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May 29, 2011

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

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SeanHayes@ipglegal.com