Demystifying the "Rules of Employment" under Korean law

In our previous installment, we broke down the requirements for drafting a lawful employment contract under Korean law. You might assume that as long as individual contracts are signed, your workplace compliance is covered.

However, under the Labor Standards Act (‘LSA’), reaching a specific team size triggers an entirely new statutory mandate: the drafting, submission, and maintenance of the Rules of Employment (취업규칙 — Chwiyup Gyu-chik).

The concept of ‘rules of employment’ may feel distinctly foreign. Here is an essential breakdown of what the Rules of Employment are, when they become mandatory, and what they must contain.

1. What Exactly are the "Rules of Employment"?

In Western corporate environments, companies typically rely on an "Employee Handbook" or a "Company Policy Manual." These documents are generally viewed as internal administrative guides, often drafted with flexible language and modified at the sole discretion of management.

The Rules of Employment (‘ROE’) under Korean law is quite different. It is a legally binding document that functions as a "constitution" of the workplace. It contains the standardized working conditions, code of conduct, disciplinary procedures, and benefits.

The most critical legal distinction is this: The ROE is not merely an internal guide; it carries the force of law within your organization. Under Article 97 of the LSA, if an individual employment contract contains terms that are less favorable to the employee than the conditions outlined in the ROE, those specific contract clauses become null and void, automatically replaced by the standards set in the ROE.

2. The "Magic Number" 10: When Does it Become Mandatory?

Under Article 93 of the LSA, the requirement to establish an ROE is strictly tied to your workforce threshold:

Workplaces with Fewer than 10 Employees: Drafting an ROE is strictly optional. Your workplace relationships are governed entirely by individual employment contracts and the LSA.

Workplaces with 10 or More Regular Employees: Writing, filing, and reporting an ROE to the Ministry of Employment and Labor (MOEL) is a strict statutory requirement.

Attorney's Note on Headcount Calculation: The threshold refers to "regularly employed" workers (상시근로자). This calculation includes full-time staff, part-time employees, and fixed-term contractors operating at your local workplace.

3. What Must Be Included? (The Statutory Checklist)

The LSA does not allow employers to simply write whatever they want. Article 93 explicitly itemizes more than a dozen mandatory clauses that must be clear and formalized within your ROE.

When reviewing or drafting your company's manual, ensure the following core categories are meticulously structured:

A. Working Hours, Breaks, and Holidays

• The exact start and end times of the workday.
• The scheduling of mandatory break times (e.g., a 1-hour lunch break for 8 hours of work).
• The designation of official holidays, paid rest days, and shifts (if operating on a rotational basis).

B. Compensation and Payroll Structures

• The components of wages, calculation methods, and official breakdown of pay structures.
• The specific payment dates and methods.
• Procedures regarding regular salary increments and bonuses (if applicable).

C. Leave and Time Off

• The allocation, request procedures, and payout mechanics for Statutory Annual Paid Leave.
• Procedures for special leaves, including maternity leave, childcare leave, and family care breaks.

D. Safety, Welfare, and Discipline

• Workplace health and safety regulations.
• Sanitation, education, and welfare facilities provided to employees.
• Disciplinary Provisions: The exact grounds for disciplinary actions, the types of penalties (reprimand, salary reduction, suspension), and the formal procedural steps (such as giving the employee a right to a hearing).

E. Workplace Harassment Prevention (Critical for Compliance)

• Specific measures designed to prevent and remedy workplace harassment (직장 내 괴롭힘 예방).
• Clear reporting channels, investigation protocols, and protective measures for victims. This clause is a frequent target for MOEL inspectors during routine workplace audits.

4. The Adverse Modification Trap: Changing the Rules

For foreign startups accustomed to fast-paced agile pivots, the most dangerous compliance pitfall lies in attempting to alter the ROE after it has been established.

Under Article 94 of the LSA, the process for changing your workplace rules depends entirely on the nature of the change:

Neutral or Favorable Changes: If you are improving employee benefits or adding perks, you must simply consult (seek the opinion of) a majority of your workforce.

Unfavorable Changes (Adverse Modification — 불이익 변경): If you are reducing benefits, introducing stricter disciplinary guidelines, or changing payroll terms in a way that harms employees, you must obtain the explicit, written consent of the majority of your employees (or the majority labor union, if one exists).

Without this explicit written majority consent, any unfavorable modification to your ROE is completely invalid under Korean law. Global management cannot unilaterally issue a memo to slash local allowances or tighten rules without triggering massive exposure to labor disputes and criminal complaints.

Conclusion: Bridging the Global-Local Divide

Establishing your first Rules of Employment should not be treated as a generic translation exercise. Simply translating a global corporate handbook into Korean and filing it with the MOEL is a recipe for compliance failure. It frequently introduces clauses that inadvertently violate the LSA, creating severe legal liabilities.

To build a defensible, highly scalable corporate infrastructure in South Korea, multinational entities must design an ROE that respects both your global corporate culture and the strict statutory boundaries of local labor law.

Disclaimer: This post is provided for general informational purposes only and does not constitute legal advice. No attorney-client relationship is formed by accessing this site or relying on the information provided herein. Readers are advised to seek professional legal counsel for any specific labor compliance issues.