1. The Rules of Employment: Concept and Making Changes

(1) Concept

The Rules of Employment refer to the company regulations that an employer stipulates unilaterally regarding working conditions and service rules. The Labor Standards Act stipulates the employer's obligations for preparing and filing their rules (Article 93) and ways to compose and change the rules (Article 94). In particular, if a labor contract includes employment conditions which are below the standards stipulated in the Rules of Employment, the nonconforming part of the labor contract is null and void (Article 97). Korean law stipulates that areas in which employment conditions have been invalidated shall be governed by the standards provided for in the Rules of Employment. The Rules of Employment are to put the employer and workers on equal footing, which shows that the employer can compose or revise the rules unilaterally when revising working conditions advantageously, but shall obtain collective consent from the majority of employees when revising them disadvantageously.

(2) Making Changes to the Rules of Employment

1) Advantageous changes
When preparing or revising the Rules of Employment, the employer should, as a rule, consider the views of the majority of employees. For favorable changes to working conditions, it is sufficient that the employer listens to the majority of employees, but there is no obligation to consult with or obtain consent from them.⁴¹⁾
(footnote40 Jongryul Lim, 『Labor Law』, 13th edition, 2015, Parkyoung sa, page 353.)
Violations of the duty to consider employee opinions regarding changes to the Rules of Employment are subject to punitive action; the violation does not invalidate the change(s). Considering employee opinions serves as a way of protecting those employees by giving the employer opportunity to reflect their opinions in changes, but the failure to do so does not invalidate those changes.
(footnote41 Hyungbae Kim, 『Labor Law』, 24th edition, 2015, Parkyoung sa, page 304.)
2) Disadvantageous changes
When working conditions stipulated in the Rules of Employment are changed disadvantageously, existing employees will continue to work under the previous conditions if their consent was not received for the changes, but new employees hired after revision of the Rules of Employment will be subject to those changes.⁴²⁾
(footnote42 Supreme Court ruling on June 24, 2011, 2009Da58364. )

① Changing the Rules of Employment unfavorably
The acceptable methods for receiving employee consent are as follows:
① If there is no labor union composed of the majority of employees, it is necessary to receive consent from the majority of employees by means of allowing them to hold their own conference. Here, 'obtaining consent through a conference' means that employees get together and exchange their opinions for and against particular issues at the division or department level of a workplace or business, without interference from or participation of the employer, and then gathering their collective opinions for delivery to the employer.⁴³⁾
(footnote43 Supreme Court ruling on May 14, 2004, 2002Da23185. June 24, 2011, 2009Da58364. )
② If there is a labor union composed of the majority of employees, the revised Rules of Employment (with the union's consent to the changes) will also be in effect for non-union employees who have not had any input into the agreement.⁴⁴⁾
(footnote44 Supreme Court ruling on Feb. 29, 2008, 2007Da85997. )
③ If working conditions are different for production and management divisions, and for regular and non-regular employees, consent shall be received from those groups who will be affected by the revised working conditions. This means the employer does not have to receive consent from the majority of all employees if some of them will not be affected by the changes.⁴⁵⁾
(footnote45 Supreme Court ruling on Dec. 7, 1990, 90Da19647. )
④ At the time the Rules are changed, even though only a certain group of employees will be disadvantageously affected, if the revisions will affect other groups of employees, consent from these other groups shall also be required.⁴⁶⁾
(footnote46 Supreme Court ruling on May 28, 2009, 2009Du2238. )
② Criteria for changed working conditions to be considered disadvantageous
Whether amendment of the Rules of Employment is disadvantageous or not shall be evaluated substantially by considering all factors such as reasons and procedures for the amendment, characteristics of the jobs, and the structure of each regulation of the Rules of Employment. Accordingly, even if one working condition has been revised disadvantageously the Rules should be determined after considering all the changes. This includes other related factors which were changed favorably or other favorable changes which were made in return for the disadvantageous change.⁴⁷⁾
(footnote47 Supreme Court ruling on Jan. 27, 2004, 2001Da42301.)
Court rulings have showed: ① In cases where regulations on accumulating retirement payments were changed disadvantageously to non-accumulating retirement payments, if employee wages were increased and their working hours shortened, that change will not automatically be considered disadvantageous.⁴⁸⁾
(footnote48 Supreme Court ruling on Nov. 13, 1984, 84DaKa414. )
② In cases where a wage regulation in the Rules of Employment was changed disadvantageously for some employees, but advantageously for other employees, such changes shall be considered as disadvantageous.⁴⁹⁾
(footnote49 Supreme Court ruling on May 14, 1993, 93Da1893.)
③ Reducing or abolishing overtime work exceeding legal standard working hours cannot be regarded as a disadvantageous change to the Rules of Employment.⁵⁰⁾
(footnote50 Labor Ministry Guidelines (Kungi 68207-286, March 13, 2003). )
④ In cases where working at night or on holidays in the working shift system, employees used to receive additional allowances. However after changing work shifts to day time only, night and holiday work allowances were no longer available. In this case, the reduced wages cannot be seen as disadvantageous.⁵¹⁾
(footnote51 Labor Ministry Guidelines (Kungi 68207-691, June 11, 2003). )


2. Procedures for Amending the Rules of Employment

Employers are not allowed to revise working conditions by amending the Rules of Employment in a one-sided manner that is unfavorable to the employees. This violates the spirit behind the protection law under the Labor Standards Act(LSA), the principle of protecting vested rights, and Article 4(Establishment of Working Conditions) of the LSA: The working conditions shall be freely established on the basis of equality, as agreed between workers and their employer.⁵²⁾
(footnote52 Supreme Court ruling on July 26, 1977, 77Da355.)

(1) Authority to amend the Rules of Employment
The employer has full authority concerning amendment of the Rules of Employment. If an employer revises the Rules of Employment to the disadvantage of a group of employees without their consent, the revised Rules of Employment are still legally effective. However, current employees whose vested interests are infringed upon shall be subject to the previous Rules of Employment.⁵³⁾
(footnote53 Supreme Court ruling on Dec. 23, 1996, 95Da32631.)

(2) Need for agreement
1) Advantageous amendment
If the amendment of the Rules of Employment is neither advantageous nor disadvantageous, the employer is not obliged to comply with, but only hear, the opinions of his/her employees.
2) Disadvantageous amendment
If an employer intends