Employment Contract

Part 2. Employment Contract Forms and Related Explanations

Ⅰ. Indefinite Term Employment Contract

With the five standard employment contracts proposed by the Ministry of Employment and Labor, I would like to review each characteristic in detail.

Ⅰ. Indefinite Term Employment Contract

1. Related explanation
(1) Work commencement date: The date on which the employment contract is concluded and the date of commencement of work may be different. The period between the date the employment contract is concluded and the date of commencement of work is called the successful candidate period. Once the employment contract has been concluded, the employer cannot terminate it without justifiable reason. Therefore, it is advisable to set a probation period, if possible, to verify whether a new hire is indeed able to do the work. The probationary period can be from 1 to 6 months, and whether or not the worker is to be employed longer is determined within that period. When dismissing a worker on probation, an objective evaluation should be used, and there should be at least two evaluators. A probationary employee’s competence should be assessed not through a one-time apprenticeship evaluation, but through additional intermediate apprenticeship evaluations.

(2) Work place and Job description: The head office, the workplace of the relevant worker, and the job description (such as personnel and general affairs) must be clarified. If needed, state that the workplace and job description may change if necessary.

(3) Contractual working hours refer to the hours set by an employer within the legal working hours. The limit is generally 40 hours per week and 8 hours per day, while overtime is limited to a maximum of 12 hours per week in excess of the legal working hours (Article 53 of the LSA). These limitations are intended to ensure workers have the right to pursue health and happiness.

(4) Working days and holidays: Working days are generally set from Monday to Friday, but can differ depending on the type of business. For weekly holidays, a paid holiday of at least one day a week must be given to each worker who has completed the contractual working days for one week (Article 55 of the LSA). Therefore, one or more paid holidays can be given on the day(s) specified by the employer.

(5) Annual paid leave: It is stipulated that annual leave is used in accordance with the employment rules and the Labor Standards Act.

(6) Wage: Wages must be at least equal to the minimum wage. The wage specified in the employment contract is ordinary wage, which is the basis for calculating various additional wages. Wages must be paid in full to workers directly in currency. Here, deposits to the worker’s bank accounts are also considered direct payment in currency. In addition, wages must be paid at least once a month on a fixed date (Article 43 of the LSA). The inclusive wage system refers to a wage system that does not calculate basic wages in advance for a given working time, but rather stipulates that daily or monthly wages shall include the total amount of statutory working hours plus additional working hours. Since the LSA stipulates that basic wages and contractual working hours shall be defined in the employment contract, the inclusive wage system is effectively in violation of that Act.

(7) Other items to be entered: It is desirable to stipulate that items not listed in the employment contract are subject to the rules of employment.
○ Whether or not social insurances are subscribed to: In principle, the employed workers are automatically subscribed to the four social insurances. However, exceptions exist: those aged 60 or over do not need to subscribe to the national pension while those 65 or over do not need to subscribe to employment insurance. In addition, those under the age of 18 do not contribute to the national pension. For foreign workers, subscription to employment insurance is voluntary. Part-time workers with remarkably few working hours (those with an average of less than 15 hours in 4 weeks) are covered only by industrial accident insurance, but not the other three.

2. Standard employment contract

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

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