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Labour and Employee Benefits 2007/08 Volume 1
Country Q&ASouth Korea
PLC
CROSS-BORDER HANDBOOKS www.practicallaw.com/labourhandbook 337
 C  o  un t  r  y  Q  & A 
South Korea
Brendon Carr and Sun-Hee Kim, Hwang Mok Park PC
www.practicallaw.com/3-376-2311
 GENERAL
1. Do the main laws that regulate the employment relationshipapply to:Foreign nationals working in your jurisdiction?Nationals of your jurisdiction working abroad?Are there any mandatory laws that apply regardless of a choice oflaw in the employment contract?
Laws applicable to foreign nationals
The Labour Standards Act 1997 (LSA) automatically applies toall workplaces in South Korea, whether the employees are Ko-rean or foreign nationals. Different provisions of the LSA applydepending on the number of employees in the workplace (
see below, Mandatory laws 
 ).The parties are free to choose a foreign law to govern the employ-ment contract (
Article 9, Private International Act 
 ), provided thatthe LSA’s mandatory provisions prevail (
Article 7, Private Inter- national Act 2001
 ).
Laws applicable to nationals working abroad
South Korean nationals working abroad are governed by the relevantforeign jurisdiction’s laws even if they have been sent to the foreignbranch office of a South Korean employer. However, if the head of-fice in South Korea controls and manages the employees’ workingconditions, South Korean law will also apply because the employ-ment contract is deemed to be between South Korean nationals.
Mandatory laws
The provisions of the LSA are mandatory and override terms andconditions of employment that do not comply with their statutoryminimums. It is unlawful for employers and employees to con-tract out of these mandatory provisions and such agreements arevoidable (usually on the employee’s application).All of the LSA’s provisions apply to workplaces with more thanfour employees.For workplaces with four employees or less, provisions concerningthe following apply:Maternity leave (
see Question 10, Maternity leave 
 ).
 Compensation for industrial accidents.Wages and notice before dismissal (
see Question 15, Notice periods 
 ).However, provisions concerning annual leave and severance paydo not apply (
see Questions 8 
and
15, Severance pay 
 ).The Civil Code 1958 sets out the general principles of contractthat govern the other aspects of the employment relationship.
EMPLOYING PEOPLE
2. Are there any age or nationality restrictions on managers orcompany directors? If so, please give details.
Age restrictions
There are no statutory age restrictions on managers or companydirectors.
Nationality restrictions
In general, there are no statutory nationality restrictions on man-agers or company directors. However, a board of directors com-prised entirely of non-resident foreigners is not recommendedbecause of the importance of the representative director, who islegally required to represent and bind the company in all its busi-ness transactions. A non-resident representative director wouldcause problems because of the nature of the role.
3. Are any grants or incentives available for employing people?If so, please give details.
The Employment Promotion for the Aged Act 1991, and theEmployment Promotion and Vocational Rehabilitation for theDisabled Persons Act 2000 (Disabled Persons Act), provide gov-ernment grants and incentives to hire disabled persons and theelderly (employees who are 55 years of age or older). However,the conditions are hard to meet and funding is generally quitelimited.When an employer hires 50 or more employees, at least 2% ofthese must be disabled persons (
Disabled Persons Act 
 ). The gov-ernment provides subsidies only in relation to the number of disa-bled employees that exceed this 2% requirement.
 © This chapter was first published in the PLC Cross-border Labour and Employee Benefits 2007/08 Handbook: Volume 1 and is reproduced with the permission of the publisher,Practical Law Company. For further information or to obtain copies please contact adam.frederickson@practicallaw.com, or visit www.practicallaw.com/labourhandbook.
 
338
PLC
CROSS-BORDER HANDBOOKS www.practicallaw.com/labourhandbook
Country Q&ASouth Korea
Labour and Employee Benefits 2007/08 Volume 1
   C  o  u  n   t  r  y   Q   &   A
4. What permits do foreign nationals require to work in yourcountry? Please explain:How these permits are obtained.How much they cost.How long the process takes.Required permits.
It is relatively easy for foreign nationalsto obtain permission to live and work in South Korea, partic-ularly those who move to establish and manage a business.As a result, multinational businesses planning to transferemployees to South Korea need only worry about complyingwith the procedural requirements. The Immigration ControlAct 1992 governs immigration and the Ministry of Justice(MOJ) administers the system.All foreign nationals require a visa unless there is a treaty be-tween their country and South Korea that exempts them fromthis requirement, which enables the foreign national to travelas a business visitor. However, all foreign nationals who intendto visit South Korea for 90 days or more, and nationals wholeave South Korea at the end of 90 days to return to resumethe same activities, must obtain visas. The two most commonemployment visa categories for executive officers, senior man-agers and professionals (with specialist knowledge) are the:
Investor/Business Manager (D-8).
This is for employ-ees working at a foreign-invested company establishedunder the Foreign Investment Promotion Act 1998;
Intra-Company Transferee (D-7).
This is for employees whohave been working in a foreign company for at least oneyear and are dispatched to its branch office in South Korea.Both are relatively easy for bona-fide foreign employees toobtain.
Obtaining permits.
The foreign national must apply to theSouth Korean local embassy or consulate in his jurisdic-tion to obtain the application form. The employee mustcomplete the application form and submit it to the immigra-tion bureau of that branch, with the required accompanyingdocuments, including the:certificate of education or qualification; andemployment contract.The director of the Immigration Service sends the docu-ments to the Minister of Justice for his approval.The local embassy or consulate in the foreign national’sjurisdiction issues the visa.
Cost.
Usually, the visa application fee ranges from US$30(about EUR22) to US$50 (about EUR37).
Length of process.
Applications made through an overseasembassy or consulate can take six to eight weeks. Applica-tions made to the MOJ through a law firm reduce this periodconsiderably.
 TERMS OF EMPLOYMENT
5. What terms govern the employment relationship? In particular:Is a written employment contract or statement of employ-ment terms required?Are any terms implied by law into the employment contract (inaddition to the mandatory terms referred to in
Question 1
 )?Are collective agreements with trade unions common (gen-erally or in specific industries)?Written employment contract.
The law does not require a formalwritten contract of employment. However, the employer must, atthe time of entering into a contract of employment, clearly statethe following employment terms in writing (
Article 17, LSA
 ):wages;working hours;paid holidays; andpaid annual leave.Other employment conditions must be clearly stated to the em-ployee at the time of employment but not necessarily in writing.The written work rules required by the LSA often provide that anemployment contract with domestic employees take the form ofan employment application form countersigned by the employer.Multinationals tend to use written offer letters and/or em-ployment contracts.
Implied terms.
The law implies a variety of mutual obliga-tions between employer and employee, including:a duty of good faith and trust;confidentiality; andloyalty.
Collective agreements.
The LSA requires employers hiringten or more employees to prepare and file with the govern-ment a comprehensive set of written work rules. These mustbe made available to the employees. Before filing a set ofwork rules with the government, the employer is expected toconsult with employees and solicit their views.The work rules resemble a collective agreement in form andfunction. Collective bargaining agreements (CBAs) are alsoentered into.
6. Is there a minimum wage? If so, please give details, in par-ticular whether it applies to all employees, regardless of theirage and experience?
The Ministry of Labour (MOL) has set the 2008 minimum wage
 © This chapter was first published in the PLC Cross-border Labour and Employee Benefits 2007/08 Handbook: Volume 1 and is reproduced with the permission of the publisher,Practical Law Company. For further information or to obtain copies please contact adam.frederickson@practicallaw.com, or visit www.practicallaw.com/labourhandbook.
 
Labour and Employee Benefits 2007/08 Volume 1
Country Q&ASouth Korea
PLC
CROSS-BORDER HANDBOOKS www.practicallaw.com/labourhandbook 339
 C  o  un t  r  y  Q  & A 
as follows (
Minimum Wages Act 1986 
 ):KRW3,770 (about US$4) an hour.KRW30,160 (about US$33) a day.KRW852,020 (about US$919) a month, based on a 44hour week.KRW787,930 (about US$850) a month, based on a 40hour week.The 2007 minimum wage had been set at KRW3,480 (aboutUS$4) per hour. The 2008 minimum wage is due to come intoforce on 1 January 2008.The minimum wage also covers temporary and part-time employees.Employers can waive minimum wage requirements for the em-ployment of:Disabled persons.Apprentices and trainees who have been working for lessthan three months.Security guards.This can only be done only with the MOL’s prior approval.The minimum wage is based on basic pay plus fixed allowancespaid at regular intervals. The calculation excludes:Bonuses and irregular allowances.Overtime and holiday premiums.Fringe benefits.Welfare allowances, such as meals and transportation.Employers may pay minors 90% of the hourly minimum wageduring their first six months of employment.
7. Are there restrictions on working hours? If so, please givedetails.
Before September 2003, the basic working hours for all em-ployees were 44 hours a week (made up of five eight-hour work-ing days and one four-hour day (usually Saturday)) (the six-dayweek). However, the LSA was amended in September 2003 toprovide a working week consisting of 40 hours, spread over fivedays (the five-day week). This change was implemented to comeinto force in transitional stages; currently, it does not apply toemployers with less than 50 employees. All employees will becovered by July 2011.For three years after adopting the five-day system, an employ-er can require employees to work up to 16 hours of overtime aweek (as opposed to the former statutory maximum of 12 hours aweek). The first four hours of overtime are remunerated at 125%of the basic wage, with the balance being paid at the pre-existing
150% overtime rate.
8. Is there a minimum holiday entitlement? If so, please givedetails. How many public holidays are there in a year and arethey included in the minimum holiday entitlement?
Holiday entitlements depend on whether the employer operatesthe six or five-day working week (
see Question 7 
 ):
Six-day working week.
These employers must give minimumholidays of (
LSA
 ):one paid day off per week (customarily Sundays);one day of paid monthly leave;ten days’ paid annual leave for full attendance duringthe previous year, or eight days’ paid annual leave for90% attendance or more;Labour Day (1 May);any other days off that it designates in its work rulesor agrees in a CBA;female employees are entitled to one additional paidday off per month as menstrual leave.The basic annual leave allowance increases by one day foreach year of service, to a maximum of 20 days’ paid annualleave a year.
Five-day working week.
These employers must give employ-ees minimum holidays of (
LSA
 ):one day paid leave a week;15 days’ paid annual leave for at least 80% attend-ance the previous year;Labour Day;unpaid menstrual leave (on request).Employees who have been employed for less than one yearare entitled to one day’s paid leave for each full month ofattendance (instead of 15 days’ paid annual leave).The annual leave allowance increases by one day for everytwo years of service, not including the first year of service,to a maximum of 25 days. Annual leave not used may belost, especially if the employer has documented attempts toencourage employees to use it.
9. What rights do employees have to time off in the case of ill-ness or injury? Is that time off paid? Can an employer recoverfrom the state sick pay granted to its employees?
The LSA does not specifically provide for time off in case of ill-ness or injury. Employees have to use their annual paid leave inthis instance.
 © This chapter was first published in the PLC Cross-border Labour and Employee Benefits 2007/08 Handbook: Volume 1 and is reproduced with the permission of the publisher,Practical Law Company. For further information or to obtain copies please contact adam.frederickson@practicallaw.com, or visit www.practicallaw.com/labourhandbook.
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kirkemmajean

its an excellent resource for human resources professionals who wish to enrich their knowledge regarding employment practices in South Korea

reply02 / 03 / 2010
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