Problems relating to Trade and Investment on Korea
16. Employment |
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Issue |
Issue details |
Requests |
Reference |
| (1) Over-Labour -Protective Industrial Practices and Systems | - Labour unions demand for wage increase and better fringe benefits without regard to employers' operational performance and productivity. Furthermore, rigidity prevails against the downward change in allowances, making it difficult for employers to implement restructuring of their workforce. | - It is requested that GOK: -- repeals the Article that requires labour unions' agreement for any changes to the rules of employment that disfavour workforce, -- prohibits by legislation employers' purchase of unused annual-paid-leave, -- repeals the legal severance indemnity system, and -- deregulates restriction on the employment term (duration of employment) for dispatched workers. |
- Labor Standards Act, etc. |
| (Action) - Dismissal for the purpose of reorganization being introduced seems to have a dubious efficacy, as witnessed in the case of Hyundai Motor Company. - According to the research conducted by the Federation of Korea Industries (FKI) published in July 2003, the greatest reason (37%) for the foreign-funded enterprises to consider the retreat from Korea was the employer/employee relationship. - During the first half of 2003, The foreign investment ombudsman received 210 cases of complaints, of which 50 cases (representing 24%) related to the employer/employee relationships. - After the currency crisis, the labour disputes are increasing in number. During 2002, 321 cases were brought about, 4 times as much as the level of 1996. - The total amount of the average monthly wages, released on 25 March 2009, of the full-time workers in the 4th quarter of 2008 was less than the same period of 2007. It is the first time the negative increase is recorded since 1998. - The minimum wage released in 2010 is 4,110 won per hour, representing 2.75% increase over the preceding year. This is the lowest increase rate since the currency crisis in 1998. - The minimum wage released in August 2011 4,320 won per hour, represents 5.11% increase over the preceding year, whereas the Worker's Committee demanded the raise of 26.0%. |
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| (2) Prohibited Purchase of Unused Paid Leave | - The amended Labour Standards Act exempts employers' obligation to purchase unused paid leave (UPL) and sets forth the scheme to promote annual paid leave under certain conditions. However, in the case where purchase of UPL forms a part of collective-bargaining agreement (CBA) or rules of employment (ROE), it is difficult to amend such agreements. In addition, promotion of paid leave system is difficult to put into practice. As a result, member firm subsidiary continues to purchase UPL from its employees. | - It is requested that GOK: -- causes the Act to be amended so that employers get exempted from purchase of UPL without amending the Agreements, or -- makes it clear that discontinuation of employers' purchase of UPL does not constitute the change unfavourable to employees. |
- Labour Standards Act Articles 1, 5, 61, 94.1 |
| (3) Restricted Employment Term for Non-Regular Workers | - Due to the constriction in the employment term for 2-years maximum, non-renewable, it is difficult for employees to deploy workers flexibly commensurate with the circumstances of business operation. | - It is requested that GOK repeals restrictions on conclusion of employment agreement so that employers may conclude employment agreement without the fixed employment term. | - Act on the Protection of Fixed term and Part time Employees - The Act On Protection, Etc. of Dispatched Workers |
| (Action) - On 1 July 2007, "Act on the Protection, etc. of fixed-term and part-time employees" was enforced concerning treatment of fixed-term, part-time, and temporary employees (Non-Regular Employees). The Act stipulates among others the following terms: 1) Prohibition in principle of irrational discriminatory treatment to non-regular employees. 2) Turning the status of employment as regular employees for non- regular employees whose employment term exceeds two years. 3) Turning the status of employment as regular employees for dispatched employees with more than two years of employment. - The response to the issues placed on the agenda 2008 reveals that the majority of workers also desire extension or repeal of the non-regular employment period so that GOK now considers construction of comprehensive measures inclusive of the complementation of the legislation. - In April 2009, GOK submitted the bill to the National Assembly, amending the law to extend the employment period of non-full-time workers from 2-years to maximum 4-years. - "Act on the Protection of Fixed-Term and Part-Time Employees" restricts the employees term of the fixed term employees to two-years. In the event of exceeding this term, employers shall be deemed to have concluded employment agreement with indefinite term of employment. |
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| (4) Compulsory Trade Union's Consent on Change of ROE Disadvantageous to Workers | - Under the labour standards act, employers must obtain trade union's consent in amending the rules of employment (ROE) in the manner disadvantageous to workers. This provision under the Act one-sidedly weakens the employers' bargaining position in the collective consultation with the trade union. - ROK labour standards act compels an employer to obtain trade union's agreement on any change in the Rules of Employment (ROE), which is "modified unfavourably to workers". This is the largest barrier for effecting any change in ROE. In the case where "ROE" is more reasonable than that of other Japanese affiliated enterprises operating in ROK, GOK commented: "Even if the ROE contents are reasonable, GOI deems that the union's agreement is indispensable. It could lead to material operational crisis of the company". GOK further commented, "introduction of the peak in wage requires trade union's consent", despite its compulsion of "the prolonged retirement age, etc." As it stands, the only changes GOK accepts are the cases where only the workers' interests are guaranteed. |
- It is requested that GOK repeals the employers' obligation to obtain trade union's consent in changing the ROE disadvantageous to workers, to enable employers to flexibly meet the change in the business environment. - It is requested that GOK takes step to: -- repeal the provisions in Article 94(1) of labour standard act, where it states: -- "However, if the rules of employment are to be modified unfavorably to workers, the employer shall obtain workers' consent", -- (2) When an employer submits the rules of employment in accordance with the provisions of Article 96, a written document containing the result of consultation referred to in paragraph (1) shall be attached, and have the cases transferred to judicial institutions. |
- Labour Standards Act Article 94.1 & 94.2 |
| (5) Nebulous Issuance Basis of Expatriate's Work Visa | - A Japanese enterprise is given an explanation that GOK does not authorise issuance of employment visa, unless the applicant is in a managerial position, supervising Korean employees, without, however, providing the definitive basis for employment visa issuance. | - It is requested that GOK overhauls the legislation for issuance of alien's work visa. | |
| (Action) - An eligible applicant to D-8 visa for foreign investors must be an indispensable professional worker, seeking engagement in administration management of foreign investment company as prescribed by "Foreign Investment Promotion Act", a professional in the field of production and engineering, investor, manager and engineer. An engineer must be indispensable, and must have an expertise not replaceable domestically in ROK. The period of stay for the D-8 visa holder has been extended by two years in total of five years since 2 August 2007. - Eligibility for intra-company transfer (D-7) for those who works by being dispatched as an "indispensable professional worker for foreign investor" is defined as executive, senior manager and specialist. |
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| (6) Changed and Nebulous Definition / Calculating Method of Normal Wages | - Since the supreme court decision in December 2013 (the SC decision), the scope of ordinary wages has become different from ministry of labour guidelines, which had been accepted before the SC decision. In addition to the increased labour cost, the SC decision fails to clarify the retroactivity of the past year portion. Certain enterprises instituted litigation. Problems and confusions have spread to the industrial relations between employers and employees. | - It is requested that GOK takes step to: -- overhaul legislation in accordance with the ministry of labour guidelines, and -- weave provisions into the measures to exonerate employers on the past unpaid wages. |
- Supreme Court Decision in December 2013 on Labour Standards Act, etc. |
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