Business Articles

June 2005

Korean Labor Law

Dr. James Watts

Korea: Overview

South Korea is a republic with powers shared between the President of South Korea and the legislature called the National Assembly. The President is chief of state and is elected for a term of 5 years. He appoints a Prime Minister who runs the government as directed by him. The 299 members of the unicameral National Assembly are elected to 4-year terms. South Korea's judicial system comprises a Supreme Court, appellate courts, and a Constitutional Court. The country has nine provinces and six administratively separate cities--Seoul, Pusan, Incheon, Taegu, Kwangju, and Taejon.

Korean Labor Law

The Korean Labor Law effects two strands of foreign relations. Firstly the effect on the Foreign Corporation doing business in Korea, and secondly, the effect on the thousands of foreign workers living and working in Korea.

The Labor Standards Act

The Korean Labor Law is known as the Labor Standards Act. The Labor Standards Act, which stipulates minimum working standards for workers, used to be applied to workplaces with five or more workers, but with the revision of the Enforcement Decree effective on February 24, 1998, the scope was expanded to cover all workplaces, which came into effect from January 1, l999.
However, some provisions (relating to employment contracts, restrictions on dismissal, working hours, leave, etc.) are not applied to workplaces with four workers or less given economic conditions and administrative capacity.

The Labor Standards Law is well written, comprehensive, and covers all essential points of employee employer relations. Unfortunately, for Foreign companies coming to Korea, employee employer relations will be in the hands of a very militant Union who, based on well documented evidence, are involved in corrupt practices ranging from charging exorbitant fees to prospective employees, to using violence as a means of negotiating contract changes.

The lack of support infrastructure for foreign enterprises is astounding given the countries desire to become the Business Hub of Asia. As noted by the President of the EUCCK (European Union Chamber of commence on Korea) "Korea lacks a real long term development project for the future of its economy." Underlying this failure is the fundamentals of Labor relations with foreign corporations. (Korea Herald, April 9th, 2005, p.14)

Working in Korea.

Categories of Persons who travel to Korea and work.

Pursuant to the Immigration Control Act, professional or skilled foreigners can be employed in Korea after being issued with the following types of visas:

professors(E-1),
teaching foreign languages(E-2),
research(E-3),
special technology instruction(E-4),
specialty occupations(E-5),
arts and entertainment(E-6),
and other particular occupations(E-7).

Other categories for business personal are available.

See Ministry of Immigration

Employees are guaranteed certain inalienable rights by the Korean Labor law.

Employers cannot dismiss employees without justifiable causes. If dismissed without justifiable causes, an employee can apply for redress to a Labor Relations Commission. Employers may be subject to punishment for any unjustifiable dismissal.

If an employer wants to dismiss his/her workers for managerial reasons, the employer should meet strict conditions and procedures. First of all, the employer should have urgent managerial reasons, make every effort to avoid such dismissal, select those to be dismissed by rational and fair standards, and sincerely consult with the trade union or workers' representatives in advance.

On the other hand, even when an employer dismisses his/her workers for justifiable reasons, the employer must notify the workers concerned of dismissal at least 30 days in advance. Otherwise, the employer should pay the workers 30 days or more of ordinary wages.

However, the reality is that the Korean employers have a woeful, well documented history, that shows they pay less than lip service to any employment contract. Foreigners are at the mercy of grossly unscrupulous and dishonest Korean employers, who have almost no recourse to any legal remedies given the competing Korean Immigration Act which sees a dismissed worker 'ejected' from Korea within two weeks of being wrongfully dismissed, thus disavowing the wronged foreigner from legal recourse.

Conclusion:

Foreign companies and foreigners working in Korea will find little or no benefit from a poorly policed law. Koreans are well aware there is no infrastructure to help the foreign corporation from radical union pressure or demands, nor is there any help for foreigners relying on the law when they are wrongly dismissed or denied legal rights pursuant to the Labor Law.

Based on the above, it is very hard to recommend a foreign Corporation establish a legal entity in Korea, nor should foreigners contemplate working in Korea as long as the harsh and oppressive conditions associated with working in Korea maintain.

As noted by the EUCCK, the Korean Parliament needs to urgently reevaluate its Labor Laws and see that fairness and justice are afforded to all - not just indigenous persons.

Websites

http://www.kimsoft.com/korea/sk-lab1.htm
http://www.efl-law.com/korea_home.html
http://www.molab.go.kr:8787/English/law/sub_1.jsp (Labor Law)

Dr. James Watts MBA Ph.D. has worked as a visiting lecturer for the Korean University, Seoul University.