Employment 2025

SOUTH KOREA Law and Practice Contributed by: Sihoon Yang, Young Min Kim, Jung Mo Hong and Douglas Hwang, Yoon & Yang LLC

2. Restrictive Covenants 2.1 Non-Competes

Non-solicitation clauses can also trigger issues regarding trade secret infringements under the Trade Secret Act. The South Korean Supreme Court has held that where a person who acquires technological information that qualifies as a trade secret moves to another company and attempts to disclose and use such trade secret at such other company, then such an act constitutes violation of the confidentiality obli - gation under Article 2.3 (D) of the Trade Secret Act. Furthermore, the company that recruits such person is in violation of Article 2.3 (A) for unlawfully acquiring a trade secret if such company has failed to exercise due care and supervision in preventing its employ - ees from unlawfully using the trade secrets of another company. Customers It is difficult to deem a former employee’s solicitation of their former employer’s customers as an infringe - ment of trade secrets within the meaning of the Trade Secret Act. However, South Korean labour laws do not forbid or otherwise restrict an employer from requiring its employees to sign an employment contract that includes a non-solicitation clause prohibiting those employees from soliciting the employer’s customers upon termination of the employment relationship. 3. Data Privacy 3.1 Data Privacy Law and Employment In South Korea, the Personal Information Protection Act serves as the framework act in relation to data privacy. As such, unless otherwise regulated through separate legislations, data privacy and personal infor - mation are governed by the Personal Information Pro - tection Act. In the past, the Act on Promotion of Information and Communications Network Utilization and Information Protection, etc (the “Info-communications Act”) and the Credit Information Use and Protection Act (the “Credit Information Act”) stipulated provisions that governed an individual’s data privacy and personal information separately from the Personal Information Protection Act. However, as a result of an amendment

The Korean Commercial Act imposes a non-compete obligation upon directors, whereas employees are not subject to the same restriction. Nevertheless, employ - ees’ non-compete obligation can be partially recog - nised through interpretations of court precedents. The South Korean Supreme Court has held that where an employment contract has a non-compete clause, such clause is valid as long as it is reason - able. However, if a non-compete clause excessively restricts employees’ constitutionally protected rights (eg, freedom in choosing jobs or providing labour) or free competition, then such non-compete clause is invalid for going against Article 103 of the Civil Act. The Korean Supreme Court further held that, to deter - mine whether a non-compete clause is valid, there must be comprehensive consideration of various fac - tors. Among other things, the court considers: • whether the employer has an interest that neces - sitates protection; • the resigning employee’s position and rank; • the reasons for the employee’s resignation; • territorial scope, time period and the types of jobs restricted through the non-compete clause; • whether the employee received compensation in exchange for signing the non-compete clause; and • public interest furthered by the non-compete clause. 2.2 Non-Solicits Employees South Korean labour laws do not forbid or restrict non- solicitation clauses that prohibit former employees from soliciting other employees who remain employed by the former employer. Therefore, employers may include such non-solicitation provisions within their employment contracts, and they may require their employees to pay liquidated damages pursuant to Article 398 of the Civil Act for a breach of such an agreement. In addition to liquidated damages, employers may seek civil damages for breach of con - tract if the employer suffers ascertainable damages from the employee’s breach.

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