LABOR CASES

The Structure of Labor Laws in Korea

Application of Korean labor law at foreign Embassies and limits on their Korean employees


I. Introduction
There are 96 foreign missions in Korea in the form of embassies, consulates, and culture centers, etc., where several thousand Korean employees work. In the process of advising various foreign embassies, the most frequently asked question is whether the embassy is required to pay severance pay to its Korean employees. This is because severance pay systems do not exist in the foreign embassies’ home countries, and the system means that a considerable amount of additional money should be paid if the employee has a long service record. These embassies need the approval of their governments before paying out any unexpected additional expenses.
Korean labor law applies to all employees working inside Korea in accordance with the principle of territorial privilege for jurisdiction. Labor law violations are subject to criminal punishment because of their compulsory provisions, but for Korean employees working in foreign missions in Korea, their employers are diplomats who are exempted from criminal prosecution under the ‘Vienna Convention on Diplomatic Relations’ , which makes it very difficult to enforce labor law should it be violated by these diplomats. Korean labor law protects the fundamental rights of employees by providing restrictions on dismissal, guarantees of payment of wages and severance pay, compensation for industrial accident, and guarantee of the three primary rights of labor, etc. So, as judicial precedent and Labor Ministry guidelines regulate the protection and limitations of labor law, it can be very confusing for embassies and their Korean employees to understand the applicability of that law. Accordingly, here I would like to look into related laws, judicial rulings and Labor Ministry guidelines and seek a clearer understanding.

II. Basic Principles
1. Related Laws
Employment contracts made between Korean employees and their embassy employers does not have stipulated regulations that must follow Korean labor laws, but according to the applicable principle of territorial privilege for jurisdiction in Korean territory (Article 12 of the Labor Standards Act), labor laws apply to all Korean employees. Even illegal migrant workers are protected by Korean labor law. The Act Regarding the Conflict of Laws (Article 28) stipulates, “For employment contracts, regardless of the governing law that both parties agreed to or did not choose, it is not possible to ignore the employee protections endowed by compulsory rules related to the governing law of the resident country.” The Labor Standards Act (Article 15) also stipulates that a labor contract which establishes working conditions failing to meet the standards required in this Labor Standards Act shall be null and void to that extent. Those conditions invalidated by the preceding sentence shall be governed by the standards provided for in this Labor Standards Act. For an example, in cases where an employment contract between both parties does not specify severance pay, the employer shall pay severance pay in accordance with the Labor Standards Act.

2. Labor Ministry Guidelines
Labor Ministry guidelines regarding application of the Labor Standards Act to employees working in foreign embassies stipulates that “as the principle of territorial privilege for jurisdiction is generally accepted, foreign embassies in Korea are not exempt from Korea’s domestic laws unless there has been an agreement between the two countries where this is specified. Provided, as foreign embassies have diplomatic immunity, there is no jurisdiction of the court in Korea to enforce domestic laws (regarding applications for remedy of unfair labor practice or lawsuits seeking nullity for dismissal) in accordance with the Supreme Court ruling on November 14, 1989 (case number: 89noo4765). Accordingly, it can be expected that enforcing domestic laws will have considerable limitations.”

3. Court Precedents
Nevertheless, the Supreme Court upheld the jurisdiction of the Korean court in a lawsuit seeking nullity of a dismissal of an employee who had been hired by the US military and worked on a US military compound. The related high court originally rejected the lawsuit because the employee had named the US government as the defendant even though the US government did not have jurisdiction in Korea, but the Supreme Court allowed the jurisdiction to be able to take legal action against the US government in Korea. The Supreme Court ruled, “according to the customary international law, the activity of a nation’s sovereignty is excluded from another nation’s jurisdiction in principle, but it is not international law or part of normal international relations that exempt the other nation’s right of jurisdiction over judicial actions. Accordingly, unless the diplomats’ judicial actions are considered actions of sovereignty, or, due to closed relations with this, there is a special condition that the execution of jurisdiction can result in unfair intervention of sovereign activities, our nation’s court can assume jurisdiction against the home nation of an embassy regarding labor issues related to diplomats.” This means that jurisdiction can be assumed when an employee takes legal action against the home nation of an embassy rather than the embassy itself.

III. Application of Labor Laws
1. Application of the Labor Standards Act
(1) Cases of unfair dismissal
An employee named Ahn was hired by the Austrian Embassy from May 1, 1997 without a fixed period for employment, and worked there until termination of employment in 2010. When the Austrian Embassy dismissed the employee due to its reduced budget, the employee took legal action against the Republic of Austria. The Seoul District Court (Civil Court section 41) ruled in favor of Ahn in his lawsuit seeking nullity of the dismissal on April 6, 2014, stipulating “The Republic of Austria shall pay 95 million won in back wages. Additionally, the Embassy shall pay Ahn the monthly wage equivalent of 2.5 million won from the first day of the last month he was employed until the date that Ahn can be reinstated.” The Court explained, “Ahn was not involved in the Embassy’s sovereign activities, but performed an assisting role of support for embassy employees in terms of Korean language skills. Ahn’s employment contract and dismissal were not related to the Embassy’s sovereign activities, but closely related to employment-related judicial activities as one party to contract relations.” It also added, “Even though a Korean court assumed jurisdiction regarding Ahn’s dismissal, there is no concern that it intervened in the Embassy’s sovereign activities unfairly. The ruling was decided by reference to a ruling made in 1998 in a lawsuit seeking nullity of a dismissal of a Korean employee who took legal action against the US government, which stipulated, “Unless there is a special condition that the execution of jurisdiction can result in unfair intervention in sovereign activities, our nation’s court can assume jurisdiction against another nation regarding labor issues related to diplomats.”
(2) Severance pay system
It is generally recognized that embassies in Korea have the duty to pay severance pay to their Korean employees. However, there are some disputes on whether embassies should pay severance pay to domestic workers such as housekeepers or gardeners.
(3) Application of the Industrial Accident Compensation Insurance Act
An embassy is a workplace to which the Labor Standards Act applies, but the enforcement of Korean law is restricted due to the employer’s diplomatic status under the Vienna Convention on Diplomatic Relations. If the employer has an obligation for compensation according to the Industrial Accident Compensation Insurance Act, it is granted tha

For further questions, please
call (+82) 2-539-0098 or email bongsoo@k-labor.com

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