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Labor Cases (Volume 72) - Winter 2025 |
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| Foreigners Hired to Work Overseas - Governing Law and the Country of Habitual Work - |
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AHN Sung-Jun, Labor Attorney, [sungjun@k-labor.com](mailto:sungjun@k-labor.com)
Ⅰ. Introduction
Driven by digital advancements and globalization, Korean companies are increasingly hiring foreign talent directly to work from their home or third countries.
While common in the music industry, this drew little attention from labor attorneys. Since music work focuses on results rather than working hours, it is typically handled via freelance or civil contracts, avoiding disputes over the Labor Standards Act.
However, with the rise of K-culture and platforms like Netflix, this trend is expanding beyond music. Foreigners in various fields are now directly contracting with Korean HQs under diverse employment forms.
This study examines the governing law, the habitual place of work, and the applicability of the Korean Labor Standards Act in this case.
Ⅱ. Key terms of the employment contract (modified from a real case)
ㅇ 1. Governing Law
This contract is governed by and interpreted under Korean law. If a dispute cannot be resolved amicably, Korean courts have jurisdiction.
ㅇ 2. Contract Format
The contract is titled "Employment Agreement," but the opening clause refers to it as "This Independent Contractor Agreement," effective January 1, 2024. The parties are listed as AMERICANO ("Company") and BENJAMIN ("Employee").
ㅇ 3. Contract Terms
ㅇ The term runs from Jan 1, 2024, to Dec 31, 2025. It automatically renews for one year unless either party gives written notice at least 30 days before the term ends.
ㅇ The primary work locations are AMERICANO's offices in Korea and New York, U.S. Benjamin may be required to travel for business at the Company's expense.
ㅇ Work hours are 40 hours per week, 5 days a week. Benjamin is classified as a Full-time employee, not an hourly or daily worker.
ㅇ BENJAMIN is hired as an experienced expert to plan and produce live-action videos using digital technology 1. As a "Senior Developer," he must perform his duties faithfully. The Company may change his duties with prior formal notice and must provide all necessary resources.
ㅇ He receives an annual salary of $30,000, paid monthly on the 5th. Performance bonuses (5%–15% of salary) are paid twice a year. The salary is renegotiated annually.
1 The work utilizes "Digital Human Technology," recreating realistic details like pores, fine hair, and dynamic wrinkles. As demonstrated by EVR Studio, this technology blurs the line between reality and the virtual world. (Forbes Korea, Dec 27, 2021)
ㅇ He is obligated to protect confidential business information and is bound by a Non-Compete Obligation.
ㅇ 4. Termination of Contract
The contract may be terminated in the following situations: The employee cannot perform their duties due to physical or mental impairment. The employee repeatedly refuses reasonable work orders. The employee causes serious civil or criminal legal disputes for the company. The company fails to pay wages within 14 days of the due date without a valid reason.
ㅇ 5. Actual Working Conditions
During the employment period, the employee never entered Korea and does not hold a Korean visa. They have worked in New York, either from a branch office of the company or remotely from home. Usually on every Friday, the employee connected via Zoom with the Korean headquarters to report progress and receive work instructions. However, for the past five months, the monthly salary has been cut by 50% without any explanation.
Additionally, the employee claims they have never received a bonus, despite believing they have performed well.
Ⅲ. Governing Law and Habitual Place of Work
ㅇ 1. Relevant Provisions of Private International Law
Under the Territoriality Principle of international law, a country’s laws generally apply to activities occurring within its own borders. However, employment contracts function differently. Article 48 of the Private International Law Act stipulates that even if a specific governing law is chosen by the parties, it cannot override the mandatory protections of the country where the employee habitually works. In short, the mandatory laws of the location where the work is actually performed take precedence.
However, if a governing law has not been explicitly chosen, the law of the country where the employee habitually works—their actual workplace—applies. Therefore, if a foreign employee enters into a contract with a Korean headquarters but works in their own country or a third nation—whether at a branch office or from home—the labor laws of that actual work location generally govern the employment relationship.
In principle, Korean labor laws and the four major social insurance schemes do not apply. However, a final determination requires a case-by-case assessment based on specific circumstances. Key factors include the terms of the contract, the entity responsible for supervision and wage payment, the work location, and the hiring process.
ㅇ 2. Determining the Applicable Law in International Employment Contracts
Reflecting amendments to the Private International Law Act and recent court rulings, the Ministry of Employment and Labor (MOEL) has issued the following administrative interpretation regarding the governing law for international employment relations.
To determine the applicable law in employment relationships involving foreign elements, we must examine two key factors under Private International Law: first, whether a governing law was chosen—either explicitly or implicitly—and second, where the employee habitually works.
In reality, however, the line between an explicit choice of law and no choice is often blurred, and courts assess each case based on its specific circumstances. Therefore, to determine the existence of an implied choice of law and the country of habitual employment, we must weigh the following six factors to decide if the Labor Standards Act applies.
Key considerations include (1) the proportion of time spent working overseas versus the total contract duration, (2) the work location and whether there is an intent to return to Korea (e.g., if it is a temporary overseas assignment). We must also examine (3) where the contract was signed, (4) who directs the work and pays the wages, and (5) which entity actually benefits from the labor. Finally, (6) the employee’s expected benefits under the specific law are taken into account.
ㅇ 3. Application to the Current Case
Although the contract was titled "Independent Contractor," in substance, it functioned as a "Full-time Employee" agreement with a fixed annual salary. The employee worked exclusively in New York—either at the AMERICANO office or from home—and never entered Korea during the entire employment period.
(1) Duration of Overseas Duty
Throughout the entire contract term (Jan. 1, 2024 – Dec. 31, 2025), the employee has worked exclusively in New York, either at the office or remotely, with no record of working in Korea. This fact strongly indicates that the U.S. is the "country of habitual employment," which weighs against the application of the Korean Labor Standards Act.
(2) Work Location and Intent to Return (Temporary Nature of Assignment)
BENJAMIN was not sent from Korea to work abroad. Although he signed a contract with the Korean headquarters, he was hired specifically to work abroad—either at a branch office there or remotely—and has remained there continuously. Therefore, this cannot be viewed as a temporary assignment premised on returning to Korea. Instead, the arrangement closely resembles local hiring within the U.S.
(3) Place of Contract Signing
As BENJAMIN has no record of entering Korea or obtaining a visa, the contract was likely executed in the U.S. or via an online platform. This is considered a neutral to unfavorable factor for the applicability of Korean labor law.
(4) Supervision and Wage Payment
BENJAMIN attended regular Zoom meetings with Korean HQ staff every Friday to report his progress and receive instructions. Furthermore, his wages were paid directly by the Korean headquarters. Although his physical workplace was the U.S., it is clear that the Korean staff exercised direct supervision—the core element of a subordinate employment relationship. Therefore, this factor strongly supports the application of the Korean Labor Standards Act.
(5) The Actual Beneficiary of the Work
BENJAMIN plans and produces digital videos. These deliverables are sent digitally to the Korean headquarters and used directly for their business. This means the Korean HQ utilizes his labor and enjoys the profits, rather than any U.S. branch. As the Korean office is the substantial recipient of his work, this strongly supports the application of Korean labor laws.
(6) Employee’s Expectations Under the Law
The employment contract explicitly states in its governing law clause: "This Agreement shall be governed by and construed in accordance with the laws of Korea." Furthermore, the dispute resolution clause designates that "Korean courts shall have jurisdiction." According to Article 45 (Choice of Law by Parties) of the Private International Law Act, parties are free to choose the governing law.
Since the signed contract explicitly applies Korean law, BENJAMIN holds a "strong legitimate expectation" of receiving protection under the Korean Labor Standards Act, such as safeguards against unpaid wages and unfair dismissal. The parties freely chose Korean law as the governing law. Therefore, it would violate the principles of good faith and estoppel to deny its application now that a dispute has arisen—simply because the workplace is outside Korea. 'Estoppel' means the company cannot simply ignore the choice of law it previously agreed to.
Ⅳ. Final Assessment of the Case
It is highly likely that the Korean Labor Standards Act applies. Although factors (1) and (2) suggest the U.S. is the "habitual place of work," the deciding factor is that both parties explicitly chose Korean law as the governing law.
Since the Korean HQ provides direction and receives the services, this is clearly a case of "Cross-Border Remote Work," not a simple local hire. Also, even though the contract title says "Independent Contractor," the reality is different. Factors like fixed salary, set working hours, and direct supervision show that the Korean Labor Standards Act shall apply.
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