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The
following is a summing up of the assessment on labor market flexibility in 2004 Employment Outlook published by the OECD.
The OECD published 2004 Employment Outlook in June 2003. The report ranked Korea’s labor market flexibility 12th out of 28 OECD members, examining the member countries’
laws on employment protection.
In 1999 Employment Outlook, Korea came in 17th in 1999 and since then there has not been any major change
in employment protection legislations. But we came in 12th this time, which is largely attributed to the government’s
efforts to make the OECD better understand the nation’s labor related laws so as to put Korea’s labor market flexibility
in the right perspective.
Comparative flexibility was the lowest, 22nd in the area of agency work. Areas such as collective
dismissal and fixed-term work proved to be more flexible than many other member countries, ranking third and 8th, respectively.
Regular employment was assessed to be around the middle, ranking 16th.
Adjustments made on Korea in 2003 Employment
Outlook are as follows:
1. “Severance pay” is in fact a payment made to every worker who leaves the firm
(voluntarily or involuntarily), which cannot be counted as dismissal costs and severance pay has therefore been set to zero
(the same adjustment was also made on Italy).
2. Delays before notice periods can start have been reduced from 60
days required by law to 40 days (in case of dismissal for managerial reasons), taking into account the Supreme Court precedents.
3. The number of successive fixed-term contracts has been increased from 1.5 to “5 or more” (although
there is no legal regulation on this, since there has been a few precedents limiting the number of successive fixed-term contracts,
Korea was assessed to be “5 or more”, just
one position lower than “no regulation”).
※ The Supreme Court precedent (2003du4110 of November 13, 2003): a dismissal cannot be seen as illegal just because the announcement of dismissal was
made less than 60 days beforehand if it satisfied all the other requirements for a dismissal for managerial reason.
The
assessment of employment protection legislations among OECD member countries in 2003 showed a much clearer picture of Korea’s labor market and provided us with a direction
for easing or strengthening regulations.
This also indicated that the problem of excessive protection of regular workers
in Korea originates not from strict employment protection
laws but largely from actual industrial relations that have caused the bipolarization of the labor market.
While there
have not been sufficient efforts for corporate transparency and reasonable management to build trust between labor and management,
the management have sometimes given in to the demands from aggressive trade unions of regular workers and offset the increases
in labor costs by hiring non-regular workers or passing the burden to subcontractors or subsidiaries.
It is required to
ease some regulations and strengthen others in order to build a fair labor market by redressing unreasonable gaps between
different working classes. As for non-regular employment type such as fixed-term work where the regulations are relatively
soft, regulations need to be strengthened, whereas regulations on agency work need to be eased
legislation on protecting non-regular workers
In a press briefing on September 10, the Ministry of Labor(MOL) announced the main contents
of the government legislation on protecting non-regular workers, such as dispatch workers, fixed-term workers and part time
workers. The MOL plans to submit the government bill to the National Assembly by November at the latest, after going through
a process for publicity such as public hearings, and public notice. The following is the main contents of the government's
bill.
1. Act on the Protection of Fixed-Term and Part Time Employees, etc. (New Legislation)
○ Prohibiting
unfounded discriminatory treatment in working conditions, such as wages and creating a corrective procedure through the Labor
Relations Commission for fixed-term and part time workers
- Facilitating resolution of disputes through mediation, and
in cases where mediation is materialized, providing the effect of legal settlement in order to promote effectiveness
-
Imposition of a fine not more than 100,000,000 KRW in cases where correction orders are not observed. (Fine limit for SMEs
could be set at a lower rate of 30 million KRW)
○ Restricting avoidance of the anti-dismissal regulations by
repeatedly renewing fixed-term employment contracts
- The period for using fixed-term employees will be restricted to
3 years, and in cases where the employer uses such employees exceeding 3 years, he/she shall not terminate employment without
just grounds besides the end of the contract period. (Dismissal restriction regulation is applied).
- However, if
there are rational reasons, fixed-term employment may exceed 3 years.
※ Fixed-term projects, completion of specific projects, replacement of vacancies, schooling
or training for employees, workers over age 50, specialized occupations, etc.
- Abolition of the employment contract
term (one year) according to the Labor Standards Act (the concerned parties may freely decide the term of contract within
the boundary of the fixed-term usage period.)
○ Dealing with the issue of employers employing part time workers
and making them engage in excessive overtime work
- Overtime work will be restricted (12 hours per week) even if it falls
within the statutory working hours, and the law will stipulate workers' rights to reject employers' unjust instructions to
work overtime.
- Reinforcement of obligations to make written contracts on important working conditions such as wages,
terms of employment contracts and working hours.
○ Implementation timeline: So that enterprises can make preparations
such as changing their employment regulations, the new law will be implemented from 2006. However, considering the burdens
of SMEs, provisions on correcting discrimination in companies with less than 300 employees will be implemented from 2007.
2. Act on the Protection of Dispatch Employees (Revision)
○ Prohibiting irrational discriminatory treatment
against dispatch workers and creating a correction procedure (correction procedure for discrimination of the fixed-term law
will apply)
- To prevent excessive intermediary deduction, the dispatching employer shall provide written notifications
to the workers on their rewards for dispatch.
○ Dispatch periods will be extended from a maximum 2 years to
a maximum of 3 years according to the period of use for fixed-term workers.
- Dispatch periods for aged workers and middle-aged
workers will be extended without restriction to prevent older workers' exit from the labor market.
○ In order
to restrict full-time use of dispatch work by repeatedly replacing dispatch workers for the same tasks, the use of dispatch
work will be prohibited during 3 months after dispatch workers have been employed for 3 years (cessation period).
○
Punishment for employers who illegally use dispatch workers will reinforced to the extent of the dispatching employers.
※ According to existing law, in cases
of illegal dispatching, dispatchers are subject to not more than 3 years of imprisonment or not more than 20 million KRW fine,
while users are subject to not more than 1 year of imprisonment or not more than 10 million KRW
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