Apr 28, 2011

Lone Star Loves the Constitutional Court of Korea

A decision handed down by the Constitutional Court of Korea on April 28, 2011 should give strong pressure to the Korean Financial Supervisory Commission (FSC) to approve Hana Financial Group’s purchase of the 51% stake Lone Star holds in Korea Exchange Bank (KEB).

Last month, the Korean Supreme Court reversed and remanded the decision of the Seoul High Court to acquit an executive of the fund of market manipulation charges. The holding motivated the FSC to hold up approving the sale based on, in part, the fact that in Korean law a guilty employee may establish, in some cases, that an employer is vicariously guilty. 

The employee was accused, in short, of conspiring with government workers and others to deflate the value of the shares of KEB credit card before the merger of the credit card unit with KEB.

Under law, the employer may be held criminally accountable for the actions of the employee.

The Constitutional Court to benefit of Lone Star ruled that the penal provisions holding an employee and employer jointly criminally culpable for the actions of an employee is unconstitutional.

The case will likely pave the way for a ruling by the FSC that approves Lone Star as being “fit” to sell its shares to Hana, since it seems no other hurdles are in place.

_____
SeanHayes@ipglegal.com

Apr 26, 2011

Restrictive Covenants in Korean Employment Agreements and the Lawyers in Korea that Draft Them

The form agreements dished out by some Korean “legal experts” on employment law at many of the “ubiquitous” Korean “law firms” has led me to write, again, on this issue.

If a lawyer gives you a form labor agreement/employment separation agreement that does not consider the below, no need to fret, you are not alone – just move on. Most firms and attorneys in Korea are providing work product that is much lower in quality than the mediocre firms overseas and a good deal of the work is being performed by junior attorneys with little useful experience or education and little active guidance by experienced attorneys (i.e former judges, government attorneys etc.) As I noted in previous posts, only employ an attorney with Korean government experience.

I recently saw an employment separation agreement drafted by a self-proclaimed “top” law firm (also ranked in the ranking books- often these books are nothing more than bought advertising), that sold to a client a form agreement that showed a total lack of knowledge of Korea’s labor & employment law.
Many of these “firms” claim to be the biggest and best in Asia. Most are not law firms (loose associations of lawyers) and often have training programs developed by senior attorneys that focus only on profitability per junior lawyer (since they are not profitable with only their own few hours worked), but little care for legal ethics, professional development of junior attorneys and client success.

Sorry for venting, but too many law firms in Korea are engaging in acts that are making it difficult for dedicated lawyers and firms with transparent billing practices and a care for clients from maintaining their good reputations. I dread when a client starts a sentence “Korean law firms . . .” The client is usually correct, but small handful of other teams operate in a fashion similar to British & American law firms’ quality-focused practices.

If you are sold by the names on the firm’s letterhead in Korea– you have been duped. Most law firms of a size over a few dozen have the same connections and names as the firms with hundreds of lawyers. The small firms are more likely to use the connections for you– the biggest firms are unlikely to use them for anyone but themselves. Exceptions are sometimes made for clients that fork over barrels full of cash. The reality is that the biggest “ubiquitous” Korean law firms often worry more about their reputation than the clients’ businesses. That is a heck of a vent, but justified if you see what clients that come to my door have been put through by these firms.

Back to the post.

In general, to enforce restrictive covenants in Korean agreements concerning employment (i.e. employment separation agreements - a court will consider the “totality of the circumstances.” The court will consider factors such as:

1. If a benefit for the restriction was conferred on the employee in exchange for the restriction;
2. The seniority of the employee;
3. The scope of the agreement (i.e. temporal and geographic limit);
4. The past compliance of labor and employment laws;
5. The inferred (of course by court) purpose of the covenant.
Therefore, ensure that you get drafted an agreement, at a minimum, that:

1. Limits the scope to a specific geographic area, time period, product line etc.
2. Has a facial bargained-for-exchange. The restrictive covenant should be in exchange for a monetary amount. This may be drafted without providing “actual” additional compensation beyond the normal termination package;
3. Applies the agreement to the more senior employees or if applied to junior employee is carefully drafted to specifically detail the reasons for inclusion of more junior employee;
4. Makes the purpose of the restriction clear on its face.
These are not the only issues to consider, but is a good starting point in determining if you have hired the right counsel to draft your labor agreements. Labor & Employment Law is one, if not the most significant risk, facing foreign companies operating in Korea.

_____
Sean Hayes (NY Attorney-at-Law) leads the International Practice Group (IPG) at J & S Law Firm. Sean Hayes may be contacted at: SeanHayes@IPGLegal.com. J & S Law Firm's International Practice Group is headquartered in Seoul, Korea and has offices and/or affiliated firms in New York, Hong Kong, Sydney, Shenzhen and Washington DC. www.ipglegal.com

Apr 25, 2011

KORUS FTA and Korean Anti-dumping Speech by American Law Firm Winston & Strawn in Korea

Winston & Strawn LLP attorneys gave an enlightening presentation for Amcham today in Seoul, Korea. Attorneys James P. Durling and Daniel L. Porter discussed KORUS FTA and anti-dumping actions against LG Electronics and Samsung by Maytag.

What motivated me to write this post is a comment by James Durling, who emphatically noted that Republicans should consider dropping their plan to bundle the three pending U.S. FTAs in favor of pushing for the immediate vote on the KORUS FTA. Good point.

The Republicans are pushing to bundle the three FTAs, partly, out of a fear that the Columbia-US FTA may not get to a vote, in the near future, because of the political sensitivity of the Democratic Party to the ratification realities that are plaguing Columbia (strong labor union and violent opposition in Columbia).

The Republicans also wish, before the next election, to get President Obama to sign the FTAs to alleviate labor union scorn. U.S. labor unions,thus, will be unable to, successfully, pit Obama against the Republican nominee on the FTA issues.

One of the three trade agreements being ratisfied is better than none of the three being ratisfied.

Hopefully, the Republican party will consider the nation over political brinkmanship that will likely not help the Republicans prevail in presidential elections in two long years.

_____
SeanHayes@ipglegal.com

Apr 22, 2011

Non-Acceptance of Government Report Grounds for an Appeal to Korean Court

Over the past decade, Korea has liberalized its government permit system and has required, in many more instances, only a report or notification to be filed with the government for many activities that previously required approval of a relevant Korean government authority.

Even with the change, however, the Korean bureaucracy has, often, been unwilling to give up its power and has simply rejected reports, thus, in reality rejecting the anticapted activity.

In a Supreme Court case handed down late last year (2008 Du 167), the Supreme Court of Korea ruled in a case concerning a construction report, that the non-acceptance of the report is justifiable grounds for an appeal of the non-acceptance to court.

This development is a welcomed sign for developers and other that are often stymied by bureaucracy with too much time and not enough business sense.

_____
SeanHayes@ipglegal.com

Apr 15, 2011

Don't Just Trust Us: Trademarks in Korea

Our friends over at the China Law Blog have posted on an issue that leads to a good deal of work for my IP litigation practice at my Korean office of my law firm.

If you don't want the added cost of litigating a matter in a Korean court, please register your trademark in Korea. No. No. No. Registering in the U.S. and the E.U. is not enough. Your "international filing" only gives you a grace period to file in other nations that have signed onto particular international treaties.

As the China Law Blog notes:

China is a first to file country, which means that, with very few exceptions, whoever files for a particular trademark in a particular category gets it. So if the name of your company is XYZ and you make shoes and you have been manufacturing your shoes in China for the last three years and someone registers the XYZ trademark for shoes, that other company gets the trademark. And then, armed with the trademark, that company has every right to stop your XYZ shoes from leaving China because they violate its trademark.

Replace the word Korea with China and reread.

_____
SeanHayes@ipglegal.com

Apr 6, 2011

Trade Terms for Korean Agreements: Get the INCOTERMS for the IPHONE App

Our friends at the China Law Blog have posted a brief review of a very useful application for those managing international agreements.

The application is for those of us without adequate brain cells left to memorize all the INCOTERMS. Also, it contains 2010 revisions.

The application is only available for the IPhone and the IPad. All of us stuck with the Blackberry or an Android phone are out of luck.

The application may be found at: http://www.tradedict.com/.
The China Law Blog may be found at: http://www.chinalawblog.com/

_____
SeanHayes@ipglegal.com

Corporate Downsizing the Korean Way

May 18, 2007

Corporate Downsizing the Korean Way
Appeared in the Korea Times on May 18, 2007
Lex Pro Bono Column

Dear Professor Sean Hayes, I am working for a company that has notified us that they will layoff around 25 workers. I heard that under the Korean Labor Law an employer cannot dismiss employees without just cause. Is this true and what can I do to protect my job? Worried in Yeouido.

Dear Worried, the Korean Labor Law provides some protection from dismissal by employers, but provides little protection for employees that are dismissed because of serious economic difficulties facing an employer.

Korean Labor Law is codified in the Korean Labor Standards Act (LSA). The LSA is a statute that dictates the working standards for most workplaces. The statute is vague and most of its language has been developed through case law.

Article 30 and 31 of the LSA assist in guaranteeing employment security. The LSA states that an employee under contract cannot be terminated unless ``just cause’’ exists for the termination. Case law has established that just cause includes ``fault directly attributable to the employee’’ and ``urgent managerial necessity.’’

So accordingly, employers that intend to lay off workers must assert that an urgent managerial necessity’’ exists. Urgent managerial necessity includes mergers and acquisitions, business relocations and most serious economic difficulties.

However, the LSA provides some protection even when an urgent managerial necessity exists. LSA 31 (2) states that the employer must ``make every effort’’ to avoid layoffs.

The (Korean) Supreme Court has noted that to make every effort means that an employer may need to offer early retirement packages, reduce working hours, obtain labor concessions, and institute a freeze on hiring before being able to satisfy this requirement.

The LSA also provides that an employer must select those to be laid o ff in a ``reasonable and fair way.’’ For instance, laying off only women or elder employees will immediately raise red flags.

The LSA also requires that after a layoff occurs an employer who wishes to increase the number of workers within two years of the layoff must give ``preferential treatment’’ to former employees.

If you believe that an employer is terminating employees in violation of the LSA an employee may institute either an administrative complaint with the Labor Relations Commission, a criminal complaint with a local prosecutor's office, or a civil complaint with a local court.

American Attorney Sean Hayes is a professor of law for Kookmin University and a researcher for the Constitutional Court. Direct questions to: SeanHayes@ahnse.com or www.ahnse.blogspot.com.

Illegal Migrant Workers to Get Help Receiving Pay

March 14, 2007


Korea Times Kang Shin-who

The Ministry of Labor plans to help migrant workers who have overstayed their visas due to delayed salaries. The ministry Tuesday announced that it will visit immigrant detention centers and help those who have had difficulties in getting their salaries from companies they worked for.

The ministry said it will provide legal counselors to help retrieve the money in cooperation with the Ministry of Justice.

If the ministry finds foreigners who have overstayed their visas due to such circumstances, it will put priority in retrieving the unpaid salary and then take action on the overstayed visa, as according to a policy ``first pay, second overstay notice.''

In cases where the companies are unable to pay the migrant workers, the ministry said it will guarantee the payment will be made via an online bank account even after they leave Korea.

In addition, the ministry plans to regularly visit large detention centers for illegal immigrants in Hwasong, Kyonggi Province, and Chongju, North Chungchong Province, to care for foreigners who are waiting to receive their salaries.

The migrant workers will get advice on filing lawsuits, if needed, from the Korea Legal Corporation, a state-run organization that provides a legal aid system for those who are unaware of the legal system in Korea.

``Migrant workers who are branded as undocumented foreigners cannot easily appeal the injustices caused by such companies. That's why we decided to help them get paid,'' Chang Eui-sung, an official of the ministry said.

``The foreign workers also need to take more aggressive actions against companies who refuse to pay their salaries by reporting them to the proper labor authorities,'' he added.

Meanwhile, about 13 million won, the salaries of four migrant workers who were killed in a fire at an immigration office in Yosu, South Cholla Province last month, was paid to their families, the ministry said.

Currently, there are a total of 425,107 migrant workers in Korea. Among them, 238,213 are documented and 186,894 or 44 percent are here illegally as of the end of last year.

Sean C. Hayes

Sean C. Hayes
(NY Attorney at Law)
SeanHayes@IPGLegal.com
http://www.IPGLegal.com/
For our sister blog:  http://www.thekoreanlawblog.com/

EU Korea FTA: On the Fast Track to Passage

The Korean Free Trade Agreement with the European Union, on April 5, 2011, was approved in a Korean cabinet meeting, thus, allowing the Bill to be sent to the Korean National Assembly for approval.

The Korean EU FTA will eliminate, within five years of enactment, nearly 98% of Korean import duties. The Korean government and EU trade delegation agreed to promulgate the law by July 1 of this year, but if the Bill is not sent to the assembly before May (May Day Election Year Protests) – the Assembly may run into difficulties in promulgating the law before the July deadline.

The EU parliament approved the law in February of this year; the Korean side has been slow because of some puzzling translation errors (200+) and the typical political bickering issues.

This FTA will open many opportunities for products that were subject to the higher range of tariffs rates and also will bring down the cost of some of the ubiquitous Korean and EU products for consumers. We suspect to see the more creative EU traders target product lines that were priced out of the Korean market because of high tariffs on certain product lines.

The U.S. Congress better get its act together or an opportunity will be lost to the EU.

J & S Law Firm has two Korean National Assembly members as firm members.  Both members have strongly supported FTAs with the U.S. and the E.U.

_____
SeanHayes@ipglegal.com

Apr 4, 2011

Korean Labour Law Checklist for Employers and Employees

The Korean Ministry of Labor created this list with revisions by Sean Hayes and IPG.  I will update the list periodically. The checklist is intended for all employers that employ five or more workers.

The list contains many generalizations, thus, don't take this as the end all list.  I suggest, also, clicking on the label to the right entitled Korean Employment Law.


This note that Korea's Labor Law is evolving rapidly, thus, this list may not reflect recent changes.  

KOREAN LABOR STANDARDS ACT
  • A Korean company should conclude a labor contract with every worker whom it directly employs.
  • An employer, when concluding a labor contract, should clearly state terms of employment prescribed by the act. (Fine up to 5 million Won)
  • An employer ordinarily, employing ten workers or more, should prepare rules of employment and submit them to the Ministry of Labor. (Civil fine up to 5 million Won)
  • An employer ordinarily, employing ten workers or more, should keep workers informed of the rules of employment by posting or keeping the rules where workers can have free access to them. (Civil fine up to 5 million Won)
  • Wages should be paid at least once per month on a fixed day. (Imprisonment up to 3 years or fine up to 20 million Won)
  • If a worker retires, an employer should pay the wages, compensation, and other money or valuables within 14 days. (Imprisonment up to 3 years or fine up to 20 million Won)
  • An employer should preserve a register of workers and other important documents regarding labor contracts for three years. (Civil fine up to 5 million Won)
  • An employer should additionally pay fifty percent or more of the ordinary wages for overtime work, night work (work provided from 10 p.m. to 6 a.m.) or holiday work. (Imprisonment up to 3 years or fine up to 20 million Won)
  • Over-time work is done based on agreement with workers. Overtime should not exceed 12 hours per week. (Imprisonment up to 2 years or fine up to 10 million Won)
  • An employer should not require a pregnant worker and a worker aged less than 18 years old work from 10 P.M to 6 A.M. and on holidays. (Imprisonment up to 2 years or fine up to 10 million Won)
  • For each minor under 18, an employer should keep, in the workplace, a certificate proving the child's family relationship and the written consent of the child's parent or guardian. (Civil fine up to 5 million Won)
  • An employer should allow a worker more than one-day holiday with pay per week on the average.  (Imprisonment up to 2 years or fine up to 10 million Won)
  • An employer should grant 15 days' paid leave to a worker who has registered more than 80 percent of attendance during one year. After the first year of service, an employer should grant one day's paid leave for each two years of consecutive service in addition to the leave for the first year. (Imprisonment up to 2 years or fine up to 10 million Won)
  • An employer should grant one day's paid leave per month to a worker whose consecutive service period is shorter than one year, if the worker has offered work without absence throughout a month. (Imprisonment up to 2 years or fine up to 10 million Won)
  • Working hours per week should not exceed 40 (or 44) hours excluding break hours. (Imprisonment up to 2 years or fine up to 10 million Won)
  • Working hours of a person aged between 15 and 18 should not exceed seven hours per day and 40 hours per week. (Imprisonment up to 2 years or fine up to 10 million Won)
  • An employer should grant a pregnant female worker 90 days of maternity leave before and after childbirth and should allocate 45 days or more after the childbirth. The first 60 days of leave is paid. (Imprisonment up to 2 years or fine up to 10 million Won)
  • Employer should not dismiss any worker during a period of temporary interruption of work for medical treatment of an occupational injury or disease and within 30 days thereafter and any female worker before and after childbirth during a period of maternity leave and within 30 days thereafter. (Imprisonment up to 5 years or fine up to 30 million Won)
  • An employer should give advance notice to a worker at least thirty days before dismissal. If the notice is not given thirty days before dismissal, ordinary wages of thirty days or more should be paid to the worker in lieu of notice. (Imprisonment up to 2 years or fine up to 10 million Won)
  • If an employer intends to dismiss a worker, the employer should notify the worker of the reasons for and day of dismissal in writing.
EMPLOYEE RETIREMENT BENEFIT SECURITY ACT OF KOREA

  • An employer should pay workers who retire 30 days or more of average wages for each year of consecutive service as severance pay.
    (Imprisonment up to 3 years or fine up to 20 million Won)
  • If an employer intends to choose a type of retirement benefit scheme or change the chosen type into a different one, the employer, if there is a labor union composed of the majority of worker, should obtain the consent of the labor union, and if there is no such labor union, should obtain the consent of the majority of workers. If an employer intends to change the contents of a retirement benefit scheme, the employer should consider the opinion of workers in the same way as above. (Fine up to 5 million Won)
MINIMUM WAGE ACT OF KOREA

  • An employer should pay a worker a wage not less than minimum wage.
    (Imprisonment up to 3 years or fine up to 20 million Won)
  • An employer should keep workers informed of the minimum wage by posting it where workers will have free access or by other appropriate means. (Civil fine up to 1 million Won)
EQUAL EMPLOYMENT ACT OF KOREA

  • An employer, senior workers, or other workers shall not engage in sexual harassment at work. (Civil fine up to 10 million Won)
  • An employer shall conduct educational programs in order to prevent sexual harassment at least once a year pursuant to act. (Civil fine up to 3 million Won)
  • An employer shall not discriminate, in recruitment and hiring, based on gender. When recruiting and hiring female workers, an employer should not present nor demand certain physical conditions such as appearance, height, weight, etc., unmarried status, and other conditions determined by the ordinance of the Ministry of Labor which are not required to perform a certain job for which the employer intends to recruit or hire. (Fine up to 5 million Won)
  • An employer should keep documents related to recruitment and hiring as determined by the act for 3 years. (Civil fine up to 3 million Won)
  • An employer should pay an equal wage for work of equal value in the same business regardless of gender. (Imprisonment up to 3 years or fine up to 20 million Won)
  • An employer should not discriminate against men or women in managing welfare programs, training, deployment, and promotion. (Fine up to 5 million Won)
  • An employer should not discriminate against men or women with respect to retirement age, retirement and dismissal. (Imprisonment up to 5 years or fine up to 30 million Won)

ACT ON THE PROTECTION OF DISPATCHED WORKERS OF KOREA

  • An employer should not use a dispatched worker who is offered by a person who did not acquire the permission for worker dispatch undertakings from the Ministry of Labor or who violated restrictions on employment and reasons for worker dispatch as prescribed by the act. (Imprisonment up to 3 years or fine up to 20 million)
  • The length of a dispatch period of a dispatched worker should not exceed two years in total. (Imprisonment up to 3 years or fine up to 20 million Won)
  • An employer should directly employ a dispatched worker if the employer uses the worker in excess of two years. (Civil fine up to 30 million Won)
  • An employer should selects a person in charge of the management of using dispatched workers, prepare a ledger for management of using dispatched workers and preserve it for three years. (Civil fine up to 3 million Won)

ACT ON THE PROTECTION OF FIXED-TERM AND PART-TIME EMPLOYEES OF KOREA

  • When an employer drafts a labor contract with fixed-term or part-time employees, the employer should clearly state in writing matters determined by the act. (contract period, working and rest hours, wages, holidays and leave, place of work, jobs to do, and etc) (Civil fine up to 5 million Won)
  • An employer should hire fixed-term employees for a period not exceeding two years.
  • If an employer hires fixed-term employees for more than two years, the fixed-term employees are considered as workers who have made a labor contract with no fixed-term.

THE PROMOTION OF WORKER PARTICIPATION AND COOPERATION ACT OF KOREA

  • A Korean company with 30 or more permanent workers should establish a labor-management council, draw up bylaws governing the organization and operation of the council, and submit related documents to the Ministry of Labor. (Failure to establish the council: Fine up to 10 million Won) (Failure to submit the bylaws:Civil fine up to 2 million Won)
  • A labor-management council should be composed of an equal number of members representing the employer and the workers, respectively, the number of which is not less than 3 nor more than 10. There should be a chairman and a secretary for the council.
  • A labor-management council should hold meetings once every three months. The council should draw up and keep minutes of its meetings.
    (Failure to hold meetings:Civil fine up to 2 million Won)
  • A company with 30 or more permanent workers should have grievance handling members consisting of three members or less representing labor and management. (Civil fine up to 2 million Won)
  • A grievance handling members should draw up and keep a ledger relating to the receipt and handling of grievances and should preserve the ledger for one year.
  • An employer should seek resolution of the labor-management council on matters determined by Act. The council should notify workers, without delay, on matters on which resolutions are made. (Failure to seek the resolution: Fine up to 10 million Won)
  • The hours spent by a member to attend the labor-management council and engage in activities directly related thereto are regarded as hours devoted to work.
_
Sean may be contacted at: SeanHayes@ipglegal.com
http://www.ipglegal.com/

Korea Rules of Employment Required When Employing Ten or More Workers in Korea

November 24, 2010


A few minutes ago, I was contacted by a new client that was advised by the  former counsel that they were not required to have employment rules.   In most cases, an employer that employs ten or more workers must have rules of employment and the rules must be filed with the Ministry of Employment and Labor.

LABOR STANDARDS ACT
CHAPTER Ⅸ RULES OF EMPLOYMENT

Article 93 (Preparation and Report of Rules of Employment)

An employer who ordinarily employs ten or more workers shall prepare the rules of employment regarding the matters falling under each of the following subparagraphs and report such rules to the Minister of Labor. The same shall also apply in case where he/she amends such rules:

1. Matters pertaining to the starting and ending time of work, recess hours, holidays, leaves, and shifts;

2. Matters pertaining to the determination, calculation and payment method of wages, the period for which wages are calculated, the time of paying wages, and pay raises;

3. Matters pertaining to the methods of calculation and payment of family allowances;

4. Matters pertaining to retirement;

5. Matters pertaining to retirement allowances under the provisions of Article 8 of the Guarantee of Workers’ Retirement Benefits Act, bonuses, and minimum wages;

6. Matters pertaining to the burden of workers’ meal allowances, expenses of operational tools or necessities and so forth;

7. Matters pertaining to educational facilities for workers;

8. Matters pertaining to the protection of workers’ maternity and work- family balance assistance, such as leaves before and after childbirth and child-care leaves;

9. Matters pertaining to safety and health;

9-2. Matters pertaining to the improvement of environment of a place of work according to characteristics of workers, such as sex, ages or physical conditions, etc.;

10. Matters pertaining to assistance with respect to occupational and non- occupational accidents;

11. Matters pertaining to award and punishment; and

12. Other matters applicable to all workers within the business or workplace concerned.
____
Judge Jin-Gyeong CHEONG leads the Labor Law Team at IPG Legal.   He has a Ph.D. in Labor Law from SNU, worked as a judge for 21 years, and edited the first and only Korean Labor Law annotations.

IPG Legal is headquartered in Seoul, Korea and has offices and/or affiliated firms in New York, Hong Kong, Sydney, Shenzhen and Washington DC. www.ipglegal.com

Commentary on Korean Labor Standards Act

October 1, 2010


Retired Presiding Judge Jin-Gyeong CHEONG's "Commentary on the Labor Standards Act" was published this week by Pak Younga Sa Publishing. Attorney Cheong, the head of the Labor Law Team at J & S Law Firm was an editor for the publication and contributed an article concerning remedies for unfair dismissal.

The publication contains three volumes and is the only commentary on the Labor Standards Act of Korea.  The publication may be found at most Korean law firms, libraries and book stores (ISBN 978-89-6454-604-8).

Attorney Cheong holds a doctors degree in Labor Law from Seoul National University and an LL.M. from Duke University.  He retired from his position as a judge after serving on the bench for over 20 years.   His last position with the Korean court system was as the presiding judge at the Seoul Central District Court of a court panel handling Medical Malpractice cases.  His research interests include Labor Law, Medical Malpractice and Litigation Techniques.  A practitioner's guide to medical malpractice cases shall be published next week in a leading legal journal.  His profile may be found  be HERE.

Apr 3, 2011

Dismissal of Workers for Operational Emergency Declared Invalid under Korea Labor Standards Act.

February 13, 2008

Incheon District Court (2007 KaHap 4420) recently ruled that the dismissal of 5 workers for an "operational emergency" is in violation of the Labor Standards Act, since "In order for an employer to dismiss a worker due to operational reasons, there should be and emergency in operations. But defendant has maintained profit since 2000 and only had a loss in 2006." The Court also noted that employer did not have debt and was sufficiently solvent.

The employer was ordered to pay the defendant for wages "which they could be paid if continuing to work. So the plaintiff should pay them for wages from the next day after the dismissal to the reappointed day."

Here is a general article I wrote for the Korea Times last year that may be useful when an employer dismisses an employee or when an employee is dismissed. Ahnse Law Offices successfully represented the employee asking the question in the article below.


Corporate Downsizing the Korean Way

Lex Pro Bono Column
Korea Times May 18, 2007


Dear Professor Sean Hayes, I am working for a company that has notified us that they will layoff around 25 workers. I heard that under the Korean Labor Law an employer cannot dismiss employees without just cause. Is this true and what can I do to protect my job? Worried in Yeouido.

Dear Worried, the Korean Labor Law provides some protection from dismissal by employers, but provides little protection for employees that are dismissed because of serious economic difficulties facing an employer.

Korean Labor Law is codified in the Korean Labor Standards Act (LSA). The LSA is a statute that dictates the working standards for most workplaces. The statute is vague and most of its language has been developed through case law.

Article 30 and 31 of the LSA assist in guaranteeing employment security. The LSA states that an employee under contract cannot be terminated unless "just cause" exists for the termination. Case law has established that just cause includes "fault directly attributable to the employee" and "urgent managerial necessity."

So accordingly, employers that intend to lay off workers must assert that an "urgent managerial necessity" exists. Urgent managerial necessity includes mergers and acquisitions, business relocations and most serious economic difficulties.

However, the LSA provides some protection even when an urgent managerial necessity exists. LSA 31 (2) states that the employer must "make every effort" to avoid layoffs.

The (Korean) Supreme Court has noted that to make every effort means that an employer may need to offer early retirement packages, reduce working hours, obtain labor concessions, and institute a freeze on hiring before being able to satisfy this requirement.

The LSA also provides that an employer must select those to be laid off in a "reasonable and fair way." For instance, laying off only women or elder employees will immediately raise red flags.

The LSA also requires that after a layoff occurs an employer who wishes to increase the number of workers within two years of the layoff must give "preferential treatment" to former employees.

If you believe that an employer is terminating employees in violation of the LSA an employee may institute either an administrative complaint with the Labor Relations Commission, a criminal complaint with a local prosecutor's office, or a civil complaint with a local court.

New York attorney Sean Hayes leads the International Practice Group (IPG) at J & S Law Firm. Sean Hayes formerly worked for the Constitutional Court of Korea and as a professor of constitutional and contract law. Sean Hayes may be contacted at: SeanHayes@IPGLegal.com or http://www.thekoreanlawblog.com/.

Survey on Labor Law Violations

September 28, 2010


In July of 2010, a survey was published by Jungbu Employment and Labor office. The office conducted a survery on 207 companies in Incheon that hired foreigners (non-Koreans), minors and the handicap. I assume they combined the three groups, since they are perceived as the most abused individuals by employers.

The report concluded that:

1. 196 of the 207 employers violated labor law (94.7%);
2. 83 breached a labor law clause requiring a written employment agreement (40%);
3. 66 breached a clause of the labor law requiring employees to pay retirement allowance, wage arrears, yearly and monthly allowances, within 14 days of resignation (31.9%);
4. 36 didn't pay all wages or yearly allowancess (17.39%);
5. 4 paid wages below the minimum wage of KRW 4,110 per hour.
_____
Sean Hayes (NY Attorney-at-Law) is part of the IPG Legal ( www.ipglegal.com). Sean Hayes formerly worked for the Constitutional Court of Korea and as a professor of constitutional and contract law. He is the first foreigner to work for the Korean court system. Sean Hayes may be contacted at: SeanHayes@IPGLegal.com or www.thekoreanlawblog.com.