South Korea Labor Code Overhaul Cuts Maximum Workweek (Corrected)

By Anna Massoglia

Calculation of maximum weekly work hours, overtime provisions, and treatment of public holidays in South Korea are to change under amendments to the Labor Standards Act approved by the South Korean parliament Feb. 28.

Maximum Workweek

The maximum number of hours that adult employees in South Korea may work during a week is to decrease to 52, down from the previous maximum workweek of 68 hours, the amendments to the Labor Standards Act said.

Under the amendments, a week is defined as seven days including holidays with a maximum workweek of 40 regular hours per seven-day week plus 12 overtime hours. Before the amendments take effect, the maximum allowable working time is 68 hours per seven-day week, with a maximum of 40 hours for the five working days and 16 hours for work over the weekend, plus 12 overtime hours.

Employees who are at least 15 years of age but younger than 18 years of age are to be subject to a maximum workweek of 35 hours plus five overtime hours, a decrease from 40 hours plus six overtime hours, under the amendments.

The legislation is to take effect in three stages based on company size.

Starting July 1, 2018, employers with at least 300 employees are to be required to abide by the revised maximum workweek. Employers with at least 50 employees and fewer than 300 employees are to be required to comply with the changes by Jan. 1, 2020. Employers with at least five and fewer than 50 employees are to be required to comply by July 1, 2021.

Overtime

In South Korea, it has been expected that employees must be compensated for each overtime hour worked with their full hourly ordinary wage plus an additional 50 percent of that ordinary hourly wage, and the amendments clarified that this procedure must be nationally implemented.

The amendments also established a new tier of overtime compensation that is applicable for employees who on their days off or on paid holidays work for more than eight hours. Employees who work on their days off or on paid holidays are to be paid time and a half for work of less than eight hours during such time, or 200 percent if eight hours of work are exceeded.

With the exception of pregnant employees and female employees within a year after childbirth, South Korea does not impose a national limit on daily overtime for adult workers.

Exempt Sectors

Overtime exceeding 12 hours per week is allowed for employees working in some industry sectors if there is a written agreement between an employer and a representative of employees. Effective starting Sept. 1, 2018, the number of industry sectors for which overtime exceeding 12 hours per week is allowed is to be reduced to five, down from the existing 26 industry sectors.

Starting July 1, 2018, the only sectors for which overtime exceeding 12 hours per week is to be allowed are to be land transportation, water transportation, air transportation, other transportation services, and health services.

The sectors for which overtime exceeding 12 hours per week no longer is to be allowed, effective Sept. 1, 2018, are retention and warehousing, automobile and parts sales, wholesale and commodity brokerage, retail business, financial business, insurance and pension business, finance and insurance related service business, postal business, telecommunications business, educational service business, research and development business, market research and opinion polling business, advertising business, accommodation business, restaurant and restaurant business, video or audio record production and distribution business, beauty or bath and similar service business broadcasting business, building or industrial facility cleaning and control service business, sewage, and social welfare service.

Currently, 4.53 million workers in 26 occupational hours-specific industries are subject to rules under which overtime exceeding 12 hours per week is allowed, but the number of workers is projected to be reduced to 1.02 million under the amended law, explanatory material from the Ministry of Employment and Labor said March 1.

Paid Public Holidays

The only public holiday under current law for which employees in the private sector are entitled to paid leave is Labor Day, but under the amendments, employees in the private sector are to be given paid leave on multiple official public holidays and are to be paid up to time and a half for time worked on those official public holidays starting as early as Jan. 1, 2020, the amendment said.

Starting Jan. 1, 2020, employers with at least 300 employees are to be required to give employees paid leave on multiple public holidays starting Jan. 1, 2020, the Ministry of Employment and Labor said in explanatory materials March 1. Employers with at least 30 employees but fewer than 300 employees are to be required to comply with the paid public holiday changes by Jan. 1, 2021, and employers with at least five but fewer than 30 employees are to be required to comply by Jan. 1, 2022, the Ministry of Employment and Labor’s explanatory materials said.

The government is planning to conduct a survey of public holidays and is to release additional guidance on which public holidays will be a part of this practice at a later date, the amendments to the Labor Standards Act and explanatory materials said.

The Minister of Employment and Labor also announced plans to implement changes to South Korea’s flexible working hours system by December 31, 2022, in explanatory materials on the amendments.

To contact the reporter on this story: Anna Massoglia in Washington at amassoglia@bloombergtax.com

To contact the editor responsible for this story: Michael Baer at mbaer@bloombergtax.com

For More Information

A press release on the Labor Standards Act amendments is available in Korean from South Korea’s Ministry of Employment.

A corrected press release on the Labor Standards Act amendments is available in Korean from South Korea’s Ministry of Employment.

Text of the bill amending the Labor Standards regarding public holidays is available in Korean from South Korea’s National Assembly.

Texts of Bill 2002925 and Bill 2007441 amending the Labor Standards act regarding exceptions to rules on overtime and working hours are available in Korean from South Korea’s National Assembly.

Text of the bill amending the Labor Standards act regarding maximum working hours is available in Korean from South Korea’s National Assembly.

Explanatory materials on the Labor Standards Act amendments are available in Korean from South Korea’s Ministry of Employment.

More information regarding payroll for South Korea is available in Bloomberg Tax's South Korea payroll primer.

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