This summary of age discrimination law in South Korea has been prepared by Yulchon LLC: www.yulchon.com

OVERVIEW

The Prohibition of Age Discrimination in Employment and Aged Employment Promotion Act (the “AEPA”) is the primary law that specifically deals with age discrimination related issues in Korea.  Although other laws such as the Framework Act on Employment Policy and the National Human Rights Commission Act (the “NHRCA”) also have provisions prohibiting age discrimination in employment, those other laws by themselves provide only an investigatory procedure resulting in a non-binding recommendation or a mere statement, with no means of obtaining enforceable, binding remedies for age discrimination.  To remedy this absence, the AEPA was enacted in 2008, amending the former Aged Employment Promotion Act.  A major impetus for the enactment of the AEPA was the fact that many Korean companies had been setting age limits or considering age as a factor with respect to recruitment and redundancies, which had become a social issue of great concern in Korea. 

Age discrimination under the AEPA means treating a person or members of an age group disadvantageously compared to other persons of a different age or age group under similar circumstances.  The concept of discrimination includes not only economic disadvantages but also non-economic disadvantages.  Disadvantages that have not occurred but are expected to occur in future also fall within the concept of discrimination.

Direct Discrimination (Disparate Treatment)

Article 4-4(1) of the AEPA expressly prohibits employers from discriminating, without justifiable grounds, against individuals on the basis of age regarding recruitment and employment; salary, education and training; placement, transfer, or promotion; and retirement or dismissal.

Indirect Discrimination (Disparate Impact)

Any adverse effect on a certain age group that results from applying standards that are on their face age-neutral is deemed to be age discrimination absent sufficiently justifiable reasons. The prohibition of indirect discrimination may bar the use of seemingly neutral standards such as knowledge, experience or qualifications, where as a result of applying these standards, a certain age group is unreasonably disadvantaged.

Since the AEPA only prohibits discrimination without justifiable grounds, if an employer is able to prove justifiable grounds for the employer’s discriminatory act, or policy with a disparate impact on a certain age group, the employer has not violated the AEPA.

WHO’S COVERED?

The AEPA applies to virtually all employers of any size, and covers all age groups meaning that both elderly and younger workers are protected from discrimination.  It should be noted, however, that the AEPA’s obligation to “endeavour” to employ aged people at a certain minimum workforce ratio, and to file reports regarding one’s aged employment ratio) only applies to employers with at least 300 employees.

WHAT ENFORCEMENT/REMEDIES EXIST?

An employee who has suffered discrimination based on age may file a petition [1] with the National Human Rights Commission (the “NHRC”) pursuant to Article 30 of the NHRCA. [2] The NHRC will then investigate the claim and may issue a non-binding advisory opinion, and notify the Ministry of Employment and Labour (the “MOEL”) thereof. If the employer fails to comply with the NHRC’s advice without providing a justifiable reason, and if the discrimination involves substantial harm, [3] the MOEL, either at the employee’s request [4] or sua sponte, may order the employer to rectify the discriminatory behaviour. Failure to comply with such an order may result in an administrative fine of up to KRW 30 million. Moreover, discriminatory treatment in the context of recruiting or hiring may be subject to a criminal fine of up to KRW 5 million, [5] separately from the petition process through the NHRC.

Retaliation against an employee for reporting age discrimination is subject to potentially more serious penalties: imprisonment for up to two years or a fine of up to KRW 10 million.

HOW COMMON ARE CLAIMS?

According to the statistics provided by the NHRC in January 2014, after the enactment of the NHRCA in 2006, roughly 80,000 petitions were made.  Among them, 21% were discrimination-related petitions.  Approximately 7% of all petitions were regarding age discrimination.  2017, however, witnessed a decrease – approximately 3.6% of all discrimination-related petitions that year were regarding age discrimination. In 2022, about 8.1% of discrimination-related petitions were about age discrimination.

Since the implementation of the AEPA, over the first 5 years (2009-2013) an average of 157 petitions regarding age discrimination were filed annually, which is more than double the numbers filed in 2008.  In 2022, 165 petitions regarding age discrimination were filed.

WHAT CLAIMS ARE MOST COMMON AND WHAT ARE TRICKIEST ISSUES FOR EMPLOYERS?

The most common type of petition filed with the NHRC is for discrimination claims involving recruitment and employment, while petitions regarding discrimination in other areas such as transfer, promotion and education have been relatively small in number. Although not covered by the AEPA, age-discrimination petitions in non-employment areas have seen a considerable increase with 17 cases in 2008, and 44 in 2012.  Continuing this trend, 36 age-discrimination petitions in non-employment areas were filed in 2021.

ARE THERE ANY SPECIFIC EXCEPTIONS IN YOUR LAWS?

The AEPA enumerates several justifications for policies and practices that otherwise might constitute unlawful age discrimination, namely:

• Where a certain age limit is inevitably required in light of the nature of the relevant duties;

• Where compensation and benefits are differentiated based on length of service;

• Where a retirement age is set by an employment contract, rules of employment, or CBA, pursuant to the AEPA or other laws;

• Where support measures are taken to maintain and promote the employment of a certain age group pursuant to the AEPA or other laws.

RETIREMENT AGES

An employer’s internal retirement age is highly significant in Korea, because it is extraordinarily difficult to involuntarily terminate employees prior to their reaching the mandatory retirement age set by company policy.  The AEPA expressly states that when an employer sets a retirement age for employees, the employer must set the age no lower than 60 years of age. If an employer sets the retirement age lower than 60 years it is deemed extended to 60 years. This mandatory floor for companies retirement ages has had a significant impact on the country’s labour sector, as many companies had previously set their retirement age in the mid to late 50s. Many of the top corporations in Korea responded by adopting or attempting to adopt a wage-peak system as a way of mitigating the burden of paying employee salaries to workers who otherwise would have been required to retire.  A wage-peak system involves applying regular salary reductions – instead of raises – to employees after they reach a certain age, for the remainder of their service until reaching the retirement age. 

The introduction of wage-peak systems has been a matter of significant controversy and opposition by labour unions and workers organisations, and the legal question of whether such a policy requires collective employee consent has been definitively resolved by a 2017 Supreme Court decision that concurred with the 2016 Guidelines from the Ministry of Employment and Labor in holding that a company’s adoption of a wage-peak system is an adverse change requiring employees’ majority consent.[6]

INTERESTING CASES

On May 26, 2022, the Korean Supreme Court held that the wage-peak system of the Korea Electronics Technology Institute was a form of illegal age discrimination. However, the Court left open the possibility that wage-peak systems may be justified by their particular circumstances, and explained the factors that should be taken into account in evaluating any justifying circumstances. [7] The major question now is how the courts will apply this standard to other wage-peak systems, in particular those that were established in response to the amendment of the AEPA (effective 2016) which required companies to increase their mandatory retirement ages to 60. Since the Supreme Court’s 2022 decision, at least one case has been decided in which the courts found that a wage-peak system was justified based on the circumstances, including the fact that it was adopted in response to the 2016 amendment of the AEPA.

Footnotes

[1] A petition must be filed within 1 year from the date the claim has arisen. (NHRCA, Article 32(1))

[2] AEPA, Article 4-6(1).  So, the agency who initially determines matters relating to age discrimination is the NHRC, even if it is relating to the employment and labour issues.

[3] “Substantial discrimination” refers to situations including discrimination against many people, repeated discrimination, and intentional non-compliance. (AEPA, Article 4-7(1))

[4] Such request has to be made within 6 months from the date of the NHRC’s advisory opinion.  (AEPA, Enforcement Decree, Article 4 (2))

 [5] AEPA, Article 23-3(2).  Due to the dual liability provision, not only the person responsible for such discrimination (in many case the representative and the relevant manager) but also the company will be liable by fine. (AEPA, Article 23-4)

 [6] Ministry of Employment and Labour Guideline on the Interpretation and Implementation of Work Rules (Jan. 22, 2016); Case No. 2017da209129 (Sup. Ct. May 31, 2017).  Adopting a wage-peak system typically requires amendment of existing work rules or rules of employment of a company.  Work rules may be amended by a company through consultation with employees.  If such amendment is considered adverse to employee’s interests however, the company generally must obtain the majority consent of those affected employees, except for a case where those changes are “reasonable in accordance with established social norms”.  Whether adoption of a wage-peak system is an adverse change requiring employees’ consent, and even so, whether it may fall within the limited “reasonable in accordance with established social norms” exception were, until recently, matters of significant controversy in Korea.

[7] Case No. 2017da292343(Sup. Ct. May 26, 2022).