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May 31, 2011

Definition of and Obligations to Employees under Korea LSA Speech by Korean retired Judge CHEONG and Sean Hayes for AMCHAM Korea


Dear AMCHAM Members,
Entrepreneurs often lack an HR professional in the early years of a business to help keep them out of legal limbo when it comes to employment law. Furthermore, as the employee number grows in the young company, new labor requirements automatically apply – often without the entrepreneur’s noticing the change. To give us an up-to-date, practical understanding of labor laws that have immediate relevancy for small- and medium-sized companies, two partners from J & S Law will give a presentation.

Retired Korean Judge Jin-Gyeong CHEONG, Ph.D., Labor & Employment Law and NY Attorney Sean HAYES, the only non-Korean to work for the Korean court system, will give a presentation on the definition of and the obligations owed to employees under Korean Labor Standards Act.

The presentation is a must for those that enjoy a lively dialogue and/or have or intend to have more than five employees in their organization. Judge Cheong and Sean will be available for questions. Both individuals are known to be very candid and energetic. We are sure that their presentation will not only be enlightening, but will entertain.

Judge CHEONG heads up the labor practice team at J & S Law Firm and Sean heads up the International Practice Group at J & S Law Firm.

Best regards,

AMCHAM Small & Medium Size Enterprises (SME) Committee Co-Chairs
Tom Coyner / Steve McKinney / Tony Michell

Date:      Wednesday, June 8th, 2011
Time:      7:30am - 9:30am
              7:30am - 8:00am: Registration / Networking
              8:00am - 9:30am: Breakfast / Presentation / Q&A
Venue:   Grand Ambassador Seoul, Doraji Room (4th Fl.)
Cost:      KRW 36,000 for Members (Inclusive of Breakfast)
KRW    46,000 for Non-Members (Inclusive of Breakfast)

Jin-Gyeong Cheong (Bio Attached)
Partner/Team Leader, Seoul Office (Korean Attorney-at-Law)
J & S Law Firm

Sean Hayes (Bio Attached)
Partner/Team Leader, Seoul Office (NY Attorney-at-Law),
J & S Law Firm

“Definition of Employee under Korean Labor Standards Act (Rep. Directors, Directors, Executives and Rank-in-File) and Obligations to Employees under the Act (Severance, Employment Security)”

Please contact AMCHAM Office no later than
June 3, 2011. 02) 6201-2200


May 29, 2011

Listen to My Mother: JVs in Asia

The following article was written for the Korean language Legal Times.

My mother often told me, when I was much younger, to look both ways before crossing the street, carry an umbrella in the spring, and don’t go out alone in the dark. The advice can go along way for Korean companies doing business outside Korea.

As we all know, Korea companies lament over the fact that it is near impossible for Korean companies, with the exception of the most savvy and cash flush mega-conglomerates, to enter the Chinese, Indian and Southeast Asian markets without local partners if they intend to attempt to penetrate the local markets.

The common cry of Korean companies is to avoid JVs at all costs. In reality the issue is not the avoidance of JVs, but the procedure in choosing and dealing with JV partners. I have seen many Korean, American and European companies succeeded in India, China and Southeast Asia because of the active assistance of local JV partners.

Don’t let your clients attempt a venture alone without at least exploring the possibility of a local partner and normally success will come and the difficulties will be overcome by following my mother’s simple advice.

Due Diligence, Due Diligence and More Due Diligence. Korean companies, attorneys and business advisors are notorious, throughout Asia, for jumping into roads without looking both ways. Often the situation is caused by an overemphasis on trust, an over respect for Quangxi, and by the greatest quality that most Korean’s hold – perpetual optimism.

The situation has caused criminal prosecutions for some, business failures for many and headaches for most.

Before your company or your client engages in any business, advise your company or client strongly to go through a full due diligence. I often find that Korean companies, often, fear that this will upset the anticipated partner. If this upsets the partner, you have the wrong partner.

All professional potential local partners should welcome due diligence, since it is a clear sign that the local partner is dealing with a true professional.

For example, when I work with American clients in Southeast Asia, all anticipated partners that have done business with Westerners expect that the anticipated Western partner will do a lengthy due diligence and the better potential local partners are even prepared for the sure deligence prior to the first face-to-face meeting.

One of the better-known companies in Vietnam, with JVs with companies from around the world, has an employee with the specific task of satisfying the due diligence needs of foreign companies.

However, my Korean clients, invariably, believe that they have already built “trust” and may lose this trust through the due diligence. All good businesspersons should care, primarily, about building respect and seeing if they can learn through the due diligence to respect the partner.

The mutual respect will lead, naturally, to a lasting trust.
Trust based on drinks, entertainment and casual encounters is either naïve or fleeting.

Additionally, if the due diligence leads to lack of respect by your company or client for the counter-party you have found either the wrong partner or our involved with a company or client that does not understand and will, likely, never understand the value of international partnerships and the uniqueness of international business. Both are clear signs of a non-justifiable risk.

Protect your company or client from the rain through a carefully drafted shareholder, O & M, non-disclosure/non-circumvention, technology transfer and license agreements and the like with liquidated damages, arbitration, and restrictive covenant clauses. I too often see Korean attorneys and Koreans with American law licenses simply using form agreements.

I have seen numerous shareholder agreements from one of the largest Korean law firms that contain so many logical and grammatical errors that the agreement is laughable - at best. In addition, this form agreement excludes many clauses that provide added protection for clients that should immediately come to the mind of any experienced lawyer doing business abroad.

Also, you must have a deep knowledge of local law, customs and practices. In India, for example, many critical company decisions must be made through a super majority. Thus, a client with a majority shareholding may still be subjected to shareholder relationship issues.

Your company and client must have a lawyer or an experienced consultant familiar with the local market on retainer. The person should not simply be one of the many ubiquitous Korean consultants with local language skills. Often these individuals have vested interests that prevent them from being trusted advisor. Sometimes, these individuals have nothing more than local language skills and a good smile.

One such person, I met, had a wonderful resume, a list of contacts that made him look like the Who’s Who of Vietnamese business and a warm and welcoming smile. In reality, he was nothing more than a fraud. I talked with one of the individuals that he claimed to be his “HuBae” and the man just commented that he met him once and now has been plagued with numerous uninvited visits, requests for meetings with his clients and unwanted calls.

If someone has a list of friends, a good smile and an entourage of young Korean girls that can speak the local language – he probably is a fraud.
Hire a local law firm that works alongside international attorneys and for your good, skip most of the ubiquitous Korean law firms in favor of local firms with international lawyers.

If you company and clients follow my mother’s advice to look both ways before crossing the street, carry an umbrella in the spring, and don’t go out alone in the dark – they will be well on their way to a successful relationship in China, India or Southeast Asia.

Find this post in Korean here


Korean Multiple Labor Union Law to Be Implemented in July of 2011.

The Trade Union and Labor Relations Adjustment Act was amended to allow multiple union in the same Korean workplace. The Act will become effective from July 1, 2011.

One of the key purposes for the new law was to diminish management disputes. The thought is that the more radical of unions now may be moderated by the new less radical unions.

Recent disputes have helped to tarnished Korea’s reputation abroad. In fact, according to the Joongang Daily, “Labor demonstrations have been one factor that makes foreign companies reluctant to invest in Korea since it raises uncertainties about the investment environment.”

Many of IPG Legal clients mention this as a key risk of doing business in Korea and one of the reasons that they, often, choose not to locate their Asian headquarters in Korea.

In a nutshell, the new law allows more than one labor union in any given company. Since multiple unions will be allowed in companies, the law requires, for efficiency purposes, that a bargaining representative union “BRU” be selected among the unions in each company to engage in the primary act collective bargaining with the respective company. The selection of a BRU depends upon the number of members of each union. Typically the largest union will be selected, but in some circumstances a coalition of unions can form a majority. The Labor Relations Commission has the power to, in some cases, decide issues relating to the selection of BRU and to resolve labor disputes.

The changes will have immediate effects that will change the landscape of the Korean labor market for domestic and foreign firms. If a firm is currently operating in Korea or has plans to locate a business in Korea, downsize, draft labor rules, terminate an employee, or structure a retirement system it is strongly advised to consult with an attorney experienced in Korean HR compliance and consulting issues