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Update on Legislative and MOEL Regulatory Trends Regarding Comprehensive Wage Schemes As the government advances shorter working hours as a key policy agenda and, as part of that agenda, seeks to principally prohibit comprehensive wage schemes, the National Assembly has commenced a review of proposed amendments to the Labor Standards Act (“LSA”) that would prohibit comprehensive wage arrangements in principle. In addition, the Ministry of Employment and Labor (the “MOEL”) issued Guidelines to Prevent Misuse of Comprehensive Wage Schemes to Eradicate Unpaid Labor, effective April 9, 2026 (the “Guidelines”). This update summarizes key legislative and regulatory developments relating to comprehensive wage schemes. 1. National Assembly Review of Bills to Ban Comprehensive Wage Schemes A total of nine (9) LSA amendment bills aimed at restricting or prohibiting comprehensive wage agreements have been introduced and are currently pending before the National Assembly, with deliberations having become more active this month. While the bills share a common direction of prohibiting agreements that comprehensively prepay statutory overtime premiums, they differ on several key points, including the following: Whether fixed overtime (OT) arrangements would be permitted Whether employers would be required to keep a record of the employees’ working hours and/or report such information to the MOEL Whether a breach of any record keeping or reporting obligations would be subject to administrative fines or other sanctions Among the pending proposals, the bill commonly described as reflecting a tripartite agreement, proposed by Rep. Kim Joo Young of the Democratic Party, would prohibit comprehensive wage agreements for overtime premiums in principle, while allowing fixed OT agreements mutually agreed to by the parties, provided that the employer pays any additional amounts due for any overtime exceeding the predetermined working hours. The bill also includes measures intended to enhance transparency and employee access to information. In particular, it would require employers to record, in the wage ledger, daily figures for overtime, nighttime, and holiday work hours, and would grant employees the right to inspect, request copies of, or request correction of wage ledgers, wage statements, and supporting documentation. However, the bill neither introduces an obligation to report working time information to the MOEL nor establishes sanctions for violations. Because the bill remains under committee review, the final scope and wording may change during the legislative process. However, given that it is a tripartite agreed proposal, its progress warrants close monitoring. 2. MOEL Guidelines to Prevent Misuse of Comprehensive Wage Schemes Consistent with its policy direction to reduce working hours by prohibiting comprehensive wage schemes in principle, the MOEL has, since February 26, 2026 for approximately 2 months, conducted planned inspections targeting workplaces suspected of misusing comprehensive wage practices. The MOEL then announced and began enforcing the Guidelines, effective April 9, 2026. Under the Guidelines, employers are expected to separately itemize base pay and each allowance item in wage ledgers and wage statements and to calculate and pay statutory premiums for overtime, nighttime, and holiday work based on actual working hours. The Guidelines further indicate that employers should not structure compensation in a manner that obscures statutory premium items, including, for example, arrangements where base pay and allowances are not distinguished, or overtime, nighttime, and holiday premiums are not distinguished and are instead paid as a single bundled overtime allowance. Where the parties have entered into a fixed OT agreement that includes a predetermined amount of overtime premium in monthly pay, the MOEL clarifies that the employer must compare the agreed fixed OT amount with the statutory premiums calculated based on actual working hours. If the agreed amount falls short of the statutory amount, the employer must pay the difference. The MOEL indicates that a failure to pay such differences may be treated as wage arrears and handled strictly in accordance with enforcement practice. The MOEL has also indicated that it will operate an anonymous reporting channel for suspected misuse of comprehensive wage and fixed OT arrangements. Workplaces that are reported may be treated as potentially high-risk workplaces and may be selected for ad-hoc inspections or included in the planned inspection targets in the second half of the year. 3. Outlook and Practical Considerations Even under current law and case precedent, comprehensive wage agreements are recognized as valid only in limited circumstances. Accordingly, even before any statutory amendment is enacted, the enforcement of the MOEL’s April 2026 Guidelines is expected to increase the risk of disputes and investigations relating to unpaid overtime premiums. In particular, because the MOEL has taken the position in these Guidelines that even “fixed allowance” structures that bundle statutory premium categories (overtime/nighttime/holiday) are problematic, companies using such arrangements should treat this as an immediate compliance risk and review their payroll practices accordingly. At the same time, it remains somewhat unclear how the MOEL will treat hybrid structures where a fixed allowance is used as an administrative mechanism but the employer still (i) records actual overtime/nighttime/holiday hours and (ii) calculates each premium category and pays differences when overtime amounts exceed the fixed allowance. This point should be monitored for future MOEL clarification or enforcement. To prepare for possible statutory changes and to mitigate immediate inspection and dispute risks, employers should: maintain accurate working-time records and supporting payroll calculation records; and ensure premium payments are made in compliance with statutory rules and based on actual work performed. Where it is genuinely difficult to measure working time, and the company believes comprehensive wage practices are unavoidable, the company should maintain clear documentation showing the reasons and factual basis for this operational necessity. [Korean Version]
2026.04.23

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KFTC Revises the Notification on Imposition of Administrative Fines to Strengthen the Effectiveness of Economic Sanctions On April 30, 2026, the revised ‘Notification on Detailed Standards for the Imposition of Administrative Fines’(“Notification”) came into effect. The revised Notification substantially increases the lower bound of the base rate for administrative fines imposed for violations of the Monopoly Regulation and Fair Trade Law(“FTL”) and strengthens the aggravation rate for repeat offenders. The revised Notification is largely identical to the draft amendment, which was announced in March 10, 2026(Link), but the final version contains the following notable changes: (1) Increase in the minimum fixed-amount administrative fine for “less serious violations” for unfair trade practices, resale price maintenance, and retaliatory measures from KRW 5,000,000 to KRW 50,000,000 (2) Removal of the provision that would have allowed the KFTC to revoke the mitigation benefit that was granted to a company for cooperation with the KFTC’s investigation if the company subsequently appeals the KFTC’s disposition, and during the court proceeding, recants its testimony given during the KFTC’s investigation. 1. Increase in the Lower Bound of Administrative Fine Base Rate and Minimum Fixed-Amount Fine The revised Notification significantly raises the lower bound of the administrative fine calculation base rates for all types of violations under the FTL, including cartels, and also increases the minimum amount of fixed-amount administrative fines. For example, the lower bound of the base rate for a cartel is moved up from 0.5% of the relevant revenue to 10% for “less serious violations”; from 3% to 15% for “serious violations”; and from 10.5% to 18% for “very serious violations”. The revised Notification also sharply raises the lower bound of the calculation base rate for abuse of market-dominant position from 0.3% of the relevant revenue to 3% for “less serious violations”; from 1.5% to 4.5% for “serious violations”; and from 3.5% to 5.4% for “very serious violations”. The key changes to the calculation base rates and the fixed-amount administrative fines for each major category of violation are as follows. (1) Abuse of Market Dominant Position Severity Assessment score Imposition base rate Fixed-amount administrative fine Current Amended Current Amended Very serious violation 2.2 or above 3.5% - 6% 5.4% - 6% KRW 1.2 billion ? KRW 2 billion KRW 1.8 billion ? KRW 2 billion Serious violation At least 1.4 and less than 2.2 1.5% - 3.5% 4.5% - 5.4% KRW 400 million ? KRW 1.2 billion KRW 1.5 billion ? KRW 1.8 billion Less serious violation At least 1.2 and less than 1.4 0.3% - 1.5% 3% - 4.5% KRW 50 million ? KRW 400 million KRW 1 billion ? KRW 1.5 billion Less than 1.2 0.3% - 3% KRW 100 million ? KRW 1 billion (2) Violation of the Regulations to Restrict Concentration of Economic Power Severity Assessment score Imposition base-rate Current Amended Very serious violation 2.2 or above 15% - 20% 18% - 20% Serious violation At least 1.4 and less than 2.2 8% - 12% 15% - 18% Less serious violation At least 1.2 and less than 1.4 5% 10% - 15% Less than 1.2 5% - 10% (3) Cartel Severity Assessment score Imposition base-rate Fixed-amount administrative fine Current Amended Current Amended Very serious violation 2.6 or above 15% - 20% 18% - 20% KRW 3 billion ? KRW 4 billion KRW 3.6 billion ? KRW 4 billion At least 2.2 and less than 2.6 10.5% - 15% KRW 2.2 billion ? KRW 3 billion Serious violation At least 1.8 and less than 2.2 6.5% - 10.5% 15% - 18% KRW 1.5 billion ? KRW 2.2 billion KRW 3 billion ? KRW 3.6 billion At least 1.4 and less than 1.8 3% - 6.5% KRW 800 million ? KRW 1.5 billion Less serious violation Less than 1.4 0.5% - 3% 10% - 15% KRW 10 million ? KRW 800 million KRW 2 billion ? KRW 3 billion (4) Unfair Trade Practice and Resale Price Maintenance Severity Assessment score Imposition base-rate Fixed-amount administrative fine Current Amended Current Amended Very serious violation 2.2 or above 2.4% - 4% 3.6% - 4% KRW 600 million ? KRW 1 billion KRW 900 million ? KRW 1 billion Serious violation At least 1.4 and less than 2.2 0.8% - 2.4% 3% - 6% KRW 200 million ? KRW 600 million KRW 750 million ? KRW 900 million Less serious violation At least 1.2 and less than 1.4 0.1% - 0.8% 2% - 3% KRW 5 million ? KRW 200 million KRW 500 million ? KRW 750 million Less than 1.2 0.2% - 2% KRW 50 million ? KRW 500 million (5) Unfair Support and Provision of Undue Benefits* Severity Assessment score Imposition base-rate Current Amended Very serious violation 2.2 or above 120% - 160% 250% - 300% Serious violation At least 1.4 and less than 2.2 50% - 75% 200% - 250% Less serious violation At least 1.2 and less than 1.4 20% 150% - 200% Less than 1.2 100% - 150% * In the case of unfair support and provision of undue benefits, the administrative fine is calculated by applying the prescribed base rate to the violation amount (i.e., the amount of support). (6) Retaliation Severity Assessment score Imposition base-rate Fixed-amount administrative fine Current Amended Current Amended Very serious violation 2.2 or above 2.4% - 4% 3.6% - 4% KRW 600 million ? KRW 1 billion KRW 900 million ? KRW 1 billion Serious violation At least 1.4 and less than 2.2 0.8% - 2.4% 3% - 6% KRW 200 million ? KRW 600 million KRW 750 million ? KRW 900 million Less serious violation At least 1.2 and less than 1.4 0.1% - 0.8% 2% - 3% KRW 5 million ? KRW 200 million KRW 500 million ? KRW 750 million Less than 1.2 0.2% - 2% KRW 50 million ? KRW 500 million 2. Increase in the Rate of Administrative Fine for Repeat Offenders The pre-amended Notification provided that the administrative fine could be increased by up to 10% for one prior violation in the previous five years, with a maximum of up to 80%, depending on the number of prior violations. The amended Notification increases this rate to 50% even for a single prior violation and a maximum of up to 100%, depending on the number of violations. In particular, the revised Notification prescribes an aggravation rate of up to 100% for cartels, if the company had been fined for a cartel in the past 10 years. 3. Elimination or Reduction of Discretionary Mitigating Factors The pre-amended Notification provided a mitigation rate for cooperation with the KFTC investigation of 10% during each of the investigation phase and the hearing phase, allowing a total reduction of up to 20%. The amended Notification reduces these mitigation rates, permitting a total maximum reduction of 10% and only when the investigation target has cooperated throughout the investigation from the investigation phase to the hearing phase. With respect to mitigation for voluntary remediation measures, the pre-amended Notification prescribed staggered reductions of up to 30%, depending on the degree of remediation. The amended Notification changes the ground for mitigation to “if the violating party significantly reduced the price increase caused by the violation or substantially eliminated the effects of the violation” and reduces the mitigation rate to a maximum of 10%. In addition, the amended Notification removes from the list of grounds for mitigation the cases of (i) the violating party actively attempted to eliminate the effects of the violation, but the effects were not eliminated through no fault of the violating party, and (ii) the violation was clearly due to minor negligence arising in the ordinary course of business. 4. Implications In announcing the amended Notification, the KFTC noted that the amendments “break the practice of treating legal violations as a corporate strategy and, in particular, establish a basis for imposing strong sanctions over cartels which harm the public’s livelihood.” This statement suggests that the amendment is not merely a revision of the regulation as a symbolic gesture, but a strong indication that the KFTC will actively attempt to impose substantially larger fines in practice. Companies with relatively low operating profits face a significant risk of being hit with fines that could exceed several years’ worth of operating profits at once, and firms with prior records of violations are expected to face an even greater pressure. Accordingly, there is a heightened need to strengthen the company’s compliance system to prevent violations at the outset and to institutionalize a zero-tolerance policy toward internal control breaches in order to proactively manage antitrust risks. The amended Notification took effect on April 30, 2026, and the pre-amended Notification will continue to apply to violations that ended before the effective date of the amended Notification. Therefore, the precise end date of a violation in future investigations is expected to have a significant impact on the fine amount, and even in case of an already on-going investigation, if the violation continues, the amended Notification can apply resulting in a higher fine than originally anticipated. Separately, on December 29, 2025, the KFTC had announced a plan to increase the statutory ceilings on administrative fines for violations of the FTL and related laws and that it plans to submit a bill to the National Assembly in the first half of 2026(Link). If the bill is passed, it is expected that the KFTC will implement a comprehensive overhaul of the administrative fine regime, including the detailed standards set out in the revised Notification. [Korean Version]
2026.04.28

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Exemption from Network Separation Requirement for SaaS in Financial Business Networks On April 20, 2026, an amendment to the Detailed Enforcement Rules of the Electronic Financial Supervisory Regulations (the "Amendment") became effective to allow financial companies and electronic financial business operators ("Financial Companies, etc.") to utilize cloud-based software as a service ("SaaS") in their internal business networks. The Amendment is intended to institutionalize the use of SaaS in the internal business network of Financial Companies, etc., which was previously permitted only through the designation of innovative financial services ("Innovative Financial Service(s)" or "Financial Regulatory Sandbox") in the past. It is expected that the Amendment will contribute to strengthening the work method and collaboration of Financial Companies, etc., improving productivity, alleviating the burden of IT operation, and systematizing the internal management system. In this newsletter, we will cover four key areas: 1) the primary updates to the Amendment, 2) mandatory security management measures for Financial Companies, etc. utilizing SaaS within their internal business networks, 3) the key distinctions between these new rules and the existing exemption from the network separation requirement under the Financial Regulatory Sandbox framework, and 4) important implications and key considerations to note. ※ Please refer to the attached file for more details. [Korean Version]
2026.04.28

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National Assembly Passes Amendment to the FSCMA Introducing the Cornerstone Investor System On April 23, 2026, the National Assembly passed an amendment to the Financial Investment Services and Capital Markets Act (the "FSCMA"), primarily aimed at introducing certain key measures, including the cornerstone investor system. The amended FSCMA will take effect six months after promulgation. 1. Background and Purpose Under the current FSCMA, an initial public offering (IPO) generally proceeds in the following order: (i) filing of the securities registration statement, (ii) book-building with institutional investors, (iii) determination of the offering price, (iv) subscription and allocation, and (v) listing. Concerns have been repeatedly raised about the frequently witnessed practice of certain institutional investors' submitting high bids during book-building in order to secure allocations and then quickly selling the allocated shares for short-term gains, which would undermine appropriate price discovery in IPOs and increase post-listing price volatility. To address these issues, the Financial Services Commission (the "FSC") has been implementing improvements of the IPO framework in phases. These measures include introducing a mechanism to verify an investor’s capability to pay subscription price (2022), strengthening corporate due diligence standards and introducing sanctions for inadequate due diligence (2024), and establishing a framework of priority allocation (of 30 to 40%) for institutional investors providing lock-up commitments (July 2025). Building on these reforms, and drawing on precedents from Hong Kong, Singapore, and the United States, the amendment introduces two key mechanisms: (i) a preliminary book-building regime, which allows underwriters to gauge institutional demand before filing the registration statement, and (ii) the cornerstone investor system, which enables the pre-allocation of shares to institutional investors subject to a minimum six-month lock-up. The overarching goal is to promote more appropriate IPO prices and more mid- to long-term investments. 2. Key Amendments Article 119(1) of the current FSCMA provides that a public offering or sale of securities may be conducted only after the securities registration statement is formally filed and accepted by the FSC. Consequently, underwriters are prohibited from soliciting subscriptions prior to the filing of securities registration statement, and assessing demand (e.g., bidding prices and volumes) by sharing issuer information would also pose a compliance risk. Further, it is prohibited to solicit or accept subscriptions from investors before the effectiveness of securities registration statement. The amended FSCMA provides exceptions to these rules by introducing the following: (1) Introduction of the Preliminary Book-Building System (newly introduced Article 119-3) Issuers, underwriters, and arrangers may now solicit offers by assessing demand—such as bidding purchase prices and volumes—from designated professional investors (as defined by the applicable Presidential Decree) prior to the filing of securities registration statement. (2) Introduction of the Cornerstone Investor System (newly introduced Article 119-4) Issuers, underwriters, and arrangers may solicit subscriptions for a portion of the offering from designated professional investors—and accept subscriptions submitted by such professional investors—prior to the filing of securities registration statement. When selecting these investors, issuers, underwriters, and arrangers must establish a robust system to prevent conflicts of interest, as prescribed by the Presidential Decree. Accordingly, "cornerstone investors" who acquire shares must commit to a lock-up period of at least six months, with the exact durations to be determined by the Presidential Decree. Because the shares allocated to cornerstone investors are exclusively from the existing institutional investor pool, this amendment will not alter the allocation ratio between retail and institutional investors. 3. Outlook This amendment is part of broader capital markets innovations aimed at achieving a "Korea premium." In particular: (i) because preliminary book-building will be permitted, issuers will be able to reflect market demand when establishing the indicative price range to be disclosed in the securities registration statement, thereby the appropriateness of IPO pricing is expected to be enhanced; and (ii) the cornerstone investor system is expected to enhance credibility of the IPO markets as stable, long-term institutional investors may be secured in advance. The amendment will take effect six months after its promulgation. The FSC has announced that, as key regulatory measures—such as regulations relating to preliminary information sharing, caps on allocations to cornerstone investors, and standards for conflict-of-interest prevention frameworks—are delegated to the Enforcement Decree, it will design the applicable detailed regulations after collecting input from institutional and retail investors, underwriters, and other market participants. Accordingly, market participants are advised to closely monitor the development of the relevant regulations and related rulemaking process. [Korean Version]
2026.04.27

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Korea Customs Service Announces Foreign Exchange Inspection Measures Amid Elevated Exchange Rates—Recommended Corporate Responses On January 13, 2026, the Korea Customs Service (the “KCS”) announced that it had established a “Task Force to Crack Down on Illegal Trade and Foreign Exchange Transactions in Response to High Exchange Rates,” aimed at addressing illegal foreign exchange transactions that could undermine exchange rate stability. The KCS also indicated that it would begin all year-round, focused monitoring. According to media reports, under the announced plan, the KCS plans to select 1,138 companies with significant discrepancies between foreign currency receipts/payments and their import and export amounts for foreign exchange inspections, to be conducted by 24 foreign exchange investigation teams across customs offices nationwide. A KCS foreign exchange inspection is an administrative investigation conducted under the Foreign Exchange Transactions Act, in which the Commissioner of the KCS, acting pursuant to authority delegated by the Minister of Economy and Finance, examines the business activities of transaction parties (or related persons) subject to the Foreign Exchange Transactions Act. Media reports indicate that the KCS selected the targets for these inspections based on indicators suggesting potential involvement in the following three major categories of illegal conduct related to trade and foreign exchange: Non-repatriation of export proceeds: Failing to repatriate trade proceeds that should be received in Korea for an extended period without reporting, or improperly evading repatriation through sham or false transactions. Irregular trade settlement schemes: Settling trade payments through alternative means—such as hawala-style unofficial remittance networks or virtual assets—thereby impeding efforts to secure US dollar liquidity. Overseas flight of assets: Illicitly retaining the price differential overseas by under-declaring export prices, or causing unjustified foreign-currency outflows by over-declaring import prices. Additionally, on January 15, 2026, news outlets reported that the “Pan-Government Joint Response Team for Illegal Foreign Exchange Transactions”—comprised of six agencies, namely the Ministry of Economy and Finance, the National Intelligence Service, the National Tax Service, the KCS, the Bank of Korea (the “BOK”), and the Financial Supervisory Service (the “FSS”)—was officially launched. This team reflects the government’s strong commitment to track cross-border illicit fund flows without blind spots through inter-agency information sharing. Meanwhile, the KCS has indicated that overall compliance with foreign exchange regulations in the trade sector remains low, based on its 2025 foreign exchange inspections that found illegal foreign exchange transactions at 97% of the companies inspected. Where violations are identified in the course of a KCS foreign exchange inspection, matters that may initially appear to be mere procedural or administrative errors can, in some cases, morph into criminal investigations or proceedings—leading to sensitive and challenging developments such as search and seizure and questioning of relevant officers and employees as suspects. Accordingly, it is critical to respond to foreign exchange inspections with a clear understanding that they may potentially develop into criminal procedures. In this environment, companies engaged in foreign exchange transactions should proactively prepare for potential KCS inspections by reviewing whether their internal compliance systems for foreign exchange transactions are operating effectively and whether fund flows involving overseas affiliates are being managed transparently.
2026.03.25

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Leading Law Firm in All 11 Practice Areas

In the 2026 edition of Benchmark Litigation Asia-Pacific, Kim & Chang was once again recognized as a leading law firm across all 11 practice areas surveyed in Korea. Additionally, this year, 66 of our attorneys were recognized in their respective practice areas.
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Kim & Chang Named “Employer of Choice”

Kim & Chang was selected as an “Employer of Choice” by Asian Legal Business (“ALB”) in its April 2026 issue.
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“Band 1” in All Nine Areas, 44 “Leading Individuals”

In the 2026 edition of Chambers Global, Kim & Chang was once again the only Korean law firm ranked “Band 1” in all nine practice areas that were surveyed for Korea. In the individual categories, 44 of our attorneys and patent attorneys were recognized as “Leading Individuals.”
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