The Labour Standards Act was amended in 2018 to reduce the total working hours over a seven-day period from 68 hours to 52 hours (see our previous update here). This rule took effect on 1 July 2018 for employers with 300 or more employees and on 1 January 2021 for employers with 50 to 299 employees. For employers with 5 to 49 employees, the rule will take effect on 1 July 2021. Employers who fail to comply with the reduced working hours may be subject to penalties of up to two years imprisonment or a fine of up to KRW20 million (~USD17,700).
Previously, working hours were restricted to 8 hours a day or 40 hours a week, which could be increased by agreement by a further 12 hours a week. This meant that employers were asking employees to work for up to 68 hours (8 hours a day x 7 days + 12 hours). The Labour Standards Act was then amended in 2018 to clarify that a "week" is 7 days, including weekends. Thus, the maximum number of hours per week that employees could be required to work would be 52 hours (8 hours a day x 5 days + 12 hours).
Additional Overtime for Smaller Entities
From 1 July 2021 and 31 December 2022, employers with fewer than 30 employees may require employees to work for an additional 8 hours of work per week above the 52 hour limit provided that they enter into a written agreement with a labour union or, in the absence of a union, employee representatives representing the majority of employees. Such agreement may be done by way of a letter of consent, setting out the reasons for the need of overtime and the scope of employees who will be effected.
Alternative Working Hour System
Employers may choose to adopt an alternative working hour system to be exempted from the 52 hour work week requirement. To do so, they must obtain a written agreement from a labour union or, in the absence of a union, an employee representative representing the majority of employees. See our previous update here on the possible alternative working hour systems for different businesses.
Whether an employee is excluded from entitlement to overtime pay is not necessarily dependent on their title. An employer is not required to make overtime payment to an employee who:
- is in a managerial or supervisory capacity; or
- handles confidential information in a company.
An employee is likely deemed to be in a managerial or supervisory capacity where they have a degree of latitude over their working hours. Factors that are considered in assessing whether an employee is in a managerial or supervisory capacity include:
- the level of discretion that the employee enjoys over their working hours;
- the degree of influence that the employee exercises over the employment terms or conditions applying to other employees; and
- bonuses or allowances that the employee receives for their managerial position, if any.
A person who handles confidential information generally refers to a person who handles business confidential information and occupies a position in line with the management of the company.
The Ministry of Employment and Labour may carry out audits to ensure compliance. Employers should implement a system to monitor the number of hours their employees work each week (particularly for employees who work remotely) and require that employees obtain approval before performing overtime.
If an employee who is not exempted from overtime pay entitlement works beyond the 52 hour work requirement, the employer should consider reducing their work hours or adopting flexible work arrangements.