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The Busan District Court (Civil Division) recently issued a ruling upholding the validity of amendments to an employer’s rules of employment that were adverse to employees, notwithstanding the absence of a formal “group meeting” of all affected employees
Background
The case concerned a private university’s transition from a seniority‑based remuneration system to a performance‑based remuneration system. The claim was brought by faculty members of the university (Claimants), who raised two principal arguments:
- the amendments to the rules of employment were invalid as they were procedurally defective since the university did not convene a formal group meeting at which all faculty members could gather collectively to discuss and approve the change. The Claimants contended that, in the absence of such a meeting, the transition to a performance‑based system was invalid under Korean labour law.
- the university had previously miscalculated salaries under the seniority‑based system, and that those errors were carried over when salaries were recalculated under the new performance‑based framework. On this basis, the Claimants argued that, even if the amendments were valid, their remuneration under the new system should be recalculated.
Under Article 94(1) of the Korean Labor Standards Act, employers seeking to amend its rules of employment are required to hear the opinion of a majority trade union or a majority of employees (if no such union exists). Crucially, employers must obtain majority or collective consent where the proposed amendments are adverse to employees (eg, reducing paid leave, extending working hours, lowering bonuses).
In practice, employers will typically convene a formal meeting/townhall with the trade union/employees to inform them of the proposed amendments and seek their opinion/consent.
Decision
The Court rejected the Claimant's procedural challenge and confirmed that the amendments to the rules of employment were valid despite the absence of a single, formal group meeting. In particular, the Court clarified that 'group consent' does not necessarily require all employees to be physically assembled in a single meeting. Instead, consent may be validly obtained on an individual basis, provided that:
- there are genuine practical difficulties in holding a large‑scale meeting;
- the employer does not exert undue influence or pressure on employees; and
- employees are given sufficient time and opportunity to review, discuss and consider the proposed changes.
However, the Court accepted the Claimant's argument in relation to salary calculation. The Court found that errors under the previous remuneration system had affected the calculation of pay under the new performance-based remuneration system and ordered the university to pay the resulting shortfall in wages.
Key Takeaways
This decision underscores that where convening a single group meeting is impractical, adverse changes to employment rules may still be implemented lawfully if the process is carefully managed. For employers, ensuring transparency, allowing meaningful consultation, and documenting that employee consent to any amendments was obtained freely will be critical to mitigating legal risk.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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