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Newsletter | November 2015, Issue 3
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LABOR & EMPLOYMENT
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A Step Forward for the Korean Labor Market – Presidential Advisory Commission Agrees on 5 Key Labor Issues
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On September 15, 2015, after one year of deliberations, the Economic and Social Development Commission (the "ESDC") came to an agreement on 5 key issues relating to labor policies.
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As a presidential advisory body, the ESDC is comprised of Korean labor and business groups, government representatives, and subject matter experts. It is in charge of advising the President on key labor-related policies.
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The 5 key items included in the agreement are:
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| 1) |
Establish government guidelines on the requirements to change the rules of employment;
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Establish government guidelines on general dismissals;
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| 3) |
Expand youth employment;
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| 4) |
Employment security and regulatory reform for fixed-term/dispatched workers; and
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| 5) |
Improve the system by providing exemptions to certain workplaces from the working hour requirements (e.g., workplaces with less than 5 employees).
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Among these 5 items, it is particularly significant that the labor union representatives agreed to establish government guidelines on the changes to the rules of employment, and to the rules on general dismissals.
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Guideline on the Requirements to Change Rules of Employment
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As long as certain requirements are met, this guideline is expected to permit disadvantageous changes to the rules of employment without the need to obtain consent of a majority of the union, or a majority of the employees.
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This will likely have a direct impact on the legislation that stipulates age 60 as the minimum retirement age, and also directly impact the introduction of the accompanying wage peak system, which will go into effect starting in 2016.
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Guideline Regarding General Dismissals
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We expect the guidelines to focus on the requirements for dismissals based on poor performance and the like (rather than disciplinary dismissals and layoffs based on business reasons).
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We expect that the guidelines will relax the current stringent requirements for dismissal.
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Many view this agreement as a major step forward for the Korean labor market, which has long been criticized for being too rigid. Now, the road ahead is clearer, as we wait to see the government’s legislative proposal, and the National Assembly passing the new Labor Standard Act and other legislation.
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