutory working hours are 8 hours per day and 40 hours per week. The statutory working hours are applicable to business places that employ five persons or more.
Recess / interval period
During the working hours, employers must offer the recess / interval period of at least 30 minutes for 4 working hours and at least 1 hour for 8 working hours.
Recess / interval period is not viewed as a part of working hours.
Extended work
Extended work refers to work conducted in excess of the certain working hours.
Employers and employees may agree for extended works of up to 12 hours per week.
The maximum statutory working hours are 8 hours per day and 40 hours per week. The statutory working hours are applicable to business places that employ five persons or more.
Recess / interval period
During the working hours, employers must offer the recess / interval period of at least 30 minutes for 4 working hours and at least 1 hour for 8 working hours.
Recess / interval period is not viewed as a part of working hours.
Extended work
Extended work refers to work conducted in excess of the certain working hours.
Employers and employees may agree for extended works of up to 12 hours per week.
The following industries can have the extended work of 12 hours per week or change the recess / interval period upon written agreements with the respective representative of employees.
- Transportation industry, sale and storage of goods industry, and finance and insurance industry;
- Movie production and marketing industry, telecommunication industry, education research and survey industry, and advertising industry;
- Medical and hygiene industry, entertainment service industry, cleaning and incineration industry, and barber / hair-cutting industry; and
- Social welfare business
- Transportation industry, sale and storage of goods industry, and finance and insurance industry;
- Movie production and marketing industry, telecommunication industry, education research and survey industry, and advertising industry;
- Medical and hygiene industry, entertainment service industry, cleaning and incineration industry, and barber / hair-cutting industry; and
- Social welfare business
Female pregnant employees shall not be forced to conduct any extended work. Female employees within a year from childbirth shall not be forced to conduct extended works of more than 2 hours per day, 6 hours per week, and 150 hours per annum.
Night work
Night work refers to work conducted between 10 pm and 6 am in the following day.
Additional wages
With respect to extended work, night work, and holiday work, 50 percent of ordinary wage shall be paid as additional wages.
Where extended work, night work, and holiday work overlap with each other, additional wages shall also be paid in overlap.
Flexible Working Hour System
The flexible working hour system is aimed at increasing efficiency in adjusting seasonal, monthly, or daily working hours. Employees may work in excess of 8 hours per day and 40 hours per week in a certain week as long as he/she does not work in excess of 40 hours per week on average during a certain period. In this case, there is no additional wage for overtime works.
The flexible working hour system based on two weeks can be applied by amending the employment rules. The maximum working hours per week cannot exceed 48 hours.
The flexible working hour system based on three months can be applied by a written agreement with the representative of employees. The maximum working hours cannot exceed 52 hours per week and 12 hours per day.
Discretionary Working Hour System
Under the discretionary working hour system, pursuant to a written agreement with the representative of employees, an employee is deemed to have worked for the agreed working hours with the employer regardless of the actual working hours. This system is applicable only to the R&D industry, design or analysis of IT system, editing of newspaper and broadcasting programs, advertising and design, and producer and director works.
Night work
Night work refers to work conducted between 10 pm and 6 am in the following day.
Additional wages
With respect to extended work, night work, and holiday work, 50 percent of ordinary wage shall be paid as additional wages.
Where extended work, night work, and holiday work overlap with each other, additional wages shall also be paid in overlap.
Flexible Working Hour System
The flexible working hour system is aimed at increasing efficiency in adjusting seasonal, monthly, or daily working hours. Employees may work in excess of 8 hours per day and 40 hours per week in a certain week as long as he/she does not work in excess of 40 hours per week on average during a certain period. In this case, there is no additional wage for overtime works.
The flexible working hour system based on two weeks can be applied by amending the employment rules. The maximum working hours per week cannot exceed 48 hours.
The flexible working hour system based on three months can be applied by a written agreement with the representative of employees. The maximum working hours cannot exceed 52 hours per week and 12 hours per day.
Discretionary Working Hour System
Under the discretionary working hour system, pursuant to a written agreement with the representative of employees, an employee is deemed to have worked for the agreed working hours with the employer regardless of the actual working hours. This system is applicable only to the R&D industry, design or analysis of IT system, editing of newspaper and broadcasting programs, advertising and design, and producer and director works.
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Holidays and LeavesStatutory holidays are Labor Day and weekly holidays.In addition, employers may offer certain agreed holidays to their employees pursuant to the employment rules or collective agreements.
Typically, the closed days of government offices are chosen as employees’ agreed holidays; the closed days of government offices are as follows:
New Year’s Day (January 1), Lunar New Year, May 1 Labor Day, May 5 Children’s Day, Lunar April 8 Day of Buddha’s Coming, June 6 Memorial Day, August 15 National Liberation Day, Lunar August 14, 15, and 16 Korean Thanksgiving Day (Chuseok), October 3 National Foundation Day, September 9 Hangul Proclamation Day, December 25 Christmas, and official election day(s).Holiday allowances
For employees that worked for a full week, at least one paid holiday per week should be granted. Employees that did not work for a full week may use unpaid leave.
Weekly holiday does not necessarily have to be Sunday. However, it would be advisable to specify the weekly holiday in the employment rules. For working on the weekly holiday, 150 percent of wage is applicable.
Paid annual leave
For employees with employment of a year or longer, 15 days of paid annual leave should be granted – conditional on the attendance of 80 percent or more during the said year.
For employees with employment of less than a year, annual leave on a monthly basis should be granted – conditional on working for a full month. In this case, amongst 15 days of paid annual leave for one year, the number of annual leave used on a monthly basis should be subtracted from the number of annual leaves actually used.
For employees with employment of three years or more, a day should be added to 15 days of paid annual leave.
Thereafter, an additional day should be added per every two years – to the maximum of 25 days.
The annual leave days shall be in accordance with the relevant employee’s application. However, they can be revised depending on businesses’ work needs.
Annual leave use promotion system
Where an employee did not spend the given annual leave during a year, an employer shall pay the average wage or ordinary wage for the number of unused days. However, if the employee did not spend the given annual leave despite the promotion of use of annual leave, the businesses shall be exempt from the obligation to provide a monetary compensation for unused annual leave.
Under the annual leave use promotion system, an employer needs to notify the relevant employees the number of unused annual leave days within 10 days from 6 months prior to the date, which is 1 year after the non-use, and require the relevant employee to submit his/her plan to use the leave.
If the relevant employee fails to submit his/her plan or fails to use his/her annual leave despite the foregoing, the employer needs to provide the annual leave use schedule in writing to the employee at 2 months prior to the date, which is 1 year after the non-use.
Menstrual leave
Employers are required to grant unpaid menstrual leave at employees’ request.
Maternity leave
Employers are required to grant 90 calendar days of maternity leave. Maternity leave includes holidays and other public holidays.
Employers need to pay the relevant wages of 60 days during the maternity leave.
For 30 days, the unemployment insurance provides support to the maximum of KRW 1,350,000. In case of SMEs, the unemployment insurance provides the said support for 90 days.
Maternity leave needs to consist of 45 days or more prior to childbirth. Maternity leave in excess of 90 days can be granted on the unpaid basis.
In case of miscarriage or stillbirth, employers need to grant the number of holidays in proportion to the pregnancy period.
Parental leave
Employers are required to grant parental leave upon the relevant employee’s request for leave for the purpose of rearing of child less than 8 years old or elementary school second grade.
The parental leave period is included as a part of the employment period and it should be less than a year.
Employers cannot confer any unfavorable treatment to the relevant employee during the parental leave period; and employers cannot dismiss the relevant employee during the parental leave period
After the end of parental leave period, the relevant employee should be restored to the same or similar type of work that he/she conducted prior to the parental leave. -
Social Insurance
The social insurance shall be imposed in the following rates against the total wages excluding non-taxable items.
National pension - employer 4.5% and employee 4.5%
Health insurance - employer 3.06% and employee 3.06%
Employment insurance - employer 0.65% and employee 0.65%; Employer has an additional duty with respect to the occupational ability development – up to 0.25% in case of business places with 150 persons or less.
Occupational health and safety insurance - borne by employer -
Retirement payment system
Employers are required to introduce the retirement pension or severance payment system. However, employers may not grant such severance payment to employees with less than 1 year of employment or less than 15 working hours per week.
Employers are required to grant a severance payment equivalent to the average wage of 30 days per 1 year of employment. Such severance payment is payable regardless of the form of resignation; thus, it is payable not only for voluntary resignation but also for reaching the retirement ages and dismissal.
At the time of termination of employment contract, any unpaid wages and severance payment shall be paid within 14 days. Any unpaid portion thereafter shall be subject to the delay interest of 20 percent; and the relevant employee may file a complaint to the Ministry of Employment and Labor. -
Retirement pension
In order to guarantee the payment of severance payment as a matter of certainty, employers may entrust the amount under the name of severance payment on a monthly basis to an external financial organization for its management.
There are two types of retirement pensions: defined contribution and defined benefits -
Dismissal of employee
Employer cannot dismiss or sanction its employee without a justifiable ground.
Grounds for dismissal or sanction must be expressly described in the employment rules and they must be justifiable. -
Procedure for dismissal of employee
At the time of dismissal, the relevant grounds and timing of dismissal must be expressly stated in writing. Dismissal without such written notice is deemed invalid. Where an advance notice for dismissal is served in writing, a separate written notice of dismissal is not necessary and such dismissal would still be viewed as valid.
Employer needs to comply with the procedure for dismissal described in the employment rules; otherwise such dismissal would be deemed invalid. -
Advance notice for dismissal
Employer needs to notify the relevant employee about his/her dismissal 30 days prior to the intended date of dismissal. Otherwise, ordinary wage of 30 days needs to be paid to the relevant employee.
However, such notice is not required for probationary employees with less than 3 months of employment, employees with employment contracts of less than 2 months of employment period, and employees in seasonal works not exceeding 6 months. -
Employment rules
Business places with 10 persons or more are required to establish the employment rules and report the same to the Ministry of Employment and Labor. At the time of drafting of employment rules, the employer must collect the opinions of a majority of employees; at the time of revision of employment rules, it needs to obtain the employees’ majority consent or the majority union’s consent.
Any provisions in the employment contracts that are in breach of the relevant employment rules are deemed invalid and they shall be replaced by the corresponding provisions in the relevant employment rules. -
Prohibition of discrimination
Employers must not discriminate employees depending on gender, nationality, religion, and social belief / principle.
At the time of hiring, employers must not regard appearance, height, weight, and marriage, etc. that are not related with the given work as relevant considerations for employment. Employers must observe the principle of equal pay for equal work.
Not only wages but employers must ensure that there is no discrimination in terms of various benefits between employees with equal work. Employees must ensure that there are no discrimination unrelated with work between fixed-term contract employees and non fixed-term (i.e., regular) employees, part-time employees and full-time employees, and dispatched workers and employers’ employees.
Employers cannot regard female employees’ pregnancy, childbirth, and marriage, etc. as grounds for dismissal. -
Prohibition of workplace sexual harassment
Employers must not sexually harass employees using his/her work position or status.
In order to prevent such workplace sexual harassment, employers must conduct at least one hour training per annum. -
Joint labor-management conference
Business places with 30 persons or more need to establish joint labor-management conferences. These conferences shall be consisted of between 3 and 10 persons in the form of employees’ representative members and employers’ representative members. It shall be convened at least once per 3 months for agendum over company’s management including employment conditions. - We provide services of frequently reviewing and advising these complex law problems so that managers can focus on managing their companies!