The payment structure of Korean companies consists of basic wages and various allowances. The types of allowances are very diverse and the payment structure is very complex, which is in fact not an easy task for the company to manage.However, that payment structure is not obligatory, but rather a custom resulting from the bargaining between the management and labor. It has to be in principle solved by the company itself.

– It is recommendable to include most of the allowances in the basic wage, and only the
categories reflecting the work performance should be listed separately.
Furthermore, the annual compensation system should be introduced and implemented for managerial and professional positions.

If companies could dismiss workers at will, then there would be a great danger that dismissal will be misused. Especially in Korea, where the social welfare system is still almost non-existent, such a law would constitute a serious economic, as well as social blow to such workers.Therefore, it is necessary to place certain restrictions to dismissing a worker such as justifiable reasons and process.

– Penalties are necessary for companies violating the laws, which are designed to prevent
the misuse of the right of dismissal.
On the other hand, the Labor Standards Act was amended in February 1998 allowing an immediate execution of a dismissal for managerial reasons in order to improve the flexibility of the labor market.
– That would be the case when deteriorating business makes it necessary to conduct a
business transfer, merger or acquisition in order to avoid further deterioration of the
business.

Pursuant to the Labor Relations Act, compulsory employment includes physically disabled people as well as safety and health specialists.

Obligatory employment of health and safety specialists:

• In order to guarantee the health and safety of workers, it is common to employ health and safety specialists, which is also the case in advanced industrialized countries such as in Germany and Japan.
• In advanced industrialized countries the standards for their selection are even stricter and also the fields are more subdivided.
• The Korean government has been continuously liberalizing regulations, and especially in May 1997, the obligatory employment in the field of industrial health was revoked. Also, liberalization took place in other areas such as for expansion of double-posts, common recruitment system (new), reduction of obligatory employment, more exemptions etc.
• The Korean government has been continuously liberalizing regulations, and especially in May 1997, the obligatory employment in the field of industrial health was revoked. Also, liberalization took place in other areas such as for expansion of double-posts, common recruitment system (new), reduction of obligatory employment, more exemptions etc.
• However, the health and safety field

Obligatory employment of disabled people

• The obligatory employment of disabled people is intended to give them the opportunity to participate in society and live an ordinary life through their work.
• This system is based on the idea that the entire community has to take responsibility for employing disabled people. Employment leads to economic autonomy and independence of the disabled, but if this system was left to the free decision of the companies, then many of the disabled would face severe shortages of work opportunities.
• Many advanced industrialized countries are protecting disabled people through this system of obligatory employment, which allows them to live a higher quality of life. This was made possible through the charges levied to the employer, which have to be paid if not employing disabled people. This fund is used as the basic financial source for training, facilities, etc. of the disabled and therefore returned to the employer through direct or indirect means.
• The Korean government will make efforts to lay the foundation for the employment of disabled people through the development of job training, and provide skilled disabled workers to the company. This would lead to an improvement of productivity as well as solve the problem of shortages in the workforce.

If the employer has changed due to an M&A, only the workers who are presently working in the company are subject to employment succession. A worker, who was dismissed prior to the merger, is not included in the employment succession.
In this case therefore, if an application for relief of unfair dismissal was submitted to the Labor Relations Commission, it will likely be rejected due to lack of proper eligibility.

Article 31 of the Labor Standards Act stipulates that ‘Where an employer wishes to dismiss a worker for business reasons, there must be an urgent necessity in relation to business. It shall be deemed that there is such an urgent business necessity in the case of business transfer, merger or acquisition of the business to prevent business deterioration. ( ) the employer shall make every effort to avoid dismissal and shall establish and follow reasonable and fair criteria for the selection of those persons subject to dismissal ( ) Where there is an organized labor union which represents more than half of the workers at a business or business location, the employer shall inform and consult in good faith with the labor union regarding the methods for avoiding dismissals and the criteria for dismissal ( ) at least 60 days before the intended date of dismissal’.

– Thus, the above law clearly states that dismissal for managerial reasons can only be
carried out if justified reasons exist.

There are no special rules for selecting the labor representative, but the representative has to be based on the autonomy of the workers and has to be able to represent their opinions. If a labor-management council is established, and the members represent more than half of the workers, then they are acknowledged as justified representatives of the workers.
Accordingly, if the representative does not represent more than half of the workers, then the representative is not a justified representative, and thus collective dismissal for managerial reasons is invalid.

There is no clause about the retirement age in the Labor Standards Act, so the retirement age will be defined in the collective agreement or the employment regulations of the company.

– For example, if the collective agreement stipulates a different retirement age for
different positions, then it is not a discriminating treatment of sex, nationality, religion
or social status, and is also not in violation of Art. 5 of the Labor Standards Act.

An increase in discontent and demands by labor has emerged since the restructuring of businesses in 1998, when some labor unions were involved in illegal gatherings and strikes. However, since 2000, the number of illegal and violent strikes has drastically declined.
The government will ensure peaceful and legal gatherings by labor, but will take stern legal action against any behavior that goes against the law, uses force or leads to social disorder.
Therefore, continuous efforts will be made to discuss and persuade labor in order to achieve “cooperative labor-management relations”, which will support the development of the economy as well as bring stability to society.

The Labor Standards Act was amended to allow a liberalization of the labor market and improve its flexibility as well as maintain the balance in the bargaining process between the management and labor.
It is expected that the amendments will be more efficient in terms of HR management, because it should improve the flexibility of the labor market, especially in terms of working hours and employment adjustment.

• Flexible working hours were introduced, which can be changed in units of two weeks or three months under certain conditions of the new law.
• That is, the selective working hours system determines only the total working hours within a period of one month, so that the worker can freely decide over when to start and stop working and on what day.
• A new system was implemented according to a written agreement between management and labor stating that specific working days can be replaced by annual and monthly leave.
• A flexible severance pay system was introduced, allowing for more flexible management and including a mid-term settlement of severance pay as well as the severance pay pension system. The mid-term settlement of severance pay is a system providing severance pay before retirement for the years of continuous work up to the day of the settlement. The pension system is a retirement insurance, which allows the worker to receive his severance pay as a bulk payment or in installments (as pension).
• The conditions and process of employment adjustment were clearly defined through the amendments of the Labor Standards Act in February 1998 and implemented immediately by abolishing the deferment period until March 1999. In order to prevent a deterioration of business, it was noted that consultation is needed in times of transfer, merger or acquisition or businesses in order to allow an active and smooth company restructuring.
Flexibility in HR management could be achieved through the utilization of outsourcing workforce.
The bargaining process between the labor and management could be improved by changing the existing system and abolishing irrational elements.
• Paying wages to a full-time unionist is an illegal action of the employer, however, the application of the new law is postponed for five years for those companies (the payment will be gradually reduced over the years and the reduced money used as a financial source for the union).
• The employer is not obligated to pay wages during the period of industrial action for the workers participating in the action, and it is not possible to engage in industrial action demanding wages for that period.
• The law prohibiting industrial action outside the business place was abolished and instead it is now prohibited to undertake industrial action in the major facilities for production etc. by obstructing the operation or entrance to those facilities or occupying them.

Union activities are in principle conducted outside working hours. It is not permitted to engage in union activities such as general meetings during working hours.In all cases, without exception, the behavior has to be in accordance to the collective agreement.

– Thus, it is only possible to engage in union activities during working hours, if the
collective agreement contains a clause referring to such action and permitting it.

If the industrial action was legal according the Trade Union and Labor Relations Adjustment Act, then the calculation of the main holidays, paid monthly leave, and paid annual leave will be based on the days the worker came to work according to the Labor Standards Act.
If the period of industrial action lasted a whole week, or entire month, or entire year, then the employer does not need to grant paid weekly leave, monthly leave or annual leave.