Several anti-business bills were presented to the National Assembly in 2015. As the National Assembly was unable to function properly due to a series of incidents such as the MERS outbreak and strong resistance from opposition parties, many labor-related bills remain pending.
The minimum wage per hour for 2016 has been set at KRW 6,030 and the Fair Hiring Procedure Act will apply to all workplaces with 100 employees or more. Meanwhile, a new bill stipulates that employees can be granted additional paid leave in the event that they are placed in quarantine or hospitalized due to contagious diseases such as MERS.
Starting from 2016, companies with 300 employees or more are required to extend their retirement age to 60 or above. Regarding the controversy over wage peak systems, it is advisable for companies to take advantage of the offered government subsidies, which have recently changed, when adjusting their employees’ wages or working hours.
Also, companies which hires 500 employees or more, or 300 female employees or more, but do not establish workplace childcare facilities must pay compelling compliance charges not exceeding KRW 100 million twice a year. In 2016, more companies are required to provide occupational safety and health training to their employees and, as emotional labor emerges as a social issue, work-related stress is likely to be recognized as an industrial illness.
Meanwhile, keen attention is needed on the five labor reform bills that cover working hour reduction, ordinary wage and fixed-term workers, etc. With a view of enhancing companies’ understanding of changes in labor laws and regulations in 2016, the KEF offers the following summary.
1. Individual Labor Relations
|
Feature |
Before Revision | After Revision |
Note |
|
Advance notice of dismissal to monthly-paid workers employed for less than six months |
Exceptions for advance notice of dismissal1. Daily workers employed for less than three consecutive months;2. Fixed-term workers employed for less than two months;3. Monthly-paid workers employed for less than six months;4. Seasonal workers employed for less than six months;
5. Probationary workers |
The Constitutional Court has ruled “Failing to give advance notice to monthly-paid workers employed for less than six months is unconstitutional” on 23 December 2015, so employers need to always give prior notice of dismissal. | Article 35 (3) of the Labor Standards Act became ineffective from 23 Dec. 2015 |
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Paid leave for workers who are quarantined/ hospitalized due to contagious disease |
– |
· When an employee is hospitalized or quarantined after contraction of an infectious disease, the employer should grant special paid leave. In the event that the government offers a subsidy for this leave, employers must grant the special leave.·During such special leaves, employers shall not treat the employee unfavorably or dismiss him/her. | Article 41 (2) of the Act on Prevention and Management of Contagious Disease(entering into force six months after itspromulgation)※ Passed the National Assembly on 9 Dec. 2015 |
|
Minimum wage |
KRW 5,580 per hour (US$ 4.63) | · Per hour: KRW 6,030 (US$ 5)· Per month (40-hour work week, 209-hour work month): KRW 1,260,270 (US$1,046) | Minimum wage announcement No. 2015-39(1 Jan. ~ 31 Dec. 2016) |
|
Fair hiring procedure |
‧Prohibits issuing false hiring advertisements‧The job offerer is obligated to return hiring documents* Fine for failure to do so: up to KRW 3 million‧Job seekers can request the return of their hiring documents after decision has been made on whether to hire them‧The cost of returning hiring documents shall in principle be borne by the job offerer
※ From 2015, for workplaces with 300 employees or more, and public institutions |
· From 2016, for workplaces with 100 employees or more· From 2017, for workplaces with 30 employees or more | Fair Hiring Procedure Act and Enforcement Decree(Enforcement date: 1 Jan. 2016) |
|
Raise the minimum reserve rate of defined benefit (DC) retirement pension plans |
70% |
80% ※ means the rate of ‘standard policy reserve’ to secure the ability to pay benefits |
Article 5 (1) 3 of the Enforcement Decree to the Employee Retirement Benefit Security Act(1 Jan. 2016~ 31 Dec. 2017) |
|
Additional reasons to allow beneficiary to offer his/her right to receive benefits as collateral (DB, DC) |
In the event a pension holder who does not own a house wishes to purchase a house, etc. | ‧ In the event a pension holder who does not own a house has paid a lump-sum housing lease deposit (jeonse) or security deposit for residential purposes‧ In the event a pension holder has borne university tuition, wedding expenses or funeral expenses for his/her spouse and/or other dependent family members, or borne university tuition or wedding expenses for him/herself | Articles 2 (1) 1-2, 4-2 have been added to the Enforcement Decree to the Employee Retirement Benefit Security Act(Enforcement date: 15 Dec. 2015) |
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Additional reasons to allow beneficiary to withdraw his/her reserve funds early (DB, IRP) |
– | In the event a pension holder who does not own a house has borne his/her own lump-sum housing lease deposit (jeonse) or security deposit for residential purposes | Articles 14 and 18 (2) of the Enforcement Decree to the Employee Retirement Benefit Security Act(Enforcement date: 15 Dec. 2015) |
|
Additional reasons to allow workers to request that their employer pay out their retirement benefit before retirement |
‧In the event a worker who does not own a house purchases a house; has dependent family members under medical care for 6 months or more; or other cases such as declaration of bankruptcy, commencement of debtor rehabilitation procedure, income loss due to implementation of a wage peak system, or natural disaster | [Additional reasons]‧In the event a worker’s wage is reduced through revision of an existing collective agreement or rules of employment in return for extending or guaranteeing the current retirement age·In the event an employer and worker agree to decrease working hours by 1 hour per day, or 5 hours per week, and also to continue the employment relationship for 3 months or longer. | Articles 3 (1) 6 and 3 (1) 6-2 added to the Enforcement Decree to the Employee Retirement Benefit Security Act(Enforcement date: 15 Dec. 2015) |
|
Raise the subscriber contribution limit under individual retirement pension scheme |
‧ KRW12 million per year | ‧ KRW18 million per year | Article17 of the Enforcement Decree to the Employee Retirement Benefit Security Act(Enforcement date: 15 Dec. 2015) |
2. Social Insurance & Employment Policy
| Feature | Before Revision | After Revision | Note |
| Mandatory retirement age of 60 + | – | In workplaces with 300 employees or more, and public institutions, the employer shall extend employee retirement age to 60 or above※ From 2017: workplaces with fewer than 300 employees and local governments institutions | Article 19 of the Act on Prohibition of Age Discrimination and Aged Employment Promotion(Enforcement date: 1 Jan. 2016) |
| Increased premium for National Health Insurance | In 2015, the insurance premium for employee health insurance was 6.07% of the worker’s monthly average wage (evenly shared by employer and employee) | In 2016, the insurance premium is 6.12% | Article 44 of the Enforcement Decree to the National Health Insurance Act(Enforcement date: 1 Jan. 2016) |
| Increased fines for failure to employ required ratio of disabled persons | · KRW 710,000 per person per month· Ratio of employees with disabilities to the number of such employees an employer is obligated to hire:1) 3/4 ~ (KRW 710,000)2) 1/2 ~3/4(KRW 781,000)3) 1/4 ~ 1/2 (KRW 852,000)
4) ~ 1/4 (KRW 923,000) 5) None (KRW 1,166,220) |
· KRW 757,000 per person per month· Ratio of employees with disabilities to the number of such employees an employer is obligated to hire:1) 3/4 ~ (KRW 757,000)2) 1/2 ~3/4(KRW 832,700)3) 1/4 ~ 1/2 (KRW 908,400)
4) ~ 1/4 (KRW 984,100) 5) None (KRW 1,260,270) |
Announcement by the MOEL (No. 2015-335)(1 Jan.~ 31 Dec. 2016) |
| Financial subsidy for senior worker wage reductions | – | If a workplace raises the retirement age to 60 or above, and the wages of a senior worker (aged 55 or older and working for 18 months or longer) is reduced to 90% or less of his/her peak salary (from a year earlier), a financial subsidy will be provided from the employment insurance fund (temporary support in force for 3 years until the end of 2018)* Details: government subsidy covers up to KRW 10.8 million per year | Article 28 (2) of the Enforcement Decree to the Employment Insurance Act(Enforcement Date: 4 Dec. 2015)Announcement by the MOEL (No. 2015-85) |
| Financial subsidy for reduction of senior worker working hours | – | If the contractual working hours of senior workers who have been employed continuously for at least 18 months are reduced to 32 hours or less a week, both employer and employee will receive subsidies from the employment insurance fund for a maximum of 2 years.* Details:(Employee) a subsidy of up to KRW 10.8 million per year is provided to cover 50% of the wages reduced by the shorter working hours
(Employer) a subsidy of KRW 300,000 per employee whose working hours are reduced
|
Article 28 (3) of the Enforcement Decree to the Employment Insurance Act(Enforcement Date: 4 Dec. 2015)Announcement by the MOEL (No. 2015-85) |
| Financial subsidy for work-life balance | – | A subsidy of KRW 200,000~300,000 is provided for a maximum of one year for each worker with flexible working schedules or telecommuting schemes.However, if a worker is eligible to receive subsidies for working hour reduction, substitute workers, etc., the employer may choose only one subsidy.
* Details such as amount of subsidy or criteria have not yet been decided.
|
Article 35 (7) of the Enforcement Decree to the Employment Insurance Act(Enforcement date: 1 Jan. 2016) |
| Maternity protection:
Reduced working hours |
When a worker pregnant for 12 weeks or less, or 36 weeks or more requests shorter working hours (by 2 hours a day), the employer shall grant this reduction without cutting her wagesFor workplaces with 300 employees or more from 25 Sep. 2014 | For workplaces with 5 employees or more | Article 74 (7) of the Labor Standards Act & Article 1 of the Addenda(Enforcement date: 25 March 2016) |
| Fine:Workplace childcare facilities | – | For workplaces (with 500 employees or more, or 300 female employees or more) failing to establish workplace childcare facilities, compelling compliance charges of up to KRW 100 million shall be imposed twice a year* Amount of charge: Number of eligible children × 0.65 × Monthly government subsidy per child × 6 months | Article 44 (2) & (3) of the Infant Care Act(Enforcement date: 1 Jan. 2016)Article 25 (2) of the Enforcement Decree to the Infant Care Act(Enforcement date: 1 Jan. 2016) |
| Strengthened requirement for government support of a joint workplace childcare facility | The level of support can be set higher for the joint childcare facility which is operated by the employers’ organization in which the number of preferentially supported enterprises is 1/2 or more* Same amount of support as the preferentially supported enterprises | Requirements and conditions have been strengthened for support of employers’ organizations.* The number of children belonging to employees of the preferentially supported enterprises shall be 1/2 or more of the total children in the joint childcare facility | Article 38 (4) of the Enforcement Decree to the Employment Insurance Act(Enforcement date: 1 Jan. 2016) |
| Benefits (equal to 100% of wage) for 2nd childcare leave for1 month à 3 months | If a parent takes childcare leave successively for the same child, the amount of childcare leave benefit for the first one-month of the insured person who takes the second childcare leave shall be 100% of his/her monthly ordinary wage. In such cases, the maximum amount shall be KRW 1.5 million. | Childcare leave benefits (100% of ordinary wage) will be provided for 3 months, to a maximum KRW 1.5 million per month.* After 3 months, 40% of the worker’s ordinary wage (maximum KRW 1 million) will be paid | Article 95 (2) of the Enforcement Decree to the Employment Insurance Act(Enforcement date: 1 Jan. 2016) |
3. Occupational Safety & Health and Industrial Accident Insurance
※ Subordinate statutes which passed the Regulatory Reform Committee under the Office for Government Policy Coordination are likely to be enacted in the future. The statutes are marked as ‘To Come into Effect.’
| Feature | Before Revision | After Revision | Note |
| Businesses requiring provision of health and safety education | ‧Wholesale and retail businesses, lodging and restaurant businesses with fewer than 50 employees are exempt from the requirement to provide health and safety education. | ‧Employers of wholesale and retail businesses, lodging and restaurant businesses with fewer than 50 employees shall provide health and safety education※ Required hours for education is 50% less than the current requirement. This provision will be reexamined in 3 years (sunset provision) | ‧Addendum 1 of the Enforcement Decree to the Occupational Safety and Health Act (Effective from 2016)* Passed Regulatory Reform Committee (11 December 2015) |
| Appointment of safety managers in construction workplaces | ‧Construction workplaces with construction work valued less than 12 billion KRW are exempt from the requirement to appoint a safety manager | ‧Workplaces subject to submission of plans for risk and hazard prevention (with construction work valued at more than KRW 5 billion and less than KRW 12 billion) shall appoint a safety manager | ‧Addendum 3 of the Enforcement Decree to the Occupational Safety and Health Act (Effective from 2016)* Passed Regulatory Reform Committee (11 December 2015) |
| Harmful or dangerous machinery subject to safety inspections | ‧12 types of machinery such as presses and shearing machines are subject to safety inspections by a designated safety inspection institution | ‧Mobile cranes* and aerial work platforms** are also subject to safety inspections* Cranes covered by the Construction Machinery Act are no longer subject
** Mounted on a vehicle |
‧Article 28 (6) of the Enforcement Decree to the Occupational Safety and Health Act (Effective from 2016)* Passed Regulatory Reform Committee (11 December 2015) |
| Submission of process safety reports | ‧Workplaces which scored ‘P’ (the highest score) for their reports are exempt from safety management assessments until the next report deadline (4 years). | ‧If employers and workers in a workplace receiving a ‘P’ score do not observe the major part of their report, the government may reassess and give a different score. | ‧Article 130 (7) of the Enforcement Regulation to the Occupational Safety and Health Act (Effective from 2016)* Under screening by the Ministry of Government Legislation (Dec. 28) |
| Adding of content related to industrial accident compensation insurance in health and safety education | – | ‧Content related to industrial accident compensation insurance to be added to periodic health and safety education for employees | ‧Addendum 8 (2) of the Enforcement Regulation to the Occupational Safety and Health Act (Effective from 2016)* Under screening by the Ministry of Government Legislation (Dec. 28) |
| Clearly define ‘night work’ where workers are subject to special health examinations | ‧‘Night work’ which entitles a worker to special health examinations defined as ‘work done between 10 pm and 6 am of the next day, at least 4 times per month, within 6 months.’ | ‧Definition changed to ‘work done for 8 consecutive hours at least 4 times per month, within 6 months (at least 5 hours done between 10 pm and 6 am of the next day, and 5 hours must be done between 12 am and 5 am)’ | ‧Addendum 12 (2) of the Enforcement Regulation to the Occupational Safety and Health Act (Effective from 2016)* Under screening by the Ministry of Government Legislation (Dec. 28) |
| Investigation of harm and hazard from new chemicals | ‧Those intending to manufacture or import new chemicals shall submit 3 toxicity test results to the Minister of Employment & Labor regardless of the amount to be manufactured or imported.‧The MOEL shall prepare measures against the harms and hazards associated with the new chemical(s) and notify employers within 45 days from the date the employer submitted the toxicity reports | ‧If the new substance to be manufactured or imported is less than 1 ton, employers are not required to submit reverse mutation test results or micronucleus test (animal test) results.‧The MOEL shall prepare measures against the harms and hazards associated with the new chemical(s) and notify employers within 30 days (14 days if the amount of the substance to be manufactured or imported is less than 1 ton) | ‧Article 86 of the Enforcement Regulation to the Occupational Safety and Health ActAddendum 11
(4) is new (Effective from 2016) * Under screening by the Ministry of Government Legislation (Dec. 28) |
| Date for paying average wages to persons with noise-induced hearing loss | ‧From the date on which the worker has stopped engaging in work involving exposure to noise | ‧The date of issuance of the medical certificate or medical opinion issued once it is confirmed that the hearing damage is an occupational illness and the worker is eligible for insurance benefits | ‧Article 25(3) of the Enforcement Decree to the Industrial Accident Compensation Insurance Act (Effective from2016)
* Under screening by the Ministry of Government Legislation (Dec. 28) |
| Expansion of the scope of persons in special types of employment | ‧Insurance salespersons, owner-drivers of ready-mix concrete trucks, those falling into the sub-class of learning-aid tutors, golf caddies, door-to-door delivery workers and delivery workers not elsewhere classified (with exclusive contracts) | ‧Loan representatives, credit card sales representatives, designated drivers (with exclusive contracts) | ‧Article 125 of the Enforcement Decree to the Industrial Accident Compensation Insurance Act (Effective from 1 July 2016)* Under screening by the Ministry of Government Legislation (Dec. 28) |
| Additional criteria for recognition of work-related illnesses | – | ‧ Adjustment disorder and depressive episodes from an incident related to work that can result in psychological trauma, such as violence or abusive language from customers | ‧Addendum 3 of the Enforcement Decree to the Industrial Accident Compensation Insurance Act (Effective from 1 July 2016)* Under screening by the Ministry of Government Legislation (Dec. 28) |