Foreign executives working in South Korea encounter a diverse range of opportunities and challenges. Among the various aspects that require attention, understanding the intricacies of severance pay entitlement under Korean labor law is paramount. One of the key questions that often arise is whether foreign executives are entitled to legally mandated severance pay in South Korea. In this article, we will delve into the complexities surrounding severance pay for foreign executives, shedding light on the legal framework and crucial considerations. (more…)
There was a news report that more than half of the foreign workers in South Korea are not aware of the fact that they can claim for the severance pay. Yes, Korean labor law recognizes severance pay. It is being regulated by the Guarantee of Workers’ Retirement Benefits Act(“GWRBA”). In this article, we will provide you a guide to the general ideas of how severance pay works, who gets it, and how much in Korea.
When you hire an employee in South Korea, you cannot freely fire the employee. Article 23 of Labor Standard Act(“LSA”) requires a “justifiable cause” if and when an employer takes disciplinary actions, including termination of employment, with regard to its employees. Korean courts have held that a “justifiable cause” refers to such causes as a criminal offense, serious illegal acts, and gross negligent acts, etc. which would make maintaining of the relevant employment relationships no longer possible under generally accepted public notions.
Especially, because termination of employment is the most extreme measure, taking away an employee’s means of making a living, Korean courts are known to be very strict in applying the above-noted criteria, when it determines whether a particular termination is justified. Thus, unless an employee’s specific conduct is something that makes the current employer-employee relationship no longer possible to continue, it would be advisable for an employer to take less severe disciplinary actions such as suspension of employment, reduction of salary, or reprimand.
Further, as regards the employment termination, under LSA, an employer may also terminate employees where the employer can establish (more…)
There are so many seconded workers in Korea. The secondment of an employee creates various legal issues in Korea. One of them is the seconded employee’s severance pay in Korea. The Korean labor law recognizes the severance payment liability of all employers having business in Korea. This doesn’t ask the nationality of the employee. (Please check here as to how the severance pay under Korean law is recognized and operates) The problem is that some foreign companies are ignorant of their severance pay liability under Korean law. Even further, some foreign employers try to evade their severance liability intentionally.(more…)
“Hello, I am a U.S. citizen working for a Korean listed company. Recently my company sent me a dismissal notice saying I had breached the employment contract by leaking their confidential information. Informations at issue are a set of sale/purchase statements of the company. I downloaded those informations from the company’s server to my personal email account. But, there has been no warning mark of confidentiality. My other colleagues have a free access too, and the information sometimes was provided to our suppliers. Did I really breach the confidentiality of my Korean employer?”
Leaking employer’s confidential information could result in a termination of the employment contract. The legal issue, however, still remain whether or not the information can be regarded as a confidential information.
Most employers in Korea have their own rules of employment which state what is a confidential information. And even an employment contract could list a set of confidential informations which the employee should not disclose to 3rd parties. But, defining what is a confidential information is a matter of law and, therefore, the Korean court does not always follow the definition which an employer had been set in their internal documents.
The Korean court has well-established precedent that the confidential information should be (more…)
It is well known that the Korean labor law provides the employees with generous protections when it comes to the matter of disciplinary measures taken by the employer. In this article, we explain what protection is given to foreign employees in the area of termination and other disciplinary actions.
Employment Is Not “At-Will” in Korea
Unlike many other foreign legal regimes, Labor Standard Act of Korea (LSA) requires the employer having five or more employees to establish a just cause in order to exercise dismissal and any other disciplinary actions. In other words, employment is not “at-will” in Korea. (Note: There is a legal concept of no-fault dismissal based on the managerial hardship under the LSA, which requires very strict requirements to execute. This will be the subject of our upcoming article)
Foreign Employees Can Be Protected By the Korean Labor Law Even If the Labor Contract Says Korean Labor Doesn’t Apply
This rule of labor laws shall equally apply to the employment contract between Korean employers and Foreign employees in Korea, and vice versa.
More importantly, this is the case even when the employee working in Korea agrees in his employment contract that the Korean labor law does not apply. That is because the Private International Act of Korea which provides the general principles for the choice of law enables every Korean and foreign employee working in Korea to enjoy the protections under the mandatory rules of the Korean labor law.
Therefore, it is highly advisable that any foreign employee working in Korea and a multinational which has employees in Korea must understand how the Korean labor law regulates the dismissal and under what situation the dismissal becomes a wrongful termination.
What is the Just Cause for Dismissal in Korea?
The LSA does not provide what the just cause exactly means. It is up to the court’s review and interpretation. In this regard, it is firmly established in the Supreme Court’s precedent that (more…)
Question) I am an American expat working in South Korea. Originally I was working for a U.S. company incorporated in the state of New York, but 3 years ago I was seconded to the Korean branch of my U.S. company, and have been working for the branch until now. When I was seconded, my new employment contract provided that the New York state law shall apply to my employment relation in Korea. Now, my employment contract is expiring and I would like to know whether I am entitled to the severance pay under the Korean labor law. I know my employment contract and my company’s policy do not provide the right to severance pay. But, as I have been working in Korea for 3 years, I am wondering if the statutory rights of severance pay under the Korean labor law could be given to me.
Answer) The answer is Yes. Expats are entitled to severance pay under the Korean labor laws. (check here as to how the severance pay under Korean law is recognized and operates)
This answer could sound quite surprising considering the fact that the parties had previously agreed (i) the Korean labor should not apply and (ii) the severance pay should not be awarded. How come the Korean labor law intervenes in the parties’ employment relation? The answer lies in the provisions of the Private International Act of Korea which provides the general principles for the choice of law in Korea.
When a legal relation has certain foreign elements, the court must decide which jurisdiction’s law shall apply to interpret that legal relation. In Korea, the Private International Act provides the general rules and principles for the governing laws of the various types of legal relations. Specifically, the Act provides that if the employer and employee agree, the employment contract is governed by the law chosen by the parties. But, this does not mean the parties can freely determine which law and regulations apply to their employment relation. It is true in Korea that the party autonomy is a general principle of governing laws, but party autonomy is subject to limits imposed by the overriding public policy and mandatory rules.
Let’s assume a creditor has a monetary claim against a debtor in Korea but the debtor refuses to pay it. The creditor would proceed to file a lawsuit to get a judgment to collect his claim. Unfortunately, however, the chances are that knowing the complaint was filed, the debtor would try to conceal or transfer his assets to evade from the liability under judgment. This shows why provisional attachment is highly required to secure the judgment effectively.
Provisional attachment is a judicial measure available to anyone who has a monetary claim to lock down certain assets. It, depending on the type of court order, prevents the debtor from selling assets or enables the creditor to secure his interest in the debtor’s asset regardless of the sale by the debtor, until the court issues a judgment on the merit.
The creditor can, and usually does, seek a provisional remedy before she files a complaint on the merit. So, this is a very powerful weapon for the creditor. For example, as many Korean creditors do, if the creditor succeeds in putting a provisional attachment on the debtor’s bank account, the debtor would not be able to use the money and could face several penalties regarding its banking/financing transactions with the bank. This could heavily deteriorate the ability for a small company to conduct business, which makes the debtor (more…)
Q) I am on an F2 visa and teaching for 28 months at the same Hagwon. The contract between myself and the owner is basically a few written lines, just mention salary and final teaching date. There is no mentioning of the severance payment. According to the labor law, am I entitled to severance payment even though it is not mentioned in a short contract?
A) If and to the extent that you are legally regarded as an employee under Korean labor law, you are entitled to a severance pay under Korean labor law.
The term employee under the Korean labor law is someone who provides labor pursuant to his or her employer’s instructions or directions in exchange for wage compensation. The important factors for classifying someone as an employee are, (more…)
Q) Please could you clean up this question that nobody seems to be willing to answer. Is there a legally binding 40 working hour a week or not in Korea?
A) Yes, there is a 40-work-hours clause in Korean labor law.
The Labor Standard Act of Korea provides that “Work hours shall not exceed 40 hours a week, excluding hours of recess”.
However, in case of workers who are not less than eighteen years of age and women workers who are not in pregnancy, an employer and a workers’ representative can legally agree to extend work hours in excess of 40 hours a week to the extent that (more…)