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The Ministry of Employment & Labor’s Change of Administrative Interpretation Concerning Annual Paid Leave As announced in the press release dated December 16, 2021, the Ministry of Employment and Labor (the “MOEL”) recently revised its administrative interpretation of Article 60 (1) of the Labor Standards Act (the “LSA”) concerning 15 days of paid annual leave granted to an employee who has recorded at least 80% attendance in a given year. MOEL’s Administrative Interpretation [Before Change] Where an employee has been employed for one year, with the attendance rate of at least 80%, and leaves the company immediately thereafter (i.e., have been employed for 365 days), although the employee may not be able to use annual leave, he/she may claim allowance for 15 days of unused annual leave. [After Change] Even though an employee has been employed for one year with the attendance rate of at least 80%, the employee may claim allowance for unused annual leave upon resignation only when he/she is still employed on the following day of the completion of the one year of employment. Although the change in the MOEL’s position with respect to paid annual leave seems to be in line with the Supreme Court’s decision No. 2021Da227100 rendered on October 14, 2021, it is meaningful in that the MOEL has also expressed its stance on the following issues, which were not expressly covered by the aforesaid Court’s decision: Even a regular employee may not claim allowance for 15 days’ annual leave accrued for one year of service with the attendance rate of at least 80% if he/she resigns immediately upon completion of one year of service; instead, the employee may request such compensation in full only if he/she resigns after the employment continues the next day. For paid annual leave accrued at the rate of one day for each completed month of continuous service with respect to an employee who has worked less than one year, the employee may claim allowance for accrued unused annual leave for services performed in the preceding month only if he/she leaves the company after his/her employment continues on the following day of the completion of such one month’s service. If a regular employee resigns upon completion of one full year of service in his/her last year of employment (e.g. resigns after completing two full years of service, etc.), the employee may not claim monetary compensation for paid annual leave accrued for such one full year’s service, even if he/she has recorded at least 80% attendance. Employers may encounter the following concerns when applying the revised interpretation of the MOEL: Applicability to workplaces where annual leave is calculated based on the company’s fiscal year: In principle, paid annual leave should be calculated on the basis of each employee’s work commencement date, but for businesses where annual leave has been calculated uniformly based on a fiscal year for administrative convenience, it would be reasonable to recalculate annual leave days granted to a resigning employee based on the attendance rate during his/her continued service period as calculated from the actual date of commencement of work. Amendment of the Rules of Employment: If provisions concerning annual leave under the Rules of Employment (ROE) merely refer to, or confirm, the applicable provisions under the LSA, the revised administrative interpretation may apply without amending the ROE. However, if such provisions under the ROE might be interpreted differently, it may be necessary to review whether any such amendment may constitute a disadvantageous change in the ROE. When to apply the revised administrative interpretation: As the MOEL’s change of its administrative interpretation is a change in the MOEL’s opinion or its internal case handling standards—and not any change of law—it is expected that the revised administrative interpretation may apply to any cases before, as well as after, December 16, 2021 (when the relevant press release was announced). Return of compensation received for unused annual leave: Regarding any allowances for unused annual leave already paid according to the MOEL’s former administrative interpretation, unless there are special circumstances, the company would be able to request the return of the payment upon consultation with the employee concerned or file a civil claim for return of unjust enrichment. [Korean version]
2022.01.06

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New Year HR Newsletter: Updates on Important HR/Labor Law Amendments in 2022 The following are our updates on important HR/labor law amendments that will be pertinent to companies in 2022. 1. Serious Accidents Punishment Act (“SAPA”) to go into effect on January 22, 2022 for businesses with 50 or more employees SAPA seeks to secure the safety and health of workers in the workplace or the general public by holding the top decision maker of the business accountable for “serious accidents.” The responsibilities of employers and responsible management personnel under the SAPA include establishing a safety and health management system that covers workforce and budgetary issues, implementing necessary plans to prevent recurrence of serious accidents, and taking necessary measures to ensure compliance with relevant safety and health-related laws. 2. Substitute Holidays Expanded With the enactment of the Public Holidays Act, starting January 2022, employers must grant the next business day as a substitute holiday in cases where a national holiday (Independence Movement Day (March 1), Independence Day (August 15), National Foundation Day (October 3) and Hangul Proclamation Day (October 9)) or Children's Day (May 5) falls on a Saturday or Sunday. The substitute holidays must be treated as paid holidays. However, substitute holidays will not be granted for New Year’s Day (January 1), Buddha’s Birthday (April 8 in the lunar calendar), Memorial Day (June 6) and Christmas (December 25), even if such public holidays fall on Saturday or Sunday. 3. Employees can now seek relief at the Labor Relations Commission for gender discrimination and sexual harassment Starting May 19, 2022, if an employer displays sexual discrimination in recruitment, hiring, wages, educational opportunities, promotions, or retirement policies, fails to appropriately address the concerns of a victim of sexual harassment, or terminates the employment of or otherwise penalizes a victim who reports sexual harassment, the victim may seek remedy through the Labor Relations Commission. This change opens up the possibility for the Labor Relations Commission to issue corrective orders to an employer (which may include ordering the employer to cease such discriminatory acts, amend its working terms and conditions under the rules of employment or collective bargaining agreement, or pay out appropriate compensation (of up to three (3) times the amount of damages)). Failure to comply with a finalized corrective order without justifiable grounds may result in an administrative fine of up to KRW 100 million. 4. Support system for employees returning to work after an industrial accident From January 1, 2022, the Korea Workers' Compensation and Welfare Service can request an employer to set up a support system for victims of industrial accidents who are returning to work. This support system will be geared towards employees who require long-term medical care after an industrial accident or those who are expected to have a disability after medical care. 5. The minimum hourly wage is KRW 9,160 in 2022 The minimum hourly wage in 2022 is KRW 9,160, which is a 5.05% increase from the 2021 minimum hourly wage of KRW 8,720. Regular bonuses exceeding 10% of the 2022 minimum hourly wage calculated on a monthly basis (KRW 1,914,440 based on a 209-hour work month) will be included in the calculation of minimum wage. Cash welfare benefits in excess of 2% of such monthly minimum wage will be included in the calculation of minimum wage as well. The scope of items to be included in the calculation of minimum wage will continue to be expanded through 2024. In addition, the following are key changes to HR and labor laws that took effect in the second half of 2021: 1. Duty to provide written wage statements (Effective as of November 19, 2021) Employers must issue written wage statements that lay out the total wage, the amounts of each wage item (including how each item is calculated if its amount varies depending on the number of days and hours worked), the number of overtime, nighttime or holiday work hours, and details of any deduction of wages. This written wage statement may be issued electronically. The exact number of overtime hours worked, as well as how the relevant wage was calculated, should be included in the wage statement. 2. Expanded authority of the Labor Relations Commission (Effective as of November 19, 2021) The Labor Relations Commission can now issue a remedy order even for an employee whose fixed-term employment has expired or who has reached retirement age. Accordingly, even in cases where it is not possible for the company to reinstate the employee to his/her former position due to expiry of the contract term or reaching statutory retirement age, the LRC may issue a remedy order requiring the employer to make payment for backpay for the period of dismissal if the dismissal is found to be wrongful. The upper limit of the penalty for noncompliance with the LRC’s remedy order, which was KRW 20 million for each instance of noncompliance (which can be levied up to 4 times in total), has now been increased to KRW 30 million (with no change to the frequency). 3. Adjustment of work start/finish times for pregnant employees (Effective as of November 19, 2021) The start and finish times of work for a pregnant employee must be adjusted upon her request as long as the employee continues to work her prescribed daily working hours. 4. Stronger workplace harassment rules (Effective as of October 14, 2021) Prior to this amendment, an employer that received a report or became aware of harassment in the workplace was obligated to promptly conduct an investigation and take appropriate measures but could not be penalized for failure to comply with these obligations. From October 14, 2021, if an employer or certain members of his/her family engages in workplace harassment, an administrative fine not exceeding KRW 10 million may be imposed. In addition to the obligation to conduct a prompt investigation and take necessary measures, the amendment also imposes a confidentiality obligation on parties involved in the workplace harassment investigation. Violation of these obligations may result in an administrative fine of up to KRW 5 million. 5. Childcare leave during pregnancy available (Effective as of November 19, 2021) Previously, childcare leave was available for male or female employee with a child under the age of 8 or in the second grade of elementary school or below. From November 19, 2021, however, childcare leave has become available for pregnant female employees as well. The overall period of childcare leave may not exceed one year and childcare leave can be split up to two times, the same as before. However, childcare leave during pregnancy will not be deducted from the allowed number of split uses. 6. Amendment to the Occupational Safety and Health Act to enhance protection of employee health (Effective as of October 14, 2021) Previously, the obligation to take measures to protect workers from verbal abuse from customers was stipulated only for those who employ customer service workers. Starting October 14, 2021, all employers have an obligation to take necessary measures, such as temporary suspension, reassignment of work, or extension of the recess period, to protect workers who are exposed to verbal abuse from third parties such as customers if a health issue arises or is highly likely to arise. [Korean version]
2021.12.28

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Kim & Chang Legal Newsletter (2021 Issue 4) This is a quaterly update of legal developments in Korea from Kim & Chang. This issue includes: FSC Draws a Blueprint on the Future of Banking Business Administrative Notice of Proposed Guidelines for Review of Information Exchange Cartel Government’s Commitment to Carbon Neutrality - Carbon Neutrality Framework Act, 2030 NDC, and Carbon Neutrality Scenarios Implementation of Criminal Leniency Program for Cartel Cases and Strategic Considerations Legislative Trends in Corporate Governance, Including Strengthened Disclosure Requirements under the FSCMA and FTL Fractional Share Trading to be Allowed in Korea Regulation on Online Financial Platform Services New Financial Action Task Force Guidance Released on Virtual Assets and Virtual Asset Service Providers New Amendment to Specify Unfair Uses of Data and Publicity Rights under the UCPA En Banc Supreme Court Holds that Posting Links to Copyright Infringing Content Can Be Criminal Violation Settlement Made Between the US and EU on Section 232 Tariffs on Steel and Aluminum The Supreme Court’s Decision on the Number of Paid Annual Leave Days Granted to One-Year Fixed-Term Employees Trends in Enactment and Amendments of Laws Regarding Promotion of Data Industry and Easing of Regulations on Location Information and Game Industry To view the newsletter, please click the link below. Kim & Chang Legal Newsletter (2021 Issue 4) .content_view .view_area a { color: #2c3e50; text-decoration: none; }
2021.12.22

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Key Issues Related to NFT (1) - The Legal Nature of NFTs and Key Issues for Each Party Involved in the NFT Lifecycle Recently, business areas relating to NFTs (Non-Fungible Token) are rapidly and limitlessly expanding in Korea, to encompass music, fine arts, games, sports, entertainment and metaverse. The core characteristics of NFTs, which are non-substitutable tokens, is the fact that it is ‘non-fungible’ because a unique ID (token ID) is given using blockchain technology, and for this reason, it is easier to prove the ‘originality’ of the underlying assets associated with an NFT. In addition, when NFT is used, it is possible to record the owner information and transaction details of a particular NFT on a blockchain that is relatively difficult to forge or fabricate. As NFTs linked to various types of tangible or non-tangible underlying assets are minted (issuance) and distributed all over the world, it gives rise to financial services related to NFTs as well. Governmental authorities of many countries are currently reviewing how NFTs, which draw a large public attention like the case of virtual assets, should be regulated, and there are a number of studies currently being conducted in Korea regarding the necessity and direction of the regulations of NFTs. In light of such recent development and progress, we would like to discuss in four parts key legal issues that need to be considered in relation to any NFT-related project. We will cover the legal nature of NFT and key issues for each party involved in the NFT lifecycle in Part 1. From Part 2 to Part 4, we will focus on legal issues related to intellectual property rights, game industry, and tax. Please refer to the attachment for further details. [Attachment] Key Issues Related to NFT (1) .content_view .view_area a { text-decoration: none; color: #2c3e50; } [Korean version]
2021.12.16

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Checklist of Key Items for Companies Preparing for the Enforcement of the Serious Accidents Punishment Act January 27, 2022 is the date when the Serious Accidents Punishment Act (the “SAPA”) will go into effect for companies with 50 or more employees. Under the SAPA, if a serious accident occurs on or after January 27, 2022 and further if the safety and health management system of the company concerned is either not established or not fully effective to secure safety and health, then criminal punishment will be imposed on the responsible management personnel of the company, as defined by the SAPA (“RMP”), who is the final decision-maker with the authority and responsibility over the company’s safety and health matters (including sign-off authority over budget and personnel). In this regard, fulfillment of the SAPA duties to secure safety and health has become a top priority task for companies subject to the SAPA. With the SAPA enforcement date approximately one month from now, many companies are checking the status of their compliance, with focus on whether (i) establishment of safety and health management system and (ii) preparation of relevant internal company regulations, among other things, are being addressed in order to fulfill the RMP’s duties under the SAPA to secure safety and health. During the early stages of the enforcement of the SAPA, it is anticipated that the Ministry of Employment and Labor and the Prosecutors’ Office will engage in robust enforcement of the SAPA. To properly manage risk exposure under the SAPA, we are of the view that companies should (i) make their best efforts to prevent accidents and maintain safe workplace and (ii) be prepared to show that ? in case a serious accident were to occur ? they have established and operated a safety and health management system which can prevent accidents in accordance with the goals of the SAPA. In this newsletter, we set forth below a checklist of key items for companies to consider as they prepare their SAPA compliance programs. Overview of SAPA Duties To begin with, the SAPA duties are placed on the RMP. The RMP must take the following measures to secure safety and health: Establishing and implementing a safety and health management system, including personnel and budget necessary to prevent accidents; (In the event of an accident) establishing and implementing measures to prevent the recurrence of the accident; Implementing improvement or corrective orders issued by a central administrative agency or a local government under the relevant statutes; and Taking managerial measures necessary to perform obligations under safety and health laws and regulations. Building Safety and Health Management Systems The outcome of the SAPA enforcement by the governmental authorities after January 27, 2022 will provide more clarity on the scope and substance of the SAPA duties mentioned above. That being said, at this juncture, it would be prudent for each company to design, establish and implement safety and health management systems that are tailored to the company’s specific facts and circumstances, including the company’s business activities, organizational structure, size and type of industry, among other things, combined with interpretation of the SAPA and its subordinate regulations to determine what would be required of the company. KEY ACTION ITEMS 1) Clearly designate the RMP It is important to clearly designate who the RMP is for SAPA compliance. This may be especially relevant for multinational companies doing business in Korea, many of whom maintain a matrix organization (with involvement in EHS matters by the headquarters or regional offices) for the following reasons: With a clear designation of the RMP, the governmental investigation of a SAPA case will likely be more streamlined and will likely avoid reaching out to the headquarters or the regional office. The SAPA duties are imposed on the RMP. Accordingly, having a clear designation of the RMP will assist with allocation of role and responsibility and ? more importantly ?accountability within the company and help contribute to the fulfillment of the SAPA duties by the RMP. 2) Set and Implement Goals and Policies The first step towards establishing a compliant safety and health management system is to set and implement specific goals and management policies that can be achieved for continuous improvement of safety and health. Since it is important for the employees to be aligned with such goals and policies, the companies need to collect the opinions of the employees when setting goals and policies and share the details thereof with the employees. 3) Identify Risk Factors and Take Response Measures If a company fails to (i) identify hazards and risk factors and take necessary remediation measures, (ii) put necessary resources to work (e.g., budget, people, equipment) to secure safety and health or (iii) set up plans to prevent recurrence of accident if such accident occurs, then a causal linkage could be established between a serious accident ? if such accident happens ? and a violation of the SAPA. Accordingly, it would be prudent for the companies to consider taking the following measures: Analyze potential hazards and risk factors in the workplace and take appropriate measures (such as removing, replacing, and controlling such hazards and risk factors); Take measures to establish safety and health management system, such as providing support in terms of necessary budget, personnel, and facilities, etc.; Conduct periodic check as to whether safety and health measures are being performed in accordance with the prescribed procedures; Take remediation measures if any deficiencies are found, and (In case of any accident) identify the root causes thereof and establish measures to prevent recurrence. 4) Commit Organizational Resources Companies meeting certain employee headcount thresholds under the SAPA need to (i) set up a dedicated organization separate from the existing safety and health organization to manage compliance with the SAPA duties and (ii) ensure that they effectively fulfil their obligations under safety and health laws and regulations, which have been identified through the analysis of hazards and risk factors, including the Occupational Safety and Health Act. It is also important to establish an appropriate safety and health management system under the Occupational Safety and Health Act in consideration of the SAPA and to support the persons in (general) charge of safety and health management, supervisors, safety officers, health officers, etc. so that they can faithfully perform their duties with sufficient authority and responsibility under such system. 5) Safety and Health of Third Party Workers The SAPA duties encompass not only a company’s employees, but can also the safety and health of the employees of a third party if such third party provides services to the company under outsourcing, subcontracting or delegation arrangements. Accordingly, companies should pay close attention when designing their safety and health management systems so that they account for the safety and health of third party workers, including safety and health inspections, obtaining views regarding safety and health matters from such third party workers, and carrying out remediation measures where deficiencies are identified. [Korean version]
2021.12.23

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