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Application Of Korean Labor Law & Korean Supreme Court Case On Unfair Transfer After Parental Leave

In LA, where K-Law Consulting is located, there are many Korean government agencies, public corporations, large corporations, startups, etc. (“a U.S. based Korean institution or enterprise"). These U.S. based Korean institutions or enterprises will either be dispatched employees from Korea or hire local employees.

Will Korean labor law or the U.S. labor law apply to these labor issues of a U.S. based Korean institution or enterprise? At first glance, you might think that the U.S. labor law applies, but if you look closely, it is not a simple question to answer.

Recently, while consulting with a client of a U.S. based Korean enterprise, I heard about labor issues within the company. The client received an opinion through the legal team of the Korean parent company that the Korean labor law could be applied to the U.S. company, but he was worried that he had not received an opinion on specific issues yet.

Whether or not the Korean labor law applies to a U.S. based Korean institution or enterprise should be determined by comprehensively considering Korea's labor-related laws, the Korean government’s authoritative interpretation, the Korean Supreme Court precedents, etc. Specifically, it is necessary to consider various factors, such as whether it is a company (corporation) with a legal entity, whether it is a branch office or a liaison office, whether the person is dispatched from Korea or locally hired, and whether the person has a citizenship of Korea or the U.S. On the other hand, it should be noted that even if Korean labor law applies, U.S. labor law is not always completely excluded.

Considering that Korean labor law can be applied to local corporations in the U.S., it is recommended to pay a lot of attention to Korean labor law. In particular, it is necessary to pay attention to the trends in the enactment and revision of the Korean labor law and the precedents of the Korean Supreme Court.

Recently, for the first time in Korea, the Supreme Court ruled that the appointment of employees who return from parental leave to positions "substantially" lower than their positions that they had when they left constitutes an unfair transfer.

Person A, who was working as a senior staff (“Daeri”) at a large company, was on parental leave while working a “pre-selected” manager job. For reference, the business promotion expenses, and housing allowance were provided to the “pre-selected” manager job. Person A returned from parental leave and was assigned a senior staff in charge (“Damdang”)” which is a lower position than that of “pre-selected” manager (and did not provide the business promotion expenses and housing allowance), so Person A argued it was an unfair transfer and a dispute began. For reference, the manager was originally the only job performed by someone higher than the senior staff, but the “pre-selected” manager job position is an exception, where a senior staff could perform.

According to the Korean labor law, it is considered an unfair transfer to move an employee, after parental leave, to (a) a different job position other than the previous job position or (b) a job position other than the previous job position without the same level of wage. At the pre-court stage (Local Labor Relations Commission, National Labor Relations Commission), the case was determined to be an unfair transfer, but the first and second trial courts accepted the company's argument and determined that this case was not an unfair transfer.

However, the Supreme Court ruled that, unlike the judgments of the 1st and 2nd trial courts, this case was an unfair transfer, stating that it should be judged whether it is “substantially” the same job position or the same level of wage (Refer to Supreme Court, 2022. 6. 30. Ruling 2017Du76005). More specifically, looking at the new Supreme Court precedent, (a) the “senior staff in charge” (“Damdang”) job position was not the same position as the “pre-selected” manager position and (b) whether wage is at the same level should not be simply compared to wage level, but it should be judged whether wage, working conditions, substantive authority and responsibilities are substantially the same. The Supreme Court held that it was not ruled correctly in the second trial court.

When Korean labor law applies to a U.S. based Korean institution or enterprise, many issues that have not been considered until now can be problematic. In addition, it is necessary to pay attention to whether the Korean labor law applies not only to the company but also to the employees. Although both the United States and Korea legally guarantee the parental leave system, in a situation where it is not easy to use it completely in reality, the above Korean Supreme Court precedent has implications for a U.S. based Korean institution or enterprise where Korean labor law could be applied.

We, K-Law Consulting, have the only Korean law lawyer (Jinhee Lee) registered as a foreign legal consultant with the State Bar of California and will provide optimal guidelines for resolving Korean labor law related issues and disputes as well as whether the Korean labor law applies. Please feel free to contact K-Law Consulting (E-mail: / Phone: (424) 218-6562) at any time. Thank you.

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