The Need For Consent To Change Employment Terms

• Published date: 14 June 2023
• Subject Matter: Employment and HR, Contract of Employment, Employee Rights/ Labour Relations
• Law Firm: Ius Laboris
• Author: Mr Sang Wook Cho (Yulchon LLC), Soojung Lee (Yulchon LLC) and Christopher Mandel (Yulchon LLC)

For many years, Korean employers have had the option to impose changes to work rules without obtaining their workers' consent, where those changes are in line with social norms. In a recent decision, the Supreme Court of the Republic of Korea abolished this exception and formulated a new test by reference to the concept of bad faith.

Supreme Court recasts workforce consent exception

Under Korean law, when an employer changes its policies and regulations that establish collective terms and conditions of employment (referred to as 'rules of employment' or simply 'work rules'):

• it must consult with a majority union or, if there is no majority union, with the workforce generally;
• if a change is adverse to the employees, it must also obtain the consent of a majority union or, if there is no majority union a majority of the employees; and
• if workforce consent is required but not obtained, the adverse change is invalid as to all existing employees.

However, for the past 45 years the Korean courts have traditionally recognised an exception to the workforce-consent requirement: if the adverse change is 'reasonable in accordance with social norms,' workforce consent is not required (the 'social norms' exception). Although this exception has been interpreted narrowly and rarely applied, it provided a basis to argue that an adverse change imposed without seeking or obtaining workforce consent was valid. However, on 11 May, 2023, in decision, the Supreme Court of South Korea abolished this exception. Instead, the Court held that the majority-consent requirement will apply unless it is unreasonably abused by the union or workforce (the 'bad faith' exception).

Although it remains uncertain...