Workplace Investigations

While there are no specific laws that regulate a workplace investigation, there are several laws that companies should consider when conducting a workplace investigation concerning alleged employee misconduct.

One key example is the Whistleblower Protection Act (WPA). The WPA provides legal protection to a whistleblower if their allegations are raised in good faith and are in the public interest as specified under the WPA. If the WPA applies, certain obligations apply to the company, including but not limited to the following:

• the obligation to protect the confidentiality of the whistleblower’s identity;
• protecting the whistleblower if the whistleblower suffers or is likely to suffer serious harm to life or health as a result of whistleblowing and the whistleblower requests protection; and
• refraining from taking retaliatory action on the whistleblower.

Therefore, if an employee raises allegations of another employee’s misconduct, the company should review whether the allegations fall under the WPA.

There are also special laws that impose obligations on the company if there are certain types of allegations (eg, sexual harassment, workplace harassment).

In addition, when collecting and reviewing employees’ electronic data, such as emails or files stored in work laptops or company servers, which may contain personal information, the company should comply with data privacy laws discussed in more detail in questions 7 and 8.

Companies may also have internal policies (eg, whistleblower protection policies, Code of Conduct) that may apply to workplace investigations, aside from the requirements under Korean law.

There are many different ways a workplace investigation concerning employee misconduct could commence. Below are some key examples from our experience:

• an employee reports allegations concerning another employee’s misconduct through an ethics hotline or other means (eg, email, phone call);
• an outsider such as a former employee or a vendor reports allegations concerning employee misconduct to a company officer;
• an internal audit reveals potential employee misconduct;
• media reports raise allegations of employee misconduct; and
• an external investigation begins (eg, by criminal authorities or administrative agencies) concerning alleged employee misconduct.

The company may place an employee who is subject to a workplace investigation under administrative leave if this seems necessary or appropriate to ensure the integrity of the workplace investigation. While administrative leave can take different forms, one way is to issue a “standby order” to the relevant employee, instructing him or her not to come into work and prohibiting contact with other employees or customers while the workplace investigation is ongoing.

Administrative leave is not a disciplinary action, but rather an exercise of the company’s authority to take personnel management measures. This authority is generally subject to a “reasonableness” test, with the Korean courts balancing the employer’s business necessity in placing the employee on administrative leave with the inconvenience caused to the employee. In conducting the balancing test, the Korean courts have considered whether the employee receives pay during the leave and the duration of the leave, among other things. In general, if the duration of the leave is not excessive and is with full pay and benefits, the employer’s management prerogative is likely to be recognised.

The company doesn't need to obtain the employee’s consent but, in practice, a company should consider getting the employee’s acknowledgement that they have received the administrative leave notice.

In addition to Korean labour law, other factors such as the company’s rules of employment or a collective bargaining agreement (if any) may affect the company’s ability to place the employee on administrative leave, by providing for prescribed procedures for placing an employee on administrative leave or requiring the company to obtain the union’s consent if a union leader or executive is involved.

While there are no laws that set minimum qualifications for who should conduct a workplace investigation, companies often engage external legal counsel to ensure the investigation is conducted in an unbiased and professional manner. If the company itself undertakes the workplace investigation, the company should take precautions such as ensuring that the person conducting the investigation is not biased and not involved in the alleged wrongdoing. If the person conducting the investigation cannot converse in the native language of the employee under investigation, the company may consider arranging for an interpreter when conducting interviews, to minimise the risk of misunderstanding.

An employee under investigation cannot bring legal action (eg, an injunction) to stop a workplace investigation. However, there have been instances where an employee under investigation raised legal challenges concerning the investigation (eg, breach of privacy). Please see question 19. While the company would not be legally compelled to stop the investigation when legal challenges are raised, they may face penalties under the relevant laws if it is determined they have committed a violation.

While there are no laws to compel co-workers to act as witnesses, the company may have internal policies (eg, rules of employment, code of conduct) that require employees to cooperate with company actions such as a workplace investigation. That said, it would be difficult to enforce such policies even if the employee refuses to cooperate (eg, taking disciplinary action against an employee who refuses to act as a witness).

There may be instances when the company is required to provide certain legal protection to employees acting as witnesses in an investigation. For example, if a whistleblower falling under the WPA is required to act as a witness, they would be entitled to legal protections as discussed in question 1. The company may also have internal policies that provide protection to employees acting as witnesses in an investigation.

It may be difficult for a company to search and collect physical items that personally belong to the employee.

While the company may search and gather electronic data, such as emails or files stored in work laptops or company servers, there are requirements and restrictions under the Criminal Code, the Personal Information Protection Act (PIPA), and the Act on Promotion of Information and Communications Network Utilisation and Information Protection, etc (Network Act), among other laws. 

Article 316(2) of the Criminal Code states that accessing the contents of another person’s documents, pictures, special media records, etc, that are sealed or designated as secret using technical means may constitute the crime of accessing electronic records.

Under the PIPA, consent must be obtained from the information owner to collect or use personal information, or to provide such information to a third party. Consent must be separately obtained for sensitive information or unique identification information. There are strict requirements as to the format and contents of the consent forms under the PIPA.

The Network Act prohibits accessing an information and communications network without rightful authority or any intrusion that goes beyond the permitted authority for access. Although this may not be an issue if a company directly manages the email accounts at issue, if an employee’s email account is protected by a password or through other means, accessing emails from that account without obtaining the employee’s consent could constitute unlawful intrusion under the Network Act as well as under the Criminal Code as discussed above.

As discussed in question 7, it may be difficult for a company to search an employee’s personal possessions. The company may search and gather electronic data stored in work laptops or company servers, subject to legal requirements and restrictions (eg, obtaining consent). 

The PIPA provides specific guidance on the requirements for obtaining consent. Under the PIPA, to collect or use an individual’s personal information, the information holder must be informed of and consent to:

• the purpose of the collection or use;
• the personal information that will be collected;
• the period of retention and use; and
• his or her right to refuse to provide consent and any disadvantages that may result from such refusal.

There are separate requirements for obtaining consent to provide an individual’s personal information to a third party. Also, consent must be obtained separately for the collection, use or provision of sensitive or unique identification information.

Under limited circumstances, personal information may be collected, used, or provided to third parties without obtaining the consent of the information holder. For instance, a company may collect and use personal information without obtaining consent where obtaining the information is necessary to achieve the company’s “legitimate interests”, which clearly exceed the information holder’s right to his or her personal information, and the collection and use are carried out within reasonable bounds. The term “legitimate interests” in this context is generally understood as a concept similar to “justifiable act” under the Criminal Code. The Korean Supreme Court has held that under exceptional circumstances such as the following, the company’s collection and review of employee data may constitute a “justifiable act” under the Criminal Code:

1. the company had specific and reasonable suspicion that the employee had committed a crime and the company had an urgent need to verify the facts;
2. the scope of the company’s review was limited to the suspected crime through the use of keywords, etc;
3. the employee had signed an agreement stating that he or she would not use work computers in an unauthorised manner and that all work products would belong to the company; and
4. the company’s review uncovered materials that could be used to verify whether the employee committed the alleged crime.

Aside from the legal obligations imposed on the company when dealing with a whistleblower who is subject to the WPA as discussed in question 1, there are also practical considerations the company should keep in mind when dealing with a whistleblower, regardless of whether the whistleblower falls under the WPA.

For example, there have been instances where an employee who raised allegations filed a complaint with Korean authorities (such as the Anti-Corruption and Civil Rights Commission (ACRC) or the Labour Office) that the company took retaliatory action against the whistleblower. The company should carefully review the legal risks before taking action, such as personnel action or civil or criminal action, against an employee who raises allegations if that employee was also involved in the wrongdoing.

It is general practice in Korea for a company to require interviewees to maintain confidentiality concerning a workplace investigation and instruct them that they are not permitted to discuss the matter under investigation with other employees, etc. If an employee violates this instruction, it may be possible for the company to take disciplinary action against them under the company’s rules.

Further, the company or its employees who have engaged in an investigation for sexual harassment or workplace harassment in the workplace are obliged to maintain the confidentiality of the investigation. Failure to comply with such requirements may lead to an administrative fine from the Ministry of Employment and Labour for the company or its registered representative.

There may be some exceptions to the confidentiality obligation, such as when an employee is required by government authorities to provide relevant information in a parallel investigation.

There is no requirement to notify an employee under investigation concerning the allegations against him or her when requesting cooperation with a workplace investigation (eg, requesting the employee’s consent to review electronic data, or requesting an interview).

However, the company may strategically consider explaining the general purpose of the investigation before requesting consent to review electronic data or when requesting an interview. This may help increase the likelihood of cooperation and also reduce the risk of the employee raising objections to the company’s findings from the investigation by saying he or she was not properly informed of the purpose of the investigation, or that the investigation was conducted in a coercive manner.

As discussed in question 1, if the whistleblower falls under the WPA, the whistleblower’s identity should be kept confidential. Even if the WPA does not apply, the company may wish to keep the identity of the whistleblower and other key witnesses confidential to the greatest extent possible.

Some companies require an employee subject to investigation to sign an NDA or other similar documents (eg, a pledge of confidentiality) agreeing not to disclose information relating to the investigation to outside parties.

No law recognises the common law concept of “attorney-client privilege” in Korea. However, communication with an attorney is protected to some extent under certain laws, such as the Constitution, the Attorney Act, the Criminal Procedure Act, and the Civil Procedure Act. This protection is based on the attorney’s confidentiality obligation, which prohibits an attorney from divulging confidential matters acquired in the course of representing clients, unless otherwise prescribed by law. This confidentiality obligation generally allows an attorney to refuse to testify or comply with document production orders for information or materials the attorney obtained in the course of his or her duties that relate to the confidential information of clients.

In addition, there could be instances where materials from an investigation conducted in Korea may become subject to discovery outside of Korea. It is, therefore, important to ensure investigation materials are privileged under the relevant non-Korean laws in the jurisdictions where attorney-client privilege is recognised (eg, the US).

While the company cannot prevent an employee from engaging his or her legal counsel, there is no legal obligation for a company to allow an employee to bring his or her legal counsel to an interview, for example. If the employee expresses his or her intention not to participate in the interview session without his or her legal counsel, the company may consider explaining to the employee that such refusal to participate in the interview may constitute a breach of reasonable work-related orders and may be subject to disciplinary action. However, the company should consider the possibility of the employee claiming that he or she was not given a proper opportunity to explain the allegations during the investigation because they were prevented from obtaining legal assistance.

While a labour union does not have a legal right under Korean law to be informed or involved in the investigation, unless otherwise required under the relevant collective bargaining agreement, there have been instances where the labour union raised complaints that the company did not properly investigate an employee, who is a member of the labour union, particularly if the company took disciplinary action against that employee based on the findings of the investigation. The company should consider such a practical risk when conducting a workplace investigation.

If the investigation was conducted based on a claim filed by an employee to the Grievance Handling Committee (which is a sub-committee of a works council), the members of that committee have a right to be informed of the results of the investigation.

There could be some instances where an employee involved in an investigation may be entitled to support from the company. To give an example, there have been some cases where a whistleblower claimed they suffered workplace harassment or their employer took retaliatory action (eg, wrongful transfer) and they sought damages or other relief.

Sometimes, the company discovers other potential misconduct in addition to the specific allegations that trigger a workplace investigation. No law limits the scope of the company’s investigation to the allegations that were initially raised.

It is not uncommon for an employee under investigation to raise grievances during or after the investigation. Below are some examples of claims an employee may raise:

• that the company reviewed the employee’s electronic data without obtaining the requisite consent;
• that witnesses or the company committed defamation in violation of the Criminal Code;
• that the employee was coerced to comply with the investigation in violation of the Criminal Code;
• that the employee was disciplined without just cause; or
• that the employee was harassed by other employees for providing information during the investigation.

The actions the company should take would vary depending on the grievance raised.

The company should review whether the employee under investigation is requesting sick leave under appropriate procedures and for a legitimate reason and may consider ways to persuade the employee to cooperate with the investigation. If the employee applies for sick leave following company policy, the company would need to grant such sick leave and suspend the investigation during the sick leave.

There is no obligation to stay the workplace investigation while the parallel criminal or regulatory investigation is being conducted. In practice, companies often proceed with, or even accelerate, the workplace investigation to find out the facts and defend themselves against the parallel criminal or regulatory investigation being conducted. The company should be careful not to engage in activities that may raise suspicions as to whether the company is impeding the government investigation or concealing or destroying evidence.

While the investigation report would typically not be privileged, the company may consider explaining to the authorities that the investigation findings are not conclusive, should the police or regulator request the internal investigation report.

There is no legal obligation for a company to disclose the outcome of an investigation to the employee who was subject to it. Having said that, if the company wishes to take disciplinary action against the employee based on the outcome of an investigation, it is required to disclose sufficient detail on the employee’s wrongdoing that is subject to disciplinary action. This information should be provided to the employee before the disciplinary action committee (DAC) hearing to provide the employee with sufficient time to present and defend his or her position during the DAC hearing.

As discussed in question 22, when taking disciplinary action against an employee based on the outcome of an investigation, the company would need to disclose sufficient detail on the employee’s wrongdoing. However, this does not mean that the full investigation report would need to be shared with the employee to be disciplined. Key details of the investigation findings that apply to the relevant employee due to be disciplined should be shared, and not other findings concerning other persons.

There is also no requirement under Korean law for a company to disclose the investigation report or investigation findings to the whistleblower. If the company discloses the personal identity of the target employees, such disclosure could constitute a violation of the PIPA , libel or defamation under the Criminal Code. If the whistleblower strongly requests that the company share the investigation report or the findings, the company may consider providing a summary of the key findings concerning the allegations that the whistleblower raised, without disclosing personal information.

After completing an investigation, the company may consider the following measures, among others:

1. taking disciplinary action against the relevant employees;
2. taking legal action (eg, criminal action, civil action) against the relevant employees; and
3. taking appropriate remedial measures (eg, strengthening existing policies and establishing new policies, and conducting training).

The company may also consider making a voluntary report to the relevant authorities as discussed in question 25.

There is generally no obligation to report violations to the Korean authorities, subject to limited exceptions (eg, financial institutions are required to report certain types of wrongdoing to the financial regulator; if there was a leak of an industrial technology developed through a national research and development project or a national core technology, this leak should be reported to the Ministry of Trade, Industry and Energy and the National Intelligence Service). However, even in the absence of a self-reporting obligation, the company may consider strategically deciding to make a voluntary report. For example, there have been instances where the police or prosecutors’ investigations were conducted in a more limited manner where the company filed a voluntary report and cooperated with the investigation. Also, for certain types of violations (eg, cartel activities), self-reporting to the relevant authority may entitle the company to leniency provided under the law.

In certain instances, the company may also consider reporting violations to the relevant foreign authorities, in addition to, or instead of, the Korean authorities. For example, if the company found potential violations of US law such as sanctions law or the Foreign Corrupt Practice Act, the company may want to self-report these violations to the relevant authorities such as the Office of Foreign Assets Control, or the US Department of Justice.

There is no legal requirement on how long the records of the investigation (eg disciplinary action) should be maintained by the company. Many companies maintain a record of disciplinary action throughout the employment period.

As mentioned in question 19, employees may potentially raise claims, such as that the company violated data privacy laws in reviewing employee data, committed defamation, coerced the employee to comply with the investigation, and that witnesses or the company committed defamation in violation of the Criminal Code or disciplined the employee without just cause.