In many labor disputes, the company loses not because of the dismissal or unpaid wages themselves, but because of one line in a contract, one clause in the work rules, or one step in the disciplinary procedure. Reviewing documents and procedures before a problem arises costs the least.
Common Mistakes in Employment Contracts
| Item | Problematic example | How to fix it |
|---|---|---|
| Wage components | Only a monthly total is stated, with no distinction between base pay and allowances | State base pay, fixed allowances and fixed overtime allowance (including the hours it covers) separately |
| Comprehensive wage (포괄임금) | Actual overtime is much greater than the agreed hours | For jobs where working hours can be calculated, settle pay based on actual hours worked |
| Probation | No grounds for dismissal or evaluation criteria during probation | State the probation period, evaluation items and grounds for refusing permanent employment |
| Severance pay included | Agreement that severance pay is included in the monthly salary | Likely to be void, so delete it |
| Predetermined damages | Penalty clause for resigning midway | Void as a violation of the ban on predetermined penalties; agreements to return training costs require review of the conditions |
Work Rules and Unfavorable Changes
A workplace that regularly employs 10 or more workers must prepare work rules (취업규칙) and report them to the Ministry of Employment and Labor (고용노동부). The rules must include matters on preventing workplace harassment and on measures to take when it occurs. If old work rules do not reflect changes in the law, clauses that are unfavorable to the company often apply as written in a dispute.
When changes are unfavorable to workers, such as introducing a wage peak system, abolishing an allowance or expanding the grounds for discipline, the company must obtain collective consent from the trade union organized by a majority of the workers or, if there is none, from a majority of the workers. If signatures are collected separately by department, or consent is obtained in the presence of managers, the consent may be judged invalid.
In a 2023 en banc decision, the Supreme Court (대법원) changed its precedent: unless there are exceptional circumstances in which the workers' side can be seen to have abused its right of consent, an unfavorable change made without collective consent is not treated as valid merely because it is reasonable under social norms. You should not assume that the consent procedure can be skipped.
Designing the Disciplinary Procedure
- Fact-findingCollect statements and materials, and hear the person's explanation
- Notice of disciplinary committee meetingGive notice of the date, place and specific grounds for discipline within the period set in the work rules
- Opportunity to explainOpportunity to give an oral statement at the meeting or a written explanation, and to submit materials
- ResolutionFollow the rules on committee composition and quorum, and keep minutes
- NotificationNotify the type of discipline and the grounds in writing; for dismissal, give written notice of the grounds and the date
- AppealIf the work rules provide for an appeal procedure, guarantee the opportunity to apply
The grounds for discipline must be written in the notice as specific facts. If they are stated only in abstract terms such as "damage to the company's reputation," the opportunity to explain may be judged not to have been genuinely guaranteed.
Review Before Dismissal or Recommended Resignation
- Whether there is objective evidence supporting the grounds for dismissal, and whether prior warnings or a chance to improve were given
- How other employees were treated for the same reason, and whether the decision is consistent and fair
- Preparing 30 days' dismissal notice or payment of the dismissal notice allowance (해고예고수당)
- If handling the matter as a recommended resignation (권고사직), an agreement that shows the resignation is voluntary, and the terms of any consolation payment
- A recommended resignation can be a ground for receiving unemployment benefits (실업급여); a workplace that receives employment subsidies should check whether the headcount-reduction prevention requirements are affected
Regular Check Items
| Frequency | What to check |
|---|---|
| At hiring | Preparing and delivering the employment contract, worker roster, enrollment in the four major social insurances |
| Monthly | Delivering wage statements, overtime limits, reflecting the minimum wage |
| Yearly | Legally required training such as sexual harassment prevention training, promoting use of annual leave, reflecting the minimum wage notice |
| When the law is amended | Amending and reporting the work rules, changing contract forms |
| When a dispute arises | Review the relevant rules and past handling of similar cases, then decide how to respond |
Provisions Often Covered in Advisory Work
| Subject | Basis | Summary |
|---|---|---|
| Stating working conditions and delivering them in writing | Labor Standards Act (근로기준법) Article 17 | Wage components, calculation and payment method, scheduled working hours, holidays, annual leave and so on must be stated in writing and delivered |
| Preparing and reporting work rules | Labor Standards Act Article 93 | Duty to prepare and report for workplaces regularly employing 10 or more workers |
| Unfavorable changes to work rules | Labor Standards Act Article 94 | Consent of the trade union of a majority of workers, or of a majority of workers |
| Promoting use of annual leave | Labor Standards Act Article 61 | If the legal promotion procedure is followed, the duty to pay for unused annual leave is exempted |
| Fixed-term employment period | Act on the Protection, etc. of Fixed-term and Part-time Employees (기간제법) Article 4 | Employment exceeding 2 years is deemed employment under an open-ended contract (with exceptions) |
Failing to deliver an employment contract is, by itself, subject to a fine of up to KRW 5 million (500만원). For fixed-term and part-time workers, failing to state working hours, holidays and leave in writing also separately results in an administrative fine (과태료) of up to KRW 5 million (500만원).
Self-Check of Your Company's HR and Labor Practices
- Check whether an employment contract has been prepared and delivered for every employee.
- Check whether the wage components and calculation method are stated the same way in the contract and the wage statement.
- If you regularly employ 10 or more workers, check whether the work rules have been reported and include a harassment clause.
- Check whether the disciplinary procedure clauses match how discipline is actually carried out.
- Check the actual overtime hours of employees under comprehensive wage contracts.
- Check whether any fixed-term worker has been employed for more than 2 years.
HR & labor advisory: frequently asked questions
Do workplaces with fewer than 5 employees also need to prepare employment contracts?
Is the comprehensive wage system illegal?
Can we recover training costs from an employee who resigns?
Must a trade union take part in the disciplinary committee?
Applicable law: Labor Standards Act (근로기준법), Act on the Protection, etc. of Fixed-term and Part-time Employees (기간제법). Written based on the laws in force on 2026-09-17. This page provides general legal information and is not legal advice on a specific case. Labor laws and court decisions change often, so decide how to respond after consulting a lawyer who has reviewed your documents, such as your contract and any notices you received.
This page is an English translation of the Korean original. If the two differ, the Korean version prevails. Korean page ›