KOREA: Annual Update – Expected Labour Law Changes in 2017


Increase in the national retirement age:   An amendment to an existing law that increases the minimum retirement age to 60 was passed on April 30, 2013. Large companies with 300 or more employees were required to comply in 2016.

From January 1, 2017, the new retirement age will also apply to small companies with less than 300 employees. Retirement at 60 will therefore apply in all organisations, regardless of the size of the workforce.

Some companies already subject to the new retirement age have been introducing a “wage peak system” to reduce the costs related to extended employment. A wage peak system involves applying regular salary reductions – instead of raises – to employees after they reach a certain age, until their retirement. Subsidies are available for employers who introduce this system (to support employees who would receive less salary due to the wage peak system), subject to the applicable requirements, and provided the system is set out in a collective bargaining agreement or the company rules.

Action required:

(1) Review and update any internal policies and procedures that may conflict with the retirement age.

(2) Consider implementing a wage peak system. Take specialist advice on how to do this and what the impact for your business is.

Proposed legal reform

Proposal to amend the Equal Employment Opportunity and Work-Family Balance Act:   Amendments to the current Act have been proposed, and are currently being reviewed by the National Assembly. If the amendments are passed, they are expected to take effect on July 1, 2017.

The suggested changes are:

• Harassment

When an employee brings a sexual harassment complaint, the employer must: (i) immediately investigate; (ii) if necessary, isolate the victim from the alleged harasser; (iii) let the victim present his/her opinion when taking disciplinary action against the harasser; and (iv) not disclose the damage the victim has suffered. Administrative fines can be issued for non-compliance with any of these requirements.

• Infertility

Employees may take up to three days’ leave each year to treat infertility. Employers must grant the leave if an employee requests it.

Action required: None at the moment, but keep track of how the legal situation develops.