Prior to the start of the business and investing in earnest, we established an office in Korea for liaising, advertising, publicity, and information gathering. Currently, one Korean employee and one Dutch employee work in Korea. If the labor relations are specified to be governed by Dutch law as applicable through a separate contract with the two employees, can Dutch labor law apply instead of Korean labor law?
Within the international legal order, a territorial principle generally applies, which means the laws and regulations of each country are applicable to all persons within that country and are generally not applicable or enforced within the territory of other countries. Unless there are special rules otherwise, those who work in Korea in accordance with the territorial principle shall be subject to Korean labor laws regardless of their nationality.
Article 25 (1) of the Act on Private International Law stipulates that a contract shall be governed by the law which the parties choose explicitly or implicitly. However, under Article 28 (1) and (2) of the same Act, in employment contracts, even if the parties choose foreign law as applicable, the worker cannot be deprived of protections given to the employee under the mandatory provisions of the country where the employee habitually provides his/her service.
Therefore, even if Dutch labor law is selected as the applicable law through a separate contract, when Korea is the country where labor is provided ordinarily, all compulsory provisions stipulated in Korean labor law, such as the Labor Standards Act, apply. In addition, the liaison office performs preliminary and auxiliary activities such as simple liaising and market research and it is difficult to see it as an independent personnel and accounting organization. Therefore, when calculating the number of full-time workers for the application of labor laws, the number of employees at the headquarters should be added to determine the number of full-time workers.