Labor contract under the labor standards act

The labor standards act of Korea has a chapter named “labor contract”. In my opinion, it is not much of help when one actually tries to draft a labor contract, but it offers some points to remember not to violate law.

Based on the chapter, the following conditions should be fulfilled for any labor contract to be legitimate.

First, some items should be clearly stated to a worker when a labor contract  is signed. Those items are wage, working hours, paid weekly holiday, annual leave, location of work, job to be performed by the worker and so on.

Incidentally, composition of wage, methods of calulating and paying wage , working hours, paid weekly holidays, and annual leave should be stated in written form. In other words, a decent labor contract should explicitly mention the above items.

The labor standards act bans an employer from stating in advance, in a labor contract, the amount of damage to be compensated by a worker for illegal activites or non-compliance with the labor contract.

It, however, does not prohibit an employer from pursuing compensation for a damage actually incurred by a worker. It does not ban an employer from making an article in a labor contract that a worker who had a training or education through expenses by the company should work for a company for certain years to be exempted from obligation to repay the expenses.

Although no mention can be found in the labor standards act, non-disclosure or non-compete agreements also can be inserted in a labor contract. There are some court rulings approving such agreements.

Of course, such agreements are not applicable to all levels of workers. They are usually relevant for senior managers or a certain workers who had access to skills or technologies that are imporant to a company.

Obtaining a decent copy of an English labor contract in Korea is not easy. I have yet to find a single satisfactory labor contract in English based on Korean context. The ministry of labor has not released any authoritative standard sample of labor contract in English.

Maybe it is also due to the tendency  that most companies just state the above essential items and close the labor contract by saying that other matters will be governed by the labor standards act.

1 comment for “Labor contract under the labor standards act

  1. admin
    December 23, 2010 at 2:57 pm

    Hi. According to the act on protection of fixed term workers, a labor contract up to 2 years is possible. When that 2 years elapse, the status of the concerned worker is changed to that of fixed-term contract to permanent contract. There is no laws for basic salary. But you can use minimum wage as a reference. Minimum wage for 2011 is hourly 4,320 Korean won. Supposing an employee works 40 hours a week, his/her minimum monthly wage is 902,880 Won, which is around 782.14 USD based on exchange rate of Dec.23, 2010.

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