Korean labor law for Foreign Employers

Information on employment laws of Korea

Contact me for questions on Korean labor law

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A manager of a foreign company can ask questions on Korean labor laws by clicking here.

Written by Sunny Lee

April 6th, 2013 at 11:56 am

Five Points Summary of Maternity Leave

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This post will cover major points of maternity leave system of Korea. The system may confuse a foreign employer because one should consult complicated laws and regulations.  It is a good idea to leave the matter to be handled by your local HR staff or HR consultants, although it won’t hurt if you have the general idea of the system. Consider this post as a snapshot to help you get such a general idea.

1.  Maternity leave is 90 days with an exception for a female employee with twins. 

An employer should grant a pregnant employee 90 days in maternity leave. The 90 days are calendar days, meaning that all weekly holidays (usually Sundays) and other kinds of holidays are included in the 90 days.

Based on the amendment of the Labor Standards Act that took effect in July 1, 2014*, an employee pregnant with two or more children is entitled to have 120 days of maternity leave. The amendment applies to employees who give birth after the amendment entered into force.

*Article 74 of the Labor Standard Act

2. At least 45 days of leave should be given to a female employee after childbirth

To protect the health of a female employee after childbirth, an employer should allow the employee to have at least 45 days of maternity leave after childbirth even if the employee already took more than 45 days of the leave before childbirth. In such a case, the employer may not pay the wage for the days of leave in excess of 90 days.

3. Maternity leave should be given even for miscarriage or stillbirth.

Maternity leave should be granted even in the case of miscarriage or stillbirth as follows:

  • within 11 weeks into pregnancy: Five days of leave from the date of miscarriage or stillbirth
  • 12~15 weeks into pregnancy: 10 days of leave from the date of miscarriage or stillbirth
  • 16~21 weeks into pregnancy: 30 days of leave from the date of miscarriage or stillbirth
  • 22~27 weeks into pregnancy: 60 days of leave from the date of miscarriage or stillbirth
  • 28 weeks or longer into pregnancy: 90 days of leave from the date of miscarriage or stillbirth

4. Maternity leave is a paid leave.

An employer should pay wages for the first 60 days of the leave period. (In the case of an employee with twins or more, an employer pays wages for the first 75 days.) The employment insurance fund covers the wages for the remaining days of maternity leave.

However, with the “Preferentially Supported Enterprises” which are listed in the table 1 of the Enforcement Decree of the Employment Insurance Act, the Employment Insurance Fund covers the wages for the whole 90 days. In such a case, the maximum amount of wages covered by the Fund for the 90 days is 4,050,000 Won (1.35 million Won for 30 days). If an employee’s monthly wage is higher than the maximum monthly wage covered by the fund, the employer should pay the balance for the first 60 days.

Here is an example of how this system works.

Suppose you have 200 or less employees and the company is in the retail industry and you are paying 1,500,000 Won to a female employee as a monthly wage.

The wage for the whole 90 days of maternity leave for the employee is covered by the Employment Insurance Fund because your company is in one of the industries listed in the Table* of of the  “Preferentially Supported Enterprises”.

However, as stated earlier, the maximum wage covered by the Employment Insurance Fund for 30 days is 1,350,000 Won, which means there is a balance of  150,000 Won. Therefore, you have to pay the employee the balance for the first 60 days (150,000 won for first month and 150,000 won for the second month).  For the last 30 days, you pay nothing  to the employee because an employer has an obligation to pay only for the first 60 days.

 

*  The list of “Preferentially Supported Enterprises” from the Enforcement Decree of the Employment Insurance Act 

table 1

5. You cannot dismiss an employee during maternity leave.

An employer is prohibited from dismissing a female employee during maternity leave and within 30 days after the leave.

 

Written by Sunny Lee

March 5th, 2015 at 10:34 am

Substitute holiday system of Korea

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Unlike other advanced countries such as United States, Japan and Australia, Korea never had substitute holidays system. That means when a public holiday overlaps with Sunday, the holiday was just lost for employees.

This changed with the passage of a bill for substitution of overlapping holidays at the National Assembly in 2013.  “A Regulation on Closure Days for Public Offices” was amended accordingly based on the bill.

The substitute holiday system in the regulation stipulates that the substitution is not for all overlapping holidays but only for Lunar New Year’s Day (Dec.31, Jan. 1 and 2 of the lunar calendar), Korean Thanksgiving Day (August 14, 15 and 16 of the lunar calendar), and May 5 (Children’s Day). As a result, in 2014, there was only one case of substitution, which was taking a day off on September 10 instead of September 7 (Thanksgiving day) that fell on Sunday.

The regulation stipulates that overlapping of Lunar New Year’s Day (three days) and Korean Thanksgiving Day (three days) with Sunday or other public holidays shall make next working day after the successive holidays as a substituted holiday. As for Children’s day, overlapping of the day with Saturday, Sunday, or other public holidays shall make the next working day after May 5 as a substituted holiday.

There is one thing to remember about the relationship between the above-mentioned regulation and actual holidays at private enterprises.  According to the labor-related laws, there are only two types of legal holidays that employers should allow to employees. They are paid weekly holidays (usually Sunday) and Workers’ Day (May 1). Public holidays in the regulation are not mandatory holidays for private enterprises. It is up to employers of those companies to make those public holidays days off for employees or not by inserting a relevant article in the rules of employment or in the collective bargaining agreement.

For example, an employer may stipulate holidays like this in the rules of employment.

<Holidays>
1. weekly paid holidays
2. worker’s day
3. holidays based on the Regulation on Closure Days for Public Offices

In this case, the substitution system will also apply to the workplace.

On the other hand, an employer may just enumerate holidays without mentioning the regulation.

<Holidays>
1. Weekly paid holidays
2. Worker’s day
3. Lunar new years’ days
4. Korean Thanksgiving Day
..
.. and so on.

In this case, the substitution system does not apply to the company.

In closing, here is a list of holidays based on the Regulation on Closure Days for Public Offices for 2015.

1.  Jan.1 (New year’s day)
2. Feb. 18 to 20 (Lunar new years days)
3. March 1st. (Independence movement day)
4. May 5 (Children’s day)
5. May 25 (Buddha’s birthday)
6. June 6 (Memorial day)
7. Aug 15 (Independence day)
8. Sept 26 – 29 (Thanksgiving days: Sept 27 overlaps with Sunday hence a substitute holiday on Sept 29)
9. Oct 3 (National foundation day)
10. Oct 9 (Korean Alphabet day)
11. Dec. 25 (Christmas day)

** The year 2015 has only one substitute holiday on September 29.

 

Written by Sunny Lee

October 14th, 2014 at 5:18 pm

Retirement Pension to be mandatory for all companies in Korea in 2022

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On 27 August 2014, the Korean government announced a plan to make retirement pension system mandatory for all companies. The followings are main points of the plan.

1. The schedule of mandatory adoption

2016: companies with 300 or more workers
2017: companies with 100 or more
2018: companies with 30 or more
2019: companies with 10 or more
2022: all companies

2. Financial support for small-and-medium companies by introducing the retirement pension fund system for SMEs

– to be implemented in July 2015
– financial support for the pension in SMEs (companies with 30 workers or less)
– subsidy from the fund to pay half of the pension operation fees paid by an employer (the fee is 0.4% of the contribution)
– subsidy from the fund to pay 10% of the contribution by an employer for a worker with monthly salary of 1.4 million won or less

3. Temporary workers with working period of less than 1 year to be covered by retirement pay

– to be implemented in 2016
– workers with a labor contract for less than 1 year will be entitled to retirement pay which is currently only for workers with 1 year or longer service

Of course, these are just a plan at this moment and actual amendments of related laws would have to follow for them to materialize.

Written by Sunny Lee

August 28th, 2014 at 5:04 pm

Posted in labor news

What is the Maximum Overtime Hours allowed in Korea?

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What is the maximum work hours including overtime that you can implement in your workplace in Korea? The answer is currently 68 hours and it is likely to change sooner or later.

Now, here is the explanation on how we get 68 hours.

Legal weekly work hours based on the Labor Standards Act (LSA) is 40 hours.

Article 50 of the LSA – (1) Working hours per week shall not exceed forty hours excluding recess hours.

The maximum overtime hours allowed by the law is 12 hours per week.

Article 53 of the LSA – (1) If the parties concerned reach agreement, the working hours stipulated in Article 50 may be extended up to twelve hours per week.

It would appear that the maximum weekly work hours based on the above mentioned articles should be 52 hours per week. However, the LSA has no specific article about whether work hours on Saturday and Sunday should be included in the maximum overtime of 12 hours stated above or not. What we currently have is only the guideline by the Ministry of Employment and Labor that says work hours on Saturday and Sunday are not included in the maximum 12 hours overtime.

That leads to the following calculation.

40 hours (workweek) + 12 hours (max. overtime) + 8 hours (Saturday) + 8 hours (Sunday) = 68 hours

*You should, of course, pay premium rates for overtime and holiday work.

This 68 hours has been the practice in businesses for a long time. However, a number of lawsuits lodged by labor unions claiming that 52 hours, not 68 hours, should be the maximum based on the strict interpretation of the law led to debates among labor, management and the government. Moreover, reduction of overtime hours to improve worker’s quality of life has been one of the agenda pushed by the new government.

Labor, management and government have been discussing how to settle the issue of overtime limit for several months, but have yet to reach a conclusion. The government and the ruling party is pushing for 60 hours as maximum work hour and labor unions and opposition parties are for 52 hours. Eventually, the law will be amended and more specific and detailed restriction on overtime will be enforced but it is hard to say when an agreement will be made because discussions over labor-related issues in Korea have a proven record of getting postponed or protracted forever.

There was an interesting coincidence. While I was preparing a post on this topic, I got a question on the same subject from someone who used the question form on the top of this blog. Thanks to him, I was able to write this post faster than usual. :-)

Written by Sunny Lee

April 23rd, 2014 at 12:06 pm

Childcare Leave System in South Korea

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This post covers five important points on childcare leave based on the Equal Employment Act of Korea that governs the leave.

1.Who can request childcare leave?

An employee, male or female, who has a child aged not more than 8 years or a child in the 2nd or lower grade of an elementary school. Not only regular workers but also fixed-term workers and dispatched (leased) workers can request childcare leave. For fixed-term and dispatched workers, the term (duration) of their childcare leave is not included in the calculation of the employment period.

2. Who is not eligible for childcare leave?

– An employee whose consecutive period of service will be less than 1 year on the day prior to the day on which the childcare leave is supposed to begin.
– An employee whose spouse is on a childcare leave for the same child.

3. What is the maximum period of childcare leave?

Childcare leave can last up to 1 year.

4. Should an employer pay salary to an employee during his/her childcare leave?

An employer does not have a legal obligation to pay employees during their childcare leave unless company rules state otherwise. Employee themselves should request childcare leave benefits at the employment centers under the Ministry of Labor. The benefits are 40% of monthly ordinary wages.

5. What are other steps that an employer should ensure with regard to childcare leave?

The employer should reinstate an employee after childcare leave to his/her previous position or other position with the same level of salary. The employer should include the period of childcare leave in the period of service to calculate retirement pay, promotion and annual leave. Also, the employer should not dismiss or give disadvantageous treatment to workers because of childcare leave. An employer cannot dismiss workers during their childcare leave.

Written by Sunny Lee

April 18th, 2014 at 4:16 pm