INSIGHTS
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Newsletters VIEW MORENewslettersMajor Amendments to Three Data Privacy Laws: Implications On January 9, 2020, the National Assembly passed the amendments to Korea's three main data privacy laws—the Personal Information Protection Act ("PIPA"), the Act on the Promotion of the Use of the Information Network and Information Protection (the "Network Act"), and the Credit Information Use and Protection Act (the "Credit Information Act"). The amendments will become effective six months from the promulgation by the President, except for certain provisions in the Credit Information Act, which will come into effect in one to one and a half year after the promulgation, to be specified in the Presidential Decree. The amendments (i) clearly distinguish among personal data, pseudonymized data and anonymized data, and enact detailed provisions on the processing of pseudonymized data; (ii) transform the Personal Information Protection Commission ("PIPC") into the central data privacy regulatory authority; (iii) transfer to the PIPA all privacy provisions in the previous Network Act relating to online service providers; and (iv) clarify that the Credit Information Act, which used to apply mostly to the financial institutions, now also apply to all commercial companies and grant the PIPC with the authority to request information, to investigate, to conduct on-site investigations, and to impose corrective orders and administrative fines for the purpose of enforcing the Credit Information Act. In view of these wide-ranging changes, it is recommended that companies review the amendments and determine whether any changes to their privacy and data protection framework will be necessary. Please see the attachment for a summary of the key changes introduced by the amendments and how the new application of the Credit Information Act will differ from the application of the PIPA.2020.01.10
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Newsletters VIEW MORENewslettersKFTC Releases Model Distribution Agreements for Pharmaceuticals/Automotive Retail/Auto Parts Industries On December 26, 2019, the Korea Fair Trade Commission ("KFTC") released Model Distribution Agreements for transactions between suppliers and distributors in the pharmaceuticals, automotive retail and auto parts industries ("Model Agreements"). While suppliers are not legally bound to adopt these Model Agreements, the KFTC has highly recommended their adoption, and they serve as guidance as to what the KFTC considers to be "fair industry practice." We believe that the Model Agreements should be taken into consideration when amending, renewing or entering into new agreements with distributors. Please see the attached document for further details of the Model Agreements.2020.01.09
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Newsletters VIEW MORENewslettersKey Labor and Employment Law Amendments in 2020 Below are some key amendments to Korea’s labor and employment-related legislation for 2020. 1. Public holidays for government offices shall be paid holidays for private companies as well (Article 55, Paragraph (2) of the Labor Standards Act (“LSA”) and will take effect, depending on the company’s number of employees, as of January 1, 2020) Private employers will be obligated to provide their employees paid holidays on public holidays of government offices, including traditional holidays (Lunar New Year’s Day and Chuseok) and national holidays, and substitute public holidays. In order to require employees to work on such public holidays and designate another workday as a paid day off, employers must execute a written agreement with the employees’ representative. The amendment will take effect in three phases depending on a company’s headcount over a period of two years. - Private businesses with 300 or more employees, state and local governments, and public organizations: January 1, 2020 - Private businesses with 30-299 employees: January 1, 2021 - Private businesses with 5-29 employees: January 1, 2022 2. Introduction of family care leave, etc. (Article 22-2 of the Equal Employment Opportunity and Work-Family Balance Assistance Act (the “Equal Employment Act”); effective as of January 1, 2020) Starting January 1, 2020, employees may use “family care leave” for up to ten days per year, to care for a family member's disease, accident or old age or to take care of a child (the annual ten days may be used in one day increments, and the days used for family care leave are included in the leave of absence period for family care). In addition, from January 1, 2020, employees may use family care leave or a leave of absence for family care in order to care for his/her grandparent or grandchild (the current statute only allows family care leave or a leave of absence to take care of parents, spouse, children, or spouse’s parents). 3. Introduction of reduction in working hours for family care, etc. (Articles 22-3 and 22-4 of the Equal Employment Act; effective by phase depending on the company size, as of January 1, 2020) Starting January 1, 2020, when an employee working in a public or private workplace with 300 or more regular employees applies for a reduction in his/her working hours in relation to “family care, his/her own health conditions, preparations at the age of 55 years or older for retirement or his/her school work,” his/her employer must allow the employee to work for a reduced number of hours (however, the effective date shall be January 1, 2021 for the employers with 30-299 employees, and January 1, 2022 for those with fewer than 30 employees). The reduced weekly working hours shall be at least 15 hours but not exceed 30 hours. The duration of reduced working hours shall not be longer than one year, but if there is a reasonable justification for a longer period, the duration of reduced working hours may be extended within the limit of two additional years (however, no extension is allowed if the reason for the extension is school work). 4. Enactment of the fully revised Occupational Safety and Health Act (effective as of January 16, 2020) To accommodate recent changes in the industrial sector and broaden the coverage of statutory protection, the Occupational Safety and Health Act (“OSHA”) has been fully revised to improve the legal framework by prohibiting companies from contracting out dangerous and harmful work and will take effect on January 16, 2020. Please see the attached newsletter for further details. 5. Hourly minimum wage of KRW 8,590 in 2020 (effective as of January 1, 2020) Minimum wage for the year 2020 shall be KRW 8,590 per hour, which is an increase of KRW 240 (about 2.9%) from KRW 8,350 in 2019. The portion of the regular bonus which is in excess of 20% of the monthly minimum wage of the year 2020 (KRW 8,590 x 209 (hours) = KRW 1,795,310) and the portion of the cashable welfare benefit which is in excess of 5% of the monthly minimum wage shall be included in the minimum wage calculation (this calculation coverage shall be gradually expanded between 2019 and 2024). Additionally, the revised bill for the Enforcement Decree of the Equal Employment Act, which permits parents to each take childcare leave for the same child (effective as of February 28, 2020) and shortens the qualifying period of consecutive service for reduced working hours for childcare or leave of absence for family care from one year to six months (effective as of December 24, 2019), was promulgated and became effective. Please also note that, although not a legislative amendment, the one-year grace period for guidance will be granted to companies that are subject to the 52-hour workweek requirement (i.e., those with 50 or more but fewer than 300 employees) starting January 1, 2020. During the grace period, these relatively smaller companies are exempted from the government's labor inspection for compliance with the 52-hour workweek law and, in case a company of this size is found to have violated the law on working hours (including violations discovered as a result of an employee's complaint), a sufficient period of time (up to six months) shall be given for the company’s voluntary correction. Moreover, in case a lawsuit or complaint is filed against such company, it is expected that factors such as the employer’s effort for improvement and whether the violation concerned was intentional will be considered.2020.01.02
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Newsletters VIEW MORENewslettersKFTC to Focus on ICT Sector in 2020 – Chairwoman Vows in Her 100th Day-in-Office Press Conference December 19, 2019 marked the KFTC Chairwoman Sung-Wook Joh’s 100th day in office and she met with the press to share her thoughts on the KFTC’s enforcement objectives for 2020. While a number of topics were covered during the conference, the Chairwoman made the following statements relating to ICT companies and the industry. 1. Promotion of innovation competition/growth With the development of the digital economy and the emergence of major platform service providers, creating an environment of fair competition for the platform economy has become ever more important in supporting innovative growth. By establishing and operating a team dedicated to monitoring the competitive dynamics in the ICT industry, the KFTC plans to pay close attention to identifying potential abuse of monopoly power by major platform service providers in the ICT sector starting in early 2020. In addition, the KFTC will newly form a semiconductor sub-division during the first quarter of 2020 to monitor and regulate business practices by major semiconductor manufacturers that may unfairly foreclose competitors as the market transitions to 5G. In the mid to long-term, the KFTC will work with the academia to prepare related enforcement guidelines including “Review Guidelines for Unilateral Conduct in Platform Markets (Tentative)” to facilitate greater regulatory transparency in this area. 2. Promoting swift relief for restoring market order through consent resolution system Sanctions available under the Korean fair trade law cannot directly redress harms inflicted on victims (i.e., imposing administrative fines cannot directly remedy damages) and in many cases, they will be subject to prolonged court proceedings. In the ICT sector in particular, the KFTC will seek to provide prompt relief for damages and restore market order by increasing the use of the consent resolution system. 3. Establishing consumer-oriented trade order in the fourth industrial revolution As a consumer protection agency, the KFTC is committed to preventing consumer harm amid rapidly changing market environment in the fourth industrial revolution. The KFTC plans to scrutinize the business practices of online transaction platforms including social media platforms, “one-person” media platforms or multi-channel networks to identify violations of the E-Commerce Act and/or the Act on the Regulation of Terms and Conditions.1 The KFTC will focus on monitoring advertisements and transaction activities relating to health, environment and any other sectors that are likely to inflict serious damages on consumers. As the KFTC Chairwoman has set out her high-level enforcement priorities for 2020 in her press briefing, the KFTC and its ICT task force are expected to move swiftly to set their enforcement strategies for the ICT sector in the coming months. We anticipate that the KFTC’s 2020 Enforcement Plans to be released sometime in January will provide further details on how the KFTC plans to implement the announced enforcement focus on the ICT sector. 1 This includes requiring online marketing companies to provide access to seller information in e-commerce transactions; requiring electronic bulletin board service providers to establish a system for seeking consumer relief on behalf of users; and elimination of unfair terms and conditions imposed by “one-person” media platforms and multi-channel networks.2020.01.02
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Newsletters VIEW MORENewslettersThe FSS Financial Dispute Mediation Committee Recommends Compensation for KIKO Damages On December 12, 2019, the Financial Dispute Mediation Committee (the "Mediation Committee") of the Financial Supervisory Service ("FSS") issued its recommendations on the request for mediation filed by four Korean export companies in July 2018 for the disputed mis-selling of Knock-In Knock-Out or KIKO currency option contracts by banks to the Korean export companies between 2007 to 2008. The Mediation Committee recommended that the banks compensate the four companies in an amount ranging from 15% to 41% of the losses incurred by the respective companies from the KIKO contracts. The recommended compensation amount was calculated based on specific facts pertaining to the respective transaction and the level of sophistication of each company. The controversy over the losses for the alleged mis-selling of KIKO contracts dates back to over ten years ago. By way of background, between 2007 and 2008, numerous Korean small and medium sized export companies executed a total of 800 to 900 KIKO contracts with 14 Korean local banks to hedge currency risks in an environment where the Korean Won was appreciating. Under these KIKO contracts, the export companies sold call options to sell US Dollars to the banks together with the purchase of put options to sell US Dollars to the banks at the agreed strike prices on the Korean Won to US Dollar exchange rate. The structure was designed for the companies to profit from the KIKO contracts if the exchange rate stayed within the Knock-In and Knock-Out range whereas the companies could incur losses if the exchange rate were to rise above the Knock-In barrier. At the onset of the financial crisis in 2008, as the Korean Won weakened, the export companies incurred large scale losses from the KIKO contracts as the call options sold to the banks became significantly in the money. Many of the companies filed lawsuits against the banks claiming mis-selling by the banks as the companies alleged they were not adequately informed of the potential exposures from the KIKO contracts. The dispute resulted in the Supreme Court of Korea rendering its decision in September 2013 that denied the companies' allegation of fraud and unfair practices by the banks. In the ruling, the Supreme Court set forth the standards expected of banks in fulfilling its duty to adequately explain a financial product and the associated risks ("Duty to Explain") and in recommending suitable products to customers ("Suitability Standards"). In 2018, four of the companies which did not participate in the lawsuits that resulted in the 2013 Supreme Court decision filed application for mediation by the FSS to settle the dispute with the banks. The main focus of the mediation proceeding was whether the banks failed to satisfy the Duty to Explain and/or the Suitability Standards as set forth in the Supreme Court decision. The Mediation Committee found that the banks: failed to fulfil their Duty to Explain because they did not accurately explain important information that would have affected the companies' decision to enter into the KIKO contracts, such as factors that may cause potentially large scale losses to the companies. For instance, the Mediation Committee found that the banks did not adequately explain to the companies of the substantial losses it may incur when it over-hedges its foreign currency risks and the Korean Won to US Dollar exchange rate rises above the Knock-In barrier, whilst the banks emphasized the potential gains that the companies could realize if certain conditions were met; and failed to meet the Suitability Standards because they recommended KIKO contracts to companies to hedge their foreign currency exposures without considering the companies' anticipated foreign currency exposures and the resulting foreign currency hedging required which should have incorporated existing hedges already put in place. The Mediation Committee's recommendation is not legally binding on the parties but they have 20 days to consider the recommendation from the date when the decision is served to the banks. Failure to respond within the timeframe or rejection of the recommendation does not have any legal implications on the parties. As there are some more export companies which incurred losses from the KIKO contracts but did not participate in the lawsuit resulting in the 2013 Supreme Court decision, the FSS stated that it will determine the recommended compensation amount for these companies based on the Mediation Committee's recommendations for the applications made by the four companies.2020.01.02
김·장 홍보
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“Band 1” Rankings in 18 Practice Areas
In Chambers Asia-Pacific 2020, Kim & Chang was again recognized as the most top-tier ranked firm in Korea, receiving “Band 1” in 18 practice areas.
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Winner of “Korea Law Firm of the Year” for Seventh Consecutive Year
At the ALB Korea Law Awards 2019 on November 15, 2019, Kim & Chang won “Korea Law Firm of the Year” for the seventh year in a row.
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Only Korean Firm Among the World’s Top 100 Law Firms
According to The American Lawyer’s “The Global 100,” Kim & Chang ranked among the world’s top 100 law firms for the sixth year in a row.
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