In an unprecedented legal development, the Supreme Court of Korea delivered a pivotal judgment on May 11, 2023, that fundamentally realigns the legal landscape of labor regulations. The Court pronounced that any modifications to the employment rules, made to the detriment of employees without procuring their collective consent, infringes on the proviso of Article 94(1) of the Labor Standards Act. Such alterations are, as a rule, deemed invalid, significantly infringing on the workers' collective right of approval (Supreme Court decision, May 11, 2023, 2017Da35588, 35595(consolidation) en banc decision).

This landmark ruling transforms previous interpretations by the Supreme Court, which permitted employers to amend employment rules to the employees' disadvantage without their collective consent, as long as the alterations were viewed as socially reasonable.

However, the Court judiciously left open a window for exceptional circumstances where the employees may be seen to have exploited their collective right of consent. In these rare situations, the Court may recognize the validity of the disadvantageous amendments to the employment rules. To clarify, 'exploitation of collective consent' encapsulates situations where the need for a modification in employment rules is seemingly clear due to shifts in the social environment or applicable legal framework, yet, despite the employer's earnest efforts to obtain the employees’ consent, the employees reject such alterations without providing a reasonable rationale.

In light of this ground-breaking verdict, corporations are advised to meticulously review the effects of any previous changes to employment rules that may be prejudicial to their employees. They must also exercise extreme caution, incorporating the insights from this shift in legal interpretation, when contemplating future alterations to employment regulations.