Ⅲ. Considerations when Writing a Labor Contract

1. Application of the principle of priority on favorable conditions

In application of the legal source that determines working conditions, higher-level rules take precedence over lower ones. The principle of application means that the order of hierarchy of effectiveness begins with laws like the Labor Standards Act, then collective agreements, then rules of employment, then individual labor contracts. If a lower rule violates a higher rule, the lower rule is invalidated (Articles 15 and 97 of the LSA and Article 33 of the TUA). Nevertheless, the principle of priority on favorable conditions applies to rules of employment and labor contracts.
As stated in Article 97 of the Labor Standards Act, the principle of priority on favorable conditions applies to rules of employment and labor contracts. In order to legally change rules of employment disadvantageously pursuant to Article 94 of the Labor Standards Act, the consent of a labor union representing a majority of workers, or if there is no such union, the consent of a majority of the workers, must be obtained. However, the employment contract of any workers who oppose the unfavorable rules of employment changes remains in effect even if the disadvantageous change to the rules is legal.
In general, it is desirable that only items particular to the relevant worker are stipulated, and that overall working conditions that apply to all workers are in accordance with the rules of employment.
Even though the conditions for changing rules of employment disadvantageously are met, the principle of priority on favorable conditions in labor contracts is applicable and the working conditions of workers opposed to the change continue in effect. This is justified by the purpose of labor law to prevent the unilateral reduction of working conditions by employers, emphasizing the principle of mutually determining the working conditions in accordance with Article 4 of the Labor Standards Act. Employers wishing to adapt to changes in the business environment and maintain flexible employment relations will find it desirable to state in the labor contract that special matters for the worker are written therein and all other conditions are in the rules of employment.


2. Prohibition against Predetermined Non-observance

In cases where an employee promises to pay a fixed amount of money in the event that he/she breaks an agreement to work for a certain period of time, if the employee has to pay this penalty immediately upon resigning ahead of the mandatory service period regardless of whether the company will suffer damages due to the early resignation, this is a clear violation of Article 20(Prohibition against Predetermination of Non-observance) of the Labor Standards Act. In addition, in cases where the employee has to return his/her wage that would have been paid to the employee simply because the employee resigns prior to the previously agreed end-of-service date, such provision of the employment contract violates the purpose of the above Article and will not be deemed valid.
However, in cases where there is an agreement that the employer will subsidize the cost of a training course for the employee and the employee promises to reimburse the entire or partial costs if he/she resigns early, such an agreement can be considered justifiable. In this case, the employer not only subsidized the training for occupational necessity and benefits, but also completely paid(or partially paid considering the employee’s individual desire to take the training) the expenses for the employee. If such a mandatory service period and reimbursement amount are determined to be within a reasonable and acceptable range, and the employee does not have to continue to work against the employee’s will, such agreement will not violate Article 20 of the Labor Standards Act.