We shall, under the President Lee Administration, see more labor-friendly laws and policies. Here is a list of the most noteworthy issues that are being talked about among the legal and business communities in Korea. For more articles on Korean Labor Law, please see: IPG Legal’s Labor & Employment Law Archive.
Korean Labor Policy Changes under
the President Lee Administration
Individual Labor Relations Amendments in Korea under the President Lee Administration
The administration’s labor policy platform introduces several core changes likely to affect employment terms and workplace compliance obligations. Key developments include:
1. Abolition of the Comprehensive Wage System in Korea
The “inclusive” or “comprehensive” wage system, whereby employers provide a fixed wage inclusive of statutory allowances regardless of actual hours worked, has been upheld in Korean courts in limited circumstances where it does not disadvantage employees (see Supreme Court Decision 2019Da29778, November 30, 2023). Nonetheless, concerns have emerged regarding misuse, particularly where it circumvents obligations for overtime or holiday pay. In response, the President Lee administration proposes amending the Labor Standards Act of Korea to expressly prohibit such arrangements and introduce mandatory systems for tracking and recording actual working hours. Employers are advised to undertake a comprehensive audit of current compensation structures, assess the legal viability of existing wage arrangements, and prepare contingency frameworks in the event of statutory reform. IPG Legal advises that you immediately conduct an audit and consider revisions to your employment rules and policies.
2. Expansion of Korean Labor Standards Act Coverage
A phased extension of the Korean Labor Standards Act to companies in Korea employing fewer than five workers is under consideration by the National Assembly and the President Lee administration. Given the considerable compliance implications for small businesses, a gradual implementation schedule is expected. Additionally, enhanced legal protections for short-term workers, including eligibility for paid leave and holidays, are anticipated. Employers should evaluate potential exposure and adjust employment practices accordingly.
3. Extension of Statutory Retirement Age in Korea
The Lee Administration announced plans to pursue a retirement age extension based on national consensus rather than through immediate legislative action. Drawing from comparative models, such as Japan’s obligation to retain older workers through reemployment systems or retirement age adjustments, Korean policymakers are exploring a similar institutional approach. We shall update the reader when more is known. We do not see any definitive judgments of the administration on this issue.
4. Reduction in Standard Working Hours in Korea
The Lee Administration has referenced a “4.5-day workweek” as a long-term aspiration; current proposals suggest a gradual shift rather than an immediate legislative overhaul. One legislative proposal (Bill No. 2208053 of May 2025) envisions reducing statutory hours from 40 to 36 per week beginning in 2030, contingent on business size. We shall update the reader when more is known – this is a developing issue, and we do not expect any immediate changes in law that shall take effect within the next couple of years.
Collective Labor-Management Relations/Unions in Korea under the President Lee Administration
Among the most contentious legislative developments are proposed amendments to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act (the “Trade Union Act”), which would significantly expand the employer status of primary contractors and limit employer claims for damages arising from industrial action.
Key Issues in the Redefinition of Employer Status in Korea
The jurisprudence surrounding employer status has evolved through key precedents at the Supeme Court and lower courts, including the Hyundai Heavy Industries decision (Supreme Court 2007du8881) and the more recent CJ Logistics ruling (Seoul High Court, 2024). These cases demonstrate a judicial trend toward recognizing employer status for primary contractors exercising effective control over subcontracted workers.
Challenges in applying these standards include:
- The ambiguity of terms such as “substantial” and “specific control”;
- Uncertainty regarding the nature and threshold of “decision-making” authority;
- The potential for procedural confusion in labor negotiations, including overlapping collective bargaining obligations;
- The risk of increased litigation and inter-union disputes arises from the unsettled nature of legal boundaries and definitions.
Employers should closely monitor legislative and judicial developments and prepare for scenarios in which subcontracted labor is reclassified under an expanded definition of employment responsibility. Additionally, it is essential to consider the proposed Yellow Envelope Act and recent Korean court developments.
Protection of Irregular Workers and Industrial Safety Policy Enhancements to Korean Law under the Lee Administration
1. Legal Safeguards for Special Employment Categories in Korea
Two legislative initiatives are under review:
- The Basic Act on the Guarantee of Rights for Special Employees, which aims to provide basic labor protections (e.g., safe working environments, social insurance, and anti-discrimination measures); and
- A presumption of worker status, shifting the burden of proof to the employer in cases where employment status is contested.
If adopted, employers may be required to demonstrate the absence of supervisory control, business integration, and exclusivity in order to rebut the statutory presumption. Businesses engaging service providers or gig workers are advised to reevaluate existing contracts, supervision protocols, operational integration and employment rules, and payment policies.
2. Gender Discrimination and Wage Transparency in Korea
Proposals to establish an Equal Employment Wage Disclosure System in Korea may require employers to disclose pay and employment data by gender. While intended to promote equality, such measures could inadvertently heighten inter-firm wage competition or trigger claims under the Korean Equal Employment Opportunity Act. We shall update the reader when more is known.
3. Reinforcement of Industrial Safety Measures in Korea
In response to ongoing industrial incidents, the Korean Ministry of Employment and Labor is shifting focus toward punitive enforcement, including increased criminal punishment. The recruitment of 300 additional labor inspectors and demands for stricter sentencing guidelines reflect this shift. Employers must supplement formal compliance inspections with substantive safety audits and invest in both training and expert consultation. We have written articles on industrial accidents in the past, which can be found at IPG Legal’s Labor & Employment Law Archive.
President Lee Administration Policy Shifts
The President Lee Administration articulated its labor policy vision under the themes of “Recovery, Growth, and Happiness,” with a strong emphasis on labor rights. Proposed reforms, including the so-called Yellow Envelope Law could profoundly restructure labor relations by empowering subcontractor unions, broadening bargaining scope, and restricting employers’ recourse for damages. We wrote an article on this matter than can be found at: The “Yellow Envelope Act” of Korea: Key Legal & Policy Considerations in Korea’s Proposed Labor Reform.
Given the evolving political and legislative process, not all pledges may be adopted in full or on schedule. However, several high-priority items, particularly the Trade Union Act amendments, are widely expected to proceed.
Implications for Korean Corporate Governance and Industrial Relations
- Shift in Regulatory Paradigm: The new administration’s policies represent the most labor-oriented agenda in recent years. If enacted, they will require employers to fundamentally reconfigure labor relations strategies and internal protocols.
- Judicialization of Labor Disputes: As regulatory ambiguity and union empowerment increase, labor conflicts are expected to move into Korean courts, potentially escalating legal exposure.
- Decentralization of Oversight: Plans to delegate supervisory authority to local governments and expand the ranks of “labor police” will make compliance oversight more fragmented and complex.
Corporations doing business in Korea must move beyond passive compliance and take a proactive stance by:
- Investing in labor relations capabilities;
- Conducting comprehensive audits of employment practices and wage systems;
- Engaging with unions and external counsel to establish clear, collaborative labor frameworks;
- Reimagining occupational safety protocols to align with increased scrutiny and criminal liability risks.
The labor reforms proposed by the current administration reflect a clear policy orientation favoring labor protections, union empowerment, and enhanced oversight. While these developments present significant compliance challenges, they also offer an opportunity for forward-looking organizations to modernize labor relations and foster sustainable, cooperative workplace environments. Legal counsel and human resources leadership must collaborate to manage this transition effectively and ensure readiness for both immediate regulatory shifts and long-term structural changes.
Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He assists clients with their contentious, non-contentious, and business development needs, and is regularly quoted by leading media sources on Asia’s legal and business issues. Sean is rated a Top 100 attorney, and his firm was rated a top dispute resolution law firm in Korea.
If you would like a consultation with Sean Hayes from IPG Legal, please schedule a call at: Schedule a Call with Attorney Sean Hayes.
