1.1 Key statutes
Korean employment law is primarily governed by the various statutes promulgated by the National Assembly, supported by the implementing presidential Enforcement Decrees in respect of those statutes. Additional detail is often found in the regulations of the various administrative agencies. The key statutes are:
- the Labour Standards Act;
- the Employee Retirement Benefit Security Act;
- the Dispatched Workers Protection Act ;
- the Trade Union and Labour Relations Adjustment Act;
- the Fixed-Term and Part-Time Employee Protection Act;
- the Industrial Health and Safety Act;
- the Industrial Accident Compensation Insurance Act;
- the Labour Relations Commission Act;
- the Worker Participation and Cooperation Promotion Act;
- the Employment Security Act;
- the Minimum Wage Act;
- the Basic Employment Policy Act;
- the Gender Equality in Employment Act;
- the Handicapped Persons Employment Act;
- the Senior Citizens Employment Promotion Act; and
- the Employee Welfare Fund Act.
The Labour Standards Act is arguably the most important statute, as it prescribes mandatory rules in relation to many aspects of the employment relationship. Note however that many of the major provisions of the Act apply only to employers who routinely employ 5 or more persons.
Although it is a civil law jurisdiction, court precedents also play an important role in practice.
1.2 Probationary period
The parties may agree upon an initial probationary period in the employment agreement. Procedurally, during the first 3 months of the probationary period, no advance notice of termination is required. While there is no explicit exception to the onerous ‘just cause’ standard for termination applicable under Korean law during the first 3 months of the probationary period, the standard may be applied somewhat less strictly in practice during this period.
There is no fixed period for probation by statute. Generally a period of 3-6 months is adopted by company policy and/or provided in the employment agreement.
1.3 Minimum wage
The Minimum Wage Act establishes a Minimum Wage Board. The Board meets annually and promulgates minimum monthly, weekly, daily and hourly salary/wage rates. The new minimum wage takes effect from 1 September each year.
1.4 Remuneration structure
The ‘ordinary wage’ refers to wages paid regularly and uniformly on a monthly basis, which is the basis for calculating overtime and unused leave compensation.
This is to be distinguished from the term ‘average wage’, which considers all wages paid within the previous 90 days and is the basis for calculating certain entitlements including severance and business suspension allowance. Because the average wage may take into account bonuses and other irregular cash payments, its value varies over time and may be greater than the ‘ordinary wage’.
1.5 Working hours
Hours of work
Before September 2003, the basic working hours for all employees were 44 hours a week (made up of five 8-hour working days and one 4-hour day (usually Saturday).
However, the Labour Standards Act was amended in September 2003 to provide for a 40 hour working week, spread over 5 days. This change comes into force in transitional stages, from large through to small employers. From 1 July 2008, the change was in force for all companies with 20 or more employees. Companies with less than 20 employees will be covered after a date to be determined by Presidential Decree.
Many smaller companies have opted for the 5 day/40 hour standard work week, even though they are not yet required by law to do so. In order to opt in to the scheme, a company requires consent from the trade union or a majority of employees, and must report the change to the Ministry of Labour.
Rest periods
During an 8 hour day, an employer is required to allow employees at least 1 hour-long unpaid break (ordinarily given as the lunch hour). For every 4 working hours, an employer is required to allow employees at least 30 minutes of unpaid break.
Overtime
Under the 6-day working week scheme, work hours could be extended up to 12 additional hours per week, making a total of 56 working hours per week.
For 3 years after adopting the 5 day working week, an employer can require employees to work up to 16 hours of overtime per week. The first 4 hours of overtime are remunerated at 125% of the basic wage, with the balance being paid at 150% of the basic wage.
After the 3 year transitional period, the maximum number of overtime hours that can be agreed to be worked are 12 per week. Such overtime hours are to be paid at a rate of 150% of the basic wage.
Employees required to work on their scheduled weekly days off are entitled to be remunerated at 150% of the normal wage for that day.
In addition to normal wages and/or overtime, premiums may also be payable in respect of night work (between 10 pm to 6 am).
1.6 Public holidays
Employees are entitled to a paid day off on Labour Day (1 May).
In addition, it is common for employers to grant additional paid holidays in the company’s Work Rules, in which case work on such days must be remunerated at 150% of the normal wage for that day.
1.7 Paid annual leave
Annual leave entitlements depend on whether the employer operates the 6 or 5 day working week (see heading 1.5):
Employers operating a 6 day working week must give employees:
- a minimum of 1 day of paid leave per month, for full attendance during the previous month; plus
- 10 days’ paid annual leave for full attendance during the previous year, or 8 days’ paid annual leave for 90% attendance or more during the previous year. The basic annual leave allowance increases by one day for each year of service, to a maximum of 20 days’ paid annual leave per year.
Any unused leave is subject to compensation after 1 year from accrual.
For employers operating a 5 day working week:
- Employees must be given a minimum of 15 days’ paid annual leave for at least 80% attendance during the previous year. The annual leave allowance increases by one day for every 2 years of service, not including the first year of service, up to a maximum of 25 days. There is no separate monthly leave.
- Employees who have been employed for less than a year are entitled to take some of their 15 days’ entitlement in advance, at the rate of 1 day’s paid leave for each full month of attendance.
- Any unused leave is subject to compensation after 1 year after accrual unless the company has implemented procedures to encourage the use of leave as prescribed in the law.
1.8 Other types of leave
Maternity leave
Employees are entitled to 90 days’ maternity leave, of which at least 45 days must be taken after the birth. 60 days are paid and 30 days are unpaid. Employees can apply to the government for an additional subsidy to cover maternity leave.
Paternity leave
3 days’ unpaid leave within 30 days of the child’s birth.
Childcare leave
Employees with children under the age of 3 have an entitlement to unpaid childcare leave of up to one year. The employee must have worked for the same employer for at least one continuous year. The employer is not obliged to pay wages during childcare leave – employees are paid under the employment insurance system.