Since South Korea hosted the Summer Olympics in 1988, there have been numerous developments in employment and labor laws in the country.  Here we focus on how some of the important employment law provisions have evolved over time.

In 1989, the year following the Olympics, the Korean Labor Standards Act (the “LSA”) went through many changes.  The scope of application of the LSA, which had been limited to businesses with at least 15 employees, was broadened to apply to all businesses having at least five employees.  A new avenue for disputing unfair dismissal through the labor tribunal procedures also became available to employees.  This route continues to be the simpler, more cost-efficient option for employees disputing an employer’s adverse employment actions in front of a panel that generally has an employee-protective stance.

The LSA, which was newly established in 1997, brought about many changes to provisions important to both employers and employees.  In 1997, the interim severance payment system was first introduced into the law.  The mandatory severance payment system required companies to reserve funds throughout an employee’s employment period so the employer could make the lump-sum payment upon an employee’s exit.  The interim severance payment allowed companies to settle accumulated severance and restart the service period, thereby lessening the employer’s financial burdens.  At the same time, employees were able to obtain early access to these funds for their emergency needs.

A flexible working system was also first introduced in 1997.  The flexible working system enabled the employer to have some flexibility optimizing working hours’ management, by allowing employees to work hours in excess of the statutory weekly amount on some week(s) as long as the average work hours over a longer period fell within the maximum limit, without the added financial burden of paying overtime premiums.

“Layoffs due to managerial reasons” was first introduced into the LSA in 1997, but came with a two-year deferment of the effective date due to challenges from workers alleging the new provision would allow easy, massive layoffs.

The period starting from late 1997 up until 2001 was the so-called “IMF Era,” where Korea was sunk in national debt and relief had to be received from the International Monetary Fund.  During the IMF Era, the economy took a deep dive and many companies failed to survive.  In early 1998, the deferred effective date for layoff provisions in the LSA was abolished and the provision took immediate effect, as the economic situation provoked a need to reform the rigid labor market in efforts to save the economy.  “Business transfer or merger, acquisitions to prevent business aggravation” was added to the LSA and recognized as an “urgent business necessity” – a substantial requirement for commencing a lawful redundancy under the LSA.

During the following year, the requirement to obtain the Minster of Employment and Labor’s approval for immediate termination of an employee who intentionally caused material disturbance to the business or damages to the property, was abolished.  That said, the LSA requirements for immediate termination are still very difficult to meet according to subsequent court precedents and laws.

In 2003, further amendments were implemented with the view to balance the quality of life of workers while improving enterprises’ competitiveness.  The statutory work hours were reduced from 44 hours to 40 hours – for a possible maximum of 68 working hours per week (including maximum 12 hours of overtime and 16 hours of work during the weekend).  Up to three months were allowed as the base period applicable to a flexible working system, increasing further efficiency in working hours’ management.  Compensation leave was introduced, and the premium payments for overtime work, etc., could be replaced with leave, with a written agreement between the Employee Representative and the employer, further providing a new option for employer and employees.

In 2005, the statutory severance provisions in the LSA transferred to the newly established Employee Retirement Benefit Guarantee Act.  With a view to prepare for employees’ post-retirement stability in light of the aging society, the above act prescribed that the lump-sum statutory severance could be converted to a retirement pension scheme instead.  In 2012, the pension scheme became the default obligation for companies established after 2012.

In 2006, the three framework acts for protection of irregular workers (i.e., those who do not work in regular, full-time positions) in Korea, including the Act on the Protection of Fixed-Term and Part-Time Employees, and the Act on the Protection of Dispatch Workers, were newly established or amended.  The acts prohibited discrimination against irregular workers and allowed employees to file claims to the labor tribunal to resolve and correct discriminatory behavior.  Protecting irregular workers from their instability of status and discrimination is still challenging and resolving this continues to be a focus of the Korean government.

In 2007, the criminal punishment imposed on the employer for unfair termination was abolished. Punishing an employer for essentially a civil matter, and overly restricting an employer’s right of termination of employment, had been a subject of criticism.  In this regard, instead of the direct criminal sanction, a monetary penalty was newly introduced for an employer failing to comply with the labor tribunal’s order, and criminal penalties were imposed when an employer breached a confirmed order of the labor tribunal.

In the winter of 2018, the Winter Olympics were held in Korea in Pyeongchang, Gangwon-do.  2018 brought about significant developments in Korean labor laws, and most importantly, the maximum weekly hours were set at 52 hours.  Korea is known for its long work hours and in 2016, the average number of work hours per worker annually was 2,069, which is the second highest among the countries in the OECD (only Mexico was higher, with 2,255 hours).  Previously it was understood a maximum week could be up to 68 hours, with the normal weekly 40 hours plus 12 hours’ overtime, and an extra 8 hours of work on non-working days such as Saturdays and Sundays, respectively, but the 2018 amendment made it clear that a “week” meant 7 days, and therefore the limit, including overtime, was 52 hours. 

In 2019, a new law prohibiting workplace harassment took effect, bringing the widespread issue of bullying at work into statutes.  The definition of “workplace harassment” was added to the LSA, which referred to an act of incurring physical or mental suffering or a worsening of the work environment by employers or workers using their status or power to behave beyond the scope of working norms.  The anti-bullying provisions and remedies are actively considered and sought out nowadays, and whether it will improve working conditions by eliminating workplace bullying behavior remains to be seen.  

As discussed above, the employment and labor laws are expected to continue to undergo changes in the future according to governmental, political, social changes and opinions expressed by the public and interest parties.  It is always helpful to watch out for new laws to keep up with the changes.