In the realm of international business transactions involving South Korea, the inclusion of language supremacy clauses in agreements governed by Korean law holds significant importance. These clauses, often overlooked but crucial, dictate the language in which the agreement will be interpreted and enforceable in legal proceedings. This article delves into the nuances of language supremacy clauses in Korean agreements, their implications, and the role of legal experts in navigating these complexities.

Language supremacy clauses, also known as choice of language clauses, are provisions inserted into contracts to specify the language that will govern the interpretation and enforcement of the agreement. In the context of agreements governed by Korean law, such clauses play a pivotal role in ensuring clarity and consistency in legal proceedings, especially in cases involving parties from different linguistic backgrounds.

Under Korean law, the principle of lex loci contractus applies, meaning that the law governing the contract is determined by the jurisdiction where the contract was made. However, in cases where the parties choose Korean law as the governing law, the inclusion of a language supremacy clause becomes crucial to avoid potential conflicts arising from linguistic differences.

When drafting agreements governed by Korean law, parties often opt for Korean as the governing language to ensure clarity and avoid ambiguity in legal proceedings. This is particularly important in cross-border transactions involving Korean parties and foreign counterparts, where language disparities can lead to misinterpretation and disputes.

Language supremacy clauses typically specify that the agreement and all related documents will be in the Korean language, and any translations provided are for reference purposes only. In the event of a dispute, the Korean version of the agreement prevails, and any translations are considered secondary.

The inclusion of language supremacy clauses in Korean agreements serves multiple purposes. Firstly, it ensures uniformity and consistency in the interpretation of the agreement, as all parties are bound by the same language version. Secondly, it provides clarity and transparency, as parties are aware of the language in which the agreement will be enforced in legal proceedings.

Navigating the intricacies of language supremacy clauses in Korean agreements requires expertise in Korean contract law and linguistic proficiency. Legal experts specializing in Korean law play a crucial role in advising clients on the implications of such clauses and ensuring compliance with Korean legal requirements.

InterLEX is a leading law firm specializing in South Korean employment law and corporate legal services. With a team of experienced attorneys well-versed in Korean contract law, InterLEX provides comprehensive legal support to businesses engaging in transactions governed by Korean law.

InterLEX expertise extends to advising clients on the drafting and interpretation of language supremacy clauses in Korean agreements. The firm’s proactive approach and attention to detail ensure that clients are equipped with the necessary legal guidance to navigate the complexities of Korean law and mitigate risks associated with language disparities.

In conclusion, language plays a crucial role in Korean agreements governed by Korean law, ensuring clarity, consistency, and enforceability in legal proceedings. With the right guidance of legal experts like InterLEX, businesses can navigate these complexities with confidence and achieve success in their transactions involving South Korea.

Workplace harassment and sexual harassment are hot topics in HR and labor relations. At our firm, we frequently handle internal investigations into these issues, with many cases currently in progress.
A common question we get is, What’s most important when investigating workplace harassment or sexual harassment?  Today, I want to focus on a critical factor: confidentiality .

Confidentiality is more than only a best practice—it’s a legal obligation. For example, Article 76-3(7) of the Labor Standards Act requires that anyone involved in workplace harassment investigations must not disclose confidential information without the victim’s consent. Similarly, Article 14-2(2) of the Equal Employment Opportunity Act mandates strong protections for the victim in sexual harassment cases.

Son:  Why is confidentiality so essential?

1. It is a fundamental premise for securing the trust of the parties involved in the finding of an internal investigation.
2. It is a measure to prevent secondary victimization of the complainant.
3. It promotes fairness by preventing witness statements from being influenced.
4. It shields the organization and individuals from legal liability.

A breach of confidentiality can undermine the entire investigation. If sensitive leaks, either party may reject the findings, claiming the process was biased. Worse, leaking information can harm the complainant, intimidate witnesses, or compromise their objectivity.

Legal precedent reinforces this. The Seoul High Court decision 2015Na2003264 (decided on ruling on December 18, 2015), ruled that even before confidentiality laws were explicit, investigators were required to avoid disclosing details or harming the reputations of those involved. Such breaches not only cause secondary harm to victims but discourage others from additional claims.

To avoid these risks, organizations must emphasize confidentiality from the beginning. All participants in an investigation should sign confidentiality agreements and understand that breaches can result in legal consequences—for both individuals and the company.

Protecting confidentiality isn’t just about following the law—it’s about ensuring fair, trustworthy investigations and creating a safe workplace for everyone.

The Korean Supreme Court has recently ruled that, in the context of international labor relations, the calculation of the “number of regularly employed workers” should be based on the number of workers employed in Korea (Supreme Court Decision 2023Du46074 Decided on October 25, 2024).

In this case, Company B employed more than five workers internationally, however only one employee, was employed and worked in Korea. The central issue was the calculation method used in determining the correct number of regularly employed workers. The number of regularly employed workers has significant implications regarding the applicability of the Korean Labor Standard Act (LSA).

The lower court had determined that in this case “even if only one person, A, is employed by Company B under an employment contract and works in Korea, Company B should still be regarded as employing five or more workers regularly.” The court further held that “as long as the governing law of the relevant employment relationship is recognized as the LSA of Korea, there is no reason to interpret Article 11 of the Labor Standards Act differently for domestic companies and foreign companies unless there are special circumstances.” Accordingly, the lower court concluded that Company B was subject to LSA provisions applicable to workplaces with five or more employees, including restrictions on termination.

However, the Supreme Court overturned this decision. In so doing it ruled that the calculation of the “number of regularly employed workers” must be based on the number of workers employed in Korea. The Supreme Court found that since Company B employed only one worker, in Korea on a regular basis, it could not be considered a workplace with five or more employees. The case was remanded for further proceedings consistent with this finding.

The Supreme Court explained: “A single business or workplace may be recognized only where it constitutes a ‘substantively unified economic and social unit where the various regulations governing the employment relationship can be applied uniformly’. Accordingly, the term ‘business or workplace employing five or more regularly employed workers’ under Article 11 of the Labor Standards Act refers to businesses or workplaces located in Korea.”

The Court further held that “the number of workers employed abroad, where the Korean Labor Standards Act does not apply, cannot be included in determining whether a business or workplace constitutes employing five or more regularly employed workers.

The Korean Supreme Court has recently ruled that when multiple companies operate as “a unified economic and social unit with operational integration,” the total number of employees may be counted together in determining Labor Standards Act applicability. In this specific case, two companies operating in a symbiotic manner each with less than five employees individually, the Supreme Court determined they should be regarded as a “business or workplace employing five or more regularly employed workers” under the Labor Standards Act (LSA) (Supreme Court Decision 2023Du57876, Decided on October 25, 2024).

This decision arose from a case disputing whether two companies, both controlled by the same foreign parent company, could be considered a single business or workplace under the LSA.

The Supreme Court affirmed the general principle that “business entities with separate corporate personalities cannot, in principle, constitute a single business or workplace unless there are special circumstances.” However, the Court also established criteria for when multiple entities with separate corporate personalities could be treated as a single business or workplace.

The Court stated that “where there are special circumstances demonstrating operational unity and organic interdependence sufficient to consider the separate entities as a substantively unified economic and social unit, they may be regarded as a single business or workplace.”

The determination of these special circumstances requires a comprehensive consideration of factors including:

1. Whether the type, nature, purpose, method, and location of work are identical
2. Whether personnel and labor management are not independently managed but are instead uniformly controlled by a single business entity or management
3. Whether the activities of each unit are combined for a unified business purpose, with close interconnection in terms of human and physical resources, as well as financial and accounting operations
   

In this case, the two offices of Company A and Company B operated on the same premises and engaged in hotel sales in an identical manner. Both companies were managed by the same branch manager, and their employees and managers regarded the two companies as a single business or workplace. Furthermore, a significant number of employees from Company A were transferred to work under the Korean office of Company B.

The Supreme Court concluded that “at the time of the dismissal in question, Companies A and B had already integrated their human and physical resources, operating for a substantial period as a substantively unified economic and social unit.” Therefore, the Court upheld the lower court’s finding that Companies A and B constituted a single business or workplace employing five or more workers regularly.

As a result, the Court affirmed that the LSA’s restrictions on dismissal applied to Company A and that the dismissal of the worker in question was an unfair dismissal.

The global emergence of K-pop popularity has placed Korean entertainers under the international spotlight. Defining the legal relationship between artists and their entertainment companies in Korea is nuanced. Despite working under strict working conditions with limited autonomy, K-pop stars are not generally considered ‘workers/employees’ defined under Korean Labor Standards Act (LSA). A recent decision by the Ministry of Employment and Labor (MOEL) in the case of the K-Pop group NewJeans member Hanni also exemplifies this position.

The MOEL has announced the closure of a complaint filed by NewJeans’ fan base, which alleged that Hanni was subjected to workplace harassment at HYBE’s office.

There are factors elaborated by Korean courts to be acknowledged as an employee under the LSA. In its decision the Ministry cited several factors, such as ‘absence of specific working hours or locations’, the ‘shared financial responsibility’ between Hanni and Hybe for activities, and the ‘nature of her income’, which was deemed profit-sharing rather than wages. Hanni’s ‘lack of subordination’ to company regulations such as the rules of employment further supported the decision.

The categorization of K-pop artists as independent contractors rather than employees stems from several legal and practical considerations:

Control vs. IndependenceEntertainment companies exert significant influence over idols’ work, including mandatory training, marketing, and public relations. However, idols retain a level of autonomy in creative endeavors and are not typically bound to rigid daily supervision akin to traditional employees. Labor bodies have often cited this distinction in assigning non-employee status to entertainers.

Payment StructureUnlike salaried employees, entertainers often earn income based on revenue-sharing agreements. Their earnings depend on the success of their albums, performances, and endorsements, which aligns with the nature of independent contractor arrangements.

1.Control vs. Independence

Entertainment companies exert significant influence over idols’ work, including mandatory training, marketing, and public relations. However, idols retain a level of autonomy in creative endeavors and are not typically bound to rigid daily supervision akin to traditional employees. Labor bodies have often cited this distinction in assigning non-employee status to entertainers.

2. Payment Structure

Unlike salaried employees, entertainers often earn income based on revenue-sharing agreements. Their earnings depend on the success of their albums, performances, and endorsements, which aligns with the nature of independent contractor arrangements.

3. Legal Precedent

High-profile disputes, such as those involving former members of TVXQ and EXO, have reinforced the current view that K-pop idols are not protected by the LSA. Administrative bodies have generally upheld the validity of these exclusive agreements, provided they are not deemed excessively exploitative.

The application of LSA employee protections requires meeting specific requirements. While not specifically protected under the LSA, idols may still pursue other civil avenues for seeking compensation afforded by the courts to all individuals. Understanding the application of LSA and employment relationships is essential in Korea. For any questions about these matters, please contact the experts at InterLEX!

Employee:

Boss, may I have some paid-time off? I want to take a vacation

Boss: Paid leave for part-time workers? That doesn’t sound right. I thought only full-time employees got paid vacation

Employee: I’m only part-time-working 20 hours a week. When I asked for paid leave my boss said I’m not entitled to it because I’m not full-time.

InterLEX Lawyer: Actually, Korean law grants paid leave to part-time employees too under specific conditions.
…under Article 60 of the Korean Labor Standards Act, employees who work more than 15 hours a week are entitled to accrue one unit of paid leave proportional to the amount they work each month. If the employee has worked 80% or more of the year, the employee is then entitled to 15 units of paid leave.Though part time, paid leave is a right for even part time employees in many circumstances.

Boss: Really? I didn’t know that applied to part-timers!

Boss: I’m sorry, I didn’t realize the law protected part-time employees’ right to paid leave. Thank you for being patient

Employee: Thank you for understanding

Narrator:

Thanks to knowing their rights, the employee got the well-deserved break they worked for.

Employee:

Thank you InterLEX!

Isabelle: “Today let’s talk about the first communication with the newly established union.”

Justin: “How does the initial conversation with the union begin?”

Isabelle: “Once the union is formed, they will send an official letter to start collective bargaining. They will first seek to establish ground rules.”

Justin: “What do those ground rules entail, and what should the company consider?”

Isabelle: “They usually cover when and where to negotiate. The union may want to have negotiations on the company premises during work hours to assert their influence.”

Justin: “I see. So, it would be important for the company to weigh the implications carefully before agreeing to the union’s request. What happens after the ground rules are addressed?”

Isabelle: “Next, the union will want to establish ‘Priority Negotiation Clauses,’ which generally includes time-off workers, check-offs, and allocating union office space.”

Justin: “What are time-off workers and check-offs?”

Isabelle: “Time-off workers are employees allowed to work on union affairs during normal work hours, while still being paid. Check-offs are arrangements for union fees to be automatically deducted before salaries are paid.

Justin: “Does the company have to accept the union’s suggestion for these?”

Isabelle: “No, the company should also carefully consider these clauses as well to preserve their bargaining leverage for later negotiations.”