Sources of regulation
Termination of employment in the Republic of Korea is governed by:
- the Labour Standards Act (LSA), most recently amended in 2003;
- the Enforcement Decree of the Labour Standards Act (EDLSA) also amended in 2003, the Equal Employment Act (EEA), amended in 2001;
- the Trade Union and Labour Relations Adjustment Act (TULRAA), amended in 2001; and
- the Act on the Protection of Fixed-Term and Part-Time Employees (APE), adopted in 2006.
Scope of legislation
The LSA applies to all businesses and workplaces in which more than 5 workers are ordinarily employed. With respect to those enterprises with less than 4 workers, some of the provisions of the LSA apply as prescribed by a Presidential Decree. The LSA, however, excludes any business or workplace, which employs only relatives working together, and to a worker who is hired for domestic work (art. 10, LSA). In addition, the APE also applies to State and local government agencies regardless of the number of workers employed (art. 3(3), APE).
Contracts of employment
The term of a labour contract cannot exceed one year, except in cases where there is no term fixed or a term is fixed as necessary for the completion of a certain project (art. 23, LSA).
An employer may not hire a fixed-term employee for a period exceeding two years, except where (art. 4, APE):
- The period needed to complete a project or particular task is defined;
- There is a need to fill a vacancy in case of a worker's temporary suspension from duty or dispatch until the worker returns to work;
- The period needed for a worker to complete schoolwork or vocational training is defined; or
- A job requires professional knowledge and skills or is offered as part of the government's welfare or unemployment measures prescribed by a Presidential Decree.
However, if the employer hires fixed-term workers for more than two years, the fixed-term contract for employment will be considered as concluded for an indefinite duration (art. 4, APE). If an employer intends to make a Labour contract without a fixed term, he/she must make efforts to preferentially hire fixed-term employees who are engaged in the same or similar kinds of jobs in the enterprise concerned (art. 5, APE).
An employer must not give discriminatory treatments against fixed-term employees on the ground of their employment status compared with other workers engaged in the same or similar jobs under a Labour contract without a fixed-term in the enterprise. Similarly, an employer must not give discriminatory treatments against part-time workers on the ground of their employment status compared with full-time workers who are engaged in the same or similar kinds of jobs in the enterprise (art. 8, APE).
In regards to child Labour, the LSA prohibits the ability of the parent or guardian to enter into a Labour contract on behalf of a minor. The parent and guardian of a minor, or the Minister of Labour may terminate a Labour contract, if a Labour contract is deemed disadvantageous to the minor (art. 65, LSA).
Termination of employment
The contract of employment can be terminated, not at the initiative of the employer, in certain circumstances, including by the expiry of a fixed-term contract (art. 4, APE).
If the conditions of employment are found to be inconsistent with the actual conditions, the worker concerned must be entitled to claim damages resulting from the breach of the conditions of employment or may terminate the contract at their discretion (art. 26(1), LSA).
Dismissal
An employer must not dismiss, lay off, suspend, transfer a worker, or reduce wages, or take other punitive measures against a worker without justifiable reason (art. 30(1), LSA).
Moreover, an employer must not dismiss any worker during a period of temporary interruption of work due to medical treatment of an occupational injury or disease and within 30 days afterwards (art. 30(2), LSA).
If an employer wants to dismiss a worker for “managerial needs”, there must sufficiently necessary grounds to do so, which can include, namely, transfer, acquisition, and merger of business which are aimed to avoid financial difficulties (art. 31(1), LSA).
There are several anti-discrimination and other provisions that seek to limit a hostile work environment and unfair dismissal. An employer must not discriminate against men or women in training, deployment and promotion (art. 10, EEA). Moreover, an employer must not take unfavorable measures such as dismissal, or other disadvantageous measures against a worker who was sexually harassed at work (art. 14(3), EEA).
The employer must not also dismiss any female worker before and after childbirth during a period of temporary interruption of work as provided (art. 30(2), LSA). Moreover, the employer must neither dismiss and give unfavorable treatment to a worker on account of taking childcare leave, nor dismiss the concerned worker during the childcare leave period (art. 19(3), EEA).
In accordance with the TULRAA, employers must not dismiss or discriminate against a worker on the grounds that the worker has joined, or intended to join a trade union or to establish a trade union, or has performed a justifiable act for the operation of a trade union (art. 81(1), TULRAA). Moreover, employers must not dismiss or discriminate against a worker on the grounds that the worker has taken part in justifiable collective activities, or has reported the violation of the provisions of this article by the employer to the Labour Relations Commission, or has testified about such violations or has presented evidences to administrative authorities (art. 81(5), TULRAA).
Notice and prior procedural safeguards
An employer must give an advance notice to a worker at least thirty days before dismissal (art. 32, LSA). If the notice is not given thirty days before the dismissal, normal wages for more than thirty days must be paid to the worker, except in cases prescribed by the Ordinance of the Ministry of Labour, where it is impossible to continue a business because of natural disaster, calamity, or other unavoidable causes, or where a worker has caused considerable difficulties or damage to the enterprise (art. 32, LSA).
In addition to a notice requirement, in case of dismissals for “managerial needs” (economic reasons), the employer must send, 30 days in advance, a report to the Minister of Labour, which includes:
- the reason of dismissal; the number of workers to be dismissed;
- issues discussed with worker representatives; and
- dismissal schedule.
In endeavouring to avert dismissals and in establishing criteria for dismissal on economic grounds, the employer must have sincere consultation with the trade union, provided the trade union has been formed by the consent of the majority of employees, or with those who represent the majority of employees where the trade union does not represent the majority of employees. In this regard, notice is to be given to the union or workers’ representative 60 days prior to dismissal day (art. 31(3), LSA).
All these procedural requirements for collective dismissals for economic reasons apply depending of the size of the enterprise and the number of expected redundancies:
- more than 10 dismissals in an enterprise ordinarily employing less than 99 workers;
- more than 10% of workers to dismiss in an enterprise ordinarily employing more than 100, but not exceeding 999 workers; and
- more than 100 workers to dismiss in an enterprise ordinarily employing more than 1,000 workers (art. 9-2, EDLSA).
However, advance notice rules do not apply to workers who have been employed (art. 35, LSA):
- On a daily basis for less than three consecutive months;
- For a fixed period not exceeding two months;
- As a monthly-paid worker for less than six months;
- For seasonal work for a fixed period not exceeding six months; and
- As a worker in a probationary period.
An employer must make every effort to avoid dismissal of workers for “managerial needs” and as such must only select workers to be dismissed by establishing rational and fair standards of dismissal, which include non-discrimination based on gender (art. 31(2), LSA).
When an employer who dismissed workers due to “managerial needs”, and intends to recruit workers within 2 years from the day of dismissal, he/she must make efforts to rehire those workers originally dismissed, if such workers desire, taking, in particular, into account the previous position of these workers (art. 31(2), LSA).
Severance pay
An employer has to establish a severance pay system whereby an average wage of more than 30 days is paid to a worker for each year he/she has been employed as a severance pay when the worker retires. However, if the worker was employed for less than one year, this does not apply. Moreover, an employer may, at the request of the worker, pay severance pay in advance for the period of continuous employment of the worker concerned by adjusting the balances of remunerations before his/her retirement (art. 34, LSA).
If a worker dies or retires, an employer has to pay the wages, compensations, and other money or valuables within 14 days after the cause for such payment has occurred; however, the period, under special circumstances, may be extended by the mutual agreement between the parties concerned (art. 36, LSA).
Avenues for redress
In case of a dismissal by the employer without justifiable reason, the worker may request a remedy for it to the Labour Relations Commission, which hears matters, namely, relating to termination of employment contracts.
For such disputes, the Labour Relations Commission will conduct a necessary investigation and inquiry into related parties without delay. If, for example, a fixed-term worker or a part-time worker receives discriminatory treatments, he/she can apply for a redress to the Labour Relations Commission (art. 10, APE). Moreover, if a worker is dismissed, laid off, suspended, transferred, or subject to other punitive actions or has his/her salary reduced by an employer without justifiable reason, the worker may request a remedy for it to the Labour Relations Commission (art. 81(5), TULRAA). Finally, in case of unfair Labour practices, such as dismissal or discrimination, either a worker or trade union may make an application for remedy to the Labour Relations Commission (art. 82(2), TULRAA).
In conducting the inquiry, the Labour Relations Commission will give sufficient opportunities for the parties to present evidence and cross-examine the witness (art. 10, APE & art. 83, TULRAA). However, such an application for remedy from unfair Labour practices, discriminatory treatments, or unfair dismissal must be made within three months from the date when such actions have been committed, or from the date of termination in cases where such activities continue (art. 82(2), TULRAA & art. 9, APE).
An employer guilty of violating the law prohibiting trade union discrimination may be liable for a fine or imprisonment for not more than two years (sec. 90, TULRAA).
Further information
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