As the opposition parties won a majority of the seats for the 20th National Assembly and the Environmental & Labor Committee (ELC), many bills were proposed in 2016 that lay greater burdens on companies. Many of these bills are still pending at the National Assembly since most attention was on the investigation of the presidential administration and political chaos.
The minimum wage per hour for 2017 has been set at KRW 6,470. The Fair Hiring Procedure Act will apply to all workplaces with 30 employees or more, and companies should be fully aware of the changes. Also, a bill has passed to punish employers who dismissed or disadvantaged workers, on the ground of applying for industrial accident insurance benefits.
Extension of statutory retirement age to 60 now applies to all workplaces, with companies employing fewer than 300 workers added in 2017. Now is the critical time to introduce wage peak systems and wage systems based on job and performance in order to ease the burden of the statutory extension of retirement age, to create a fairer labor market, and enhance company competitiveness. Companies need to pay attention and give adequate responses as the scope of jobs where the primary contractor is primarily responsible for safety and health measures has expanded, and fire inspectors become mandatory in workplaces where fire hazards exist.
Meanwhile, keen attention is needed on the labor reform bills that cover working hour reductions and ordinary wage, etc. With a view to enhancing companies’ understanding of these changes and readying responses to labor laws and regulations in 2017, the KEF has created the following summary by sector.
1. Individual Labor Relations
|
Feature |
Before Revision |
After Revision |
|
Statutory retirement age to 60 |
· Statutory retirement age to 60
※ In workplaces with 300 employees or more, and public institutions (Enforcement date: 1 Jan. 2016) |
· Statutory retirement age to 60
※ In workplaces with fewer than 300 employees and local government institutions (Enforcement date: 1 Jan. 2017) |
|
Minimum wage |
· Per hour: KRW 6,030 (USD 5) | · Per hour: KRW 6,470 (USD 5.56)
* Per month (40 hours/week, 209 hours/ month including 8 hours of paid leave/week): KRW 1,352,230 (USD 1,162) |
|
Fair Hiring Procedure Act |
‧ Prohibits issuing false hiring advertisements
‧ The job offerer is obligated to return hiring documents and inform job seekers of this * Fine up to KRW 3 million ‧ Job seekers can request the return of their hiring documents after a hiring decision has been made ‧ The cost of returning hiring documents shall in principle be borne by the job offerer |
· The Act applies to workplaces with 30 or more workers
※ Enforcement date: 1 Jan. 2017 |
|
Prohibition against disadvantaging workers who apply for industrial accident insurance benefits |
– | ‧ Employers are prohibited from disadvantaging workers who apply for industrial accident insurance benefits, such as by dismissing them
* Violations shall be punished by imprisonment of up to 12 years, or a fine not exceeding KRW 20 million (USD 17,150) |
2. Social Insurance & Employment Policy
|
Feature |
Before Revision |
After Revision |
|
Raise mandatory employment rate of persons with disabilities |
· Mandatory rate for private companies (50+ employees): 2.7%
· Mandatory rate for public institutions(50+ employees): 3.0% |
· Mandatory rate for private companies (50+ employees): 2.9% (2017~18) → 3.1% (2019)
· Mandatory rate for public institutions (50+ employees): 3.2% (2017~18) → 3.4% (2019) |
|
Raise maximum amount of maternity leave benefit for pre-and post-natal care/miscarriage/still birth |
· Maternity leaves benefits for pre- and post-natal care/ miscarriage/ stillbirth paid for from the employment insurance fund
– Maximum mount: KRW 1.35 million (approx. USD 1,160) / month – Minimum amount: If hourly ordinary wage of the worker is lower than the minimum wage, maternity leave benefits are calculated using the hourly minimum wage as the hourly ordinary wage of the worker |
· Maximum amount will be announced by the Ministry of Employment & Labor every year in consideration of average ordinary wage of benefit recipients, inflation rate, minimum wage, etc. |
|
Strengthen employment stability subsidy for childbirth and childcare for SME employees |
· Subsidy for childcare leave – Enterprises eligible for preferential support*: KRW 200,000 (approx. USD 170) per month – Large-sized enterprises with fewer than 1,000 employees*: KRW 100,000 (approx. USD 85) per month – Large-sized enterprises with 1000 employees or more: KRW 50,000 (approx. USD 43) per month · Subsidy for shorter working hours in childcare period – Enterprises eligible for preferential support: KRW 300,000 (approx. USD 257) per month – Other large-sized enterprises: KRW 200,000 (approx. USD 171) per month * Enterprises eligible for preferential support: workplaces in the mining industry with 300 employees or fewer; workplaces in the manufacturing industry with 500 employees or fewer; workplaces in the construction industry with 300 employees or fewer; workplaces in the transportationㆍ warehousingㆍtelecommunication service industry with 300 employees or fewer; and workplaces in other industries with 100 employees or fewer * Large-sized enterprises: enterprises which are ineligible for preferential support |
· Subsidy for childcare leave
– Enterprises eligible for preferential support: KRW 300,000 (approx. USD 257) per month – Large-sized enterprises: No subsidy
· Subsidy for shorter working hours in childcare period – Enterprises eligible for preferential support: KRW 200,000 (approx. USD 170) per month – Large-sized enterprises: KRW 100,000 (approx. USD 85) per month |
3. Occupational Safety & Health and Industrial Accident Insurance
|
Feature |
Before Revision |
After Revision |
|
Contractors’ obligation to provide safety and health information to their subcontractors |
· Persons who contract out work that is harmful or hazardous to safety and health, such as remodeling, equipment disassembly or work inside equipment that manufactures, uses, transports or stores chemicals or preparations containing chemicals shall provide information on safety and health to workers of the contractor which carries out the relevant work | · Contractors shall provide safety and health information to their subcontractors for work involving demolishing, dismantling, disassembly or remodeling of chemical facilities |
|
Training on safety and health |
· New |
· Hours of safety training on toxic chemical management which are required under the Toxic Chemicals Control Act (at least two hours once a year) would be recognized as mandatory safety and health training under the Occupational Safety & Health Act |
|
Assigning a fire safety manager to workplaces where high risk of massive fire exists |
· New |
· Fire safety manager to be assigned at workplaces where high risk exists of a massive fire due to work using open flame, such as wielding or fusing etc. |
4. Bills pending at the National Assembly
|
Feature |
Before Revision |
After Revision |
|
Clarifying the scope of ordinary wage |
‧ The definition of ordinary wage is stipulated in the Enforcement Decree to the Labor Standards Act | ‧ The definition of ordinary wage is stipulated in the Labor Standards Act |
|
Shorter working hours |
· New |
· Hours worked on holidays shall be counted as extended work; this will be implemented gradually according to workplace size
· Additional extended work will be allowed for up to 8 hours per week, if union and management agree. · Holiday work pay rate: 50% for working 8 hours or longer on holidays / 100% for working less than 8 hours on holidays |
|
Scope of businesses exempt from working hour limitations |
· 26 categories |
· 10 categories |
|
Stricter regulations on dismissal for managerial reasons |
· Criteria for managerial dismissal stipulated in Article 24 of the Labor Standards Act
: Urgent managerial need : Fair process to select employees for dismissal : Sincere consultation with employee representatives : Efforts to avoid dismissal |
· Strengthen regulations on dismissal for managerial reasons and expand employer obligation to re-employ the dismissed employees
· Only seriously urgent needs such as impending bankruptcy will be considered justifiable reason to dismiss employees; employers shall be more active in avoiding dismissal such as by selling assets or suspending work in turn |
|
Extended employment insurance to cover those in special types of employment |
· Those in special types of employment with a business license issued within 1 year are allowed to subscribe to the employment insurance scheme | · Six special types of employee considered to work exclusively for a certain company (e.g. insurance sales agent) must subscribe to the employment insurance scheme
· Employment insurance premiums shall be paid in equal with the employer · Insurance premiums are calculated according to the insured’s remuneration · Those insured for at least one year in a 24 month period are eligible for insurance benefits · Scope of ineligibility to be stipulated based on income level |