In South Korea's labor market, two main types of employment agreements are utilized, each with distinct characteristics.

Indefinite Employment Agreements

Indefinite employment agreements, also known as open-ended, unlimited, or permanent contracts, are the standard form of employment in South Korea's professional settings. These contracts lack a predetermined end date and continue until termination by either party in accordance with the agreed-upon terms. The Labor Standards Act (LSA) of 1997 governs most aspects related to indefinite employment contracts. This act establishes minimum standards that prevail over any provision within an employment contract that is less favorable to the employee.

Fixed-Term Employment Agreements

Fixed-term employment agreements, on the other hand, possess a predetermined end date specified in the contract. While these contracts are permissible, Korean law restricts their duration. The maximum term for a fixed-term employment agreement is two years, encompassing any renewals. There is no restriction on the number of renewals allowed within this two-year limit.

Exceptions to the two-year maximum exist for specific situations:

• Completing a clearly defined project or task within a set timeframe.
• Serving as a temporary replacement for an absent employee until their return.
• Participating in a vocational training program with a defined duration.
• Employing individuals aged 55 or above.

In South Korea, while not mandatory, a written employment agreement is advisable for both employers and employees. This formal document outlines the terms of employment, protecting both parties and fostering a clear understanding of rights and obligations.

Basic Information

The agreement should include the identification of both parties, which means the employer's company name and address, and the employee's full name and residence. It should also clearly explain the employee's job title, duties, and responsibilities.

Term and Commencement

The contract should specify whether it is indefinite or fixed-term. If it's a fixed-term contract, the start and end dates must be clearly defined.

Compensation and Benefits

The agreement should detail the base salary amount, including currency and payment schedule (e.g., monthly). It should also provide details on overtime pay calculation and applicable rates. If applicable, the agreement should outline any bonus structures or eligibility criteria. It should specify any benefits offered, such as health insurance, pension plans, or paid leave entitlements.

Work Hours and Schedule

The agreement should define the typical weekly and daily working hours, adhering to the maximum limits set by the Labor Standards Act. It should outline mandatory rest periods, including daily and weekly breaks. If applicable, the agreement should detail any flexible work arrangements offered, such as flexible start and finish times or remote working options.

Termination

The agreement should specify the required notice period for termination by either party, following the minimums outlined in the Labor Standards Act. It should outline any severance pay arrangements, considering relevant legislation.

Dispute Resolution

The agreement should outline the process for resolving any disagreements arising from the employment agreement. This might involve internal procedures or external mechanisms like mediation or arbitration.

Probationary periods are a common feature in South Korean employment agreements, offering a trial period for both employers and employees.

Duration

There's no statutory requirement for a probationary period in South Korea. However, it's a common practice with a standard duration of 3 months. The Labour Standards Act doesn't define a maximum limit, so employers can technically extend it. However, the duration should be reasonable considering the position's nature.

Benefits and Considerations

During the probationary period, both parties can assess suitability. Employers can evaluate the employee's skills and fit within the company culture, while employees can gauge if the role aligns with their expectations.

Employers have more flexibility to dismiss employees who don't meet expectations during probation. The statutory 30-day notice period for dismissal doesn't apply within the first 3 months. However, it's advisable for companies to maintain objective evaluation procedures during dismissal.

During the first three months of probation, employers can pay employees a minimum wage that's 90% of the national standard, with exceptions for certain job types.

Employee Considerations

While probation offers a chance to prove yourself, it's also important for employees to be aware of their rights:

• The probation period should be reasonable for the specific role. If it seems excessively long, negotiate with your employer.
• Inquire about the evaluation process during probation. This ensures you understand the criteria for success.
• Even though the legal requirement doesn't apply, some companies might provide notice before dismissal during probation. It's always best to clarify this point in your contract.

In South Korean employment agreements, confidentiality and non-compete clauses are common. It's important for both employers and employees to understand how these clauses are enforced.

Confidentiality Clauses

Korean labor laws do not restrict employers from requiring confidentiality from their employees. Confidentiality clauses can be included in employment contracts, and if an employee breaches such a clause, it could lead to disciplinary action. These clauses usually define "confidential information" and prohibit employees from disclosing it to unauthorized individuals during or after their employment. Korean courts generally uphold well-defined confidentiality clauses.

Non-Compete Clauses

Non-compete clauses are also allowed in South Korea, but they come with certain limitations. The Korean Supreme Court has ruled that such clauses are enforceable as long as they are deemed "reasonable".

The courts consider several factors to determine the reasonableness of non-compete clauses:

• Legitimate Business Interest: The employer must have a valid interest to protect, such as trade secrets or unique customer lists.
• Scope of Restrictions: The geographical and durational limitations of the non-compete clause must be reasonable. An overly broad restriction on an employee's ability to find new work is unlikely to be upheld.
• Employee's Role: The restrictions should be proportional to the employee's position and access to confidential information. A high-level executive with access to sensitive trade secrets may be subject to stricter limitations than a lower-level employee.
• Employee Departure: The circumstances surrounding the employee's departure can also be a factor.