|Revisions of Korean Labor Law in 2018
I. Minimum Wage and Obligations of the Employer
1. Minimum wage for 2018: The minimum wage, to be applied in 2018, is KRW 7,530 per hour, which is equivalent to KRW 1,573,770 per month for a 40-hour week. This is an increase of 16.4% over the previous year, and is twice the average increase rate in minimum wage.
2. Effective period: 2018.1.1 ~ 2018.12.31.
3. Application: The minimum wage shall apply to all businesses and workplaces.
4. Wages excluded from minimum wage rules are as follows (Table 1 of the Minimum Wage Act):
(1) Wages, other than those paid regularly once or more every month;
(2) Wages, other than those paid for contractual working hours or contractual working days:
① Annual or monthly paid allowances, work allowance on paid leave, work allowance on paid holidays; ② Wages and additional allowances for extended work or holiday work;
③ Additional allowances for night work; ④ Day- & night-duty allowances; and ⑤ Wages not admitted to be paid for a contractual working day, regardless of how such payments are termed.
(3) Other wages deemed inappropriate to be included in the minimum wage:
Allowances paid to assist employees such as family allowances, meal allowances, housing allowances, transportation allowances, etc., or actual or similar expenses to support employee welfare such as meals, dormitory accommodation or other housing, company shuttle buses, etc.
5. Employer Obligations
(1) Obligation to give notice: In case of violation, imprisonment for up to three years or a fine not exceeding KRW 20 million (Articles 11 and 31 of the Minimum Wage Act);
When the minimum wage is announced, the employer shall inform employees of 1) the minimum wage rate, 2) the scope of wages excluded from application of minimum wage, and 3) the effective date. This notice must be posted in places where it can easily be seen by all employees, or through other appropriate methods.
(2) Penalty for not paying minimum wage: a fine not exceeding KRW 1 million (Articles 6 and 28 of the Minimum Wage Act).
II. Annual Paid Leave
1. Rescinding of annual leave deductions for those who have worked for less than one year (Deleted Article 60 (3) of the current Labor Standards Act)
Employees are guaranteed 15 days or more of annual paid leave as stipulated by the Labor Standards Act (LSA). However, it is regulated differently for those who have worked for less than one year. Under the current law, these people are granted one paid leave day for each month during which they have continuously worked (Article 60 (2) of the LSA), but used leaves during the first year are deducted from the next year's number of days of annual leave (15 days). Therefore, for new employees, only 15 days of annual leave are provided in two years, which leads to the problem that this could threaten employees’ right to sufficient rest.
In response to this criticism, on November 9th, the National Assembly passed a bill to revise paid annual leave. According to the amendment, even if employees who have worked for less than one year use their annual leave, such used leave will not be deducted from the number of annual leave days (15 days) in the following year (the current Article 60 (3) of the LSA has been deleted). New employees can now use up to 11 days of annual leave for the first year and 15 days for the following year, making a total of 26 days for two years. This amendment will take effect six months after the date of its promulgation by the Ministry of Government Legislation (June 2018).
As an example: If an employee who joined a company on January 1, 2016 used 7 days of annual leave in the first year, how many days of paid leave would be available for him/her in 2017?
Under the current LSA, it is stipulated that the used leave days during the first year are deducted from the 15 days of annual leave that are granted only when the employee continues to work for one year. Therefore, the employee can use 8 days of paid leave in 2017, deducting 7 days from the 15 days of annual leave, which occurs on January 1, 2017.
Under the amendment, the employee will be paid for up to 11 days during the first year. Since those days are not deducted from the annual leave given in the following year, the employee can use another 15 days, which occurs on January 1, 2017.
2. The period of childcare leave shall be considered as a period of work attendance
(Newly-established Article 60 (6) 3 of the LSA)
This amendment also introduces measures to ensure the annual leave of employees who come back to work after childcare leave. According to the current law, when calculating the number of annual leave days, while maternity leave is regarded as a period of attendance, the period of childcare leave is excluded and calculated as a proportion of the whole period. Because of this, there were cases where employees did not receive a single day of annual paid leave in the following year after returning from childcare leave.
In the future, the period of childcare leave shall be considered a period of work attendance when calculating the number of annual leave days, to encourage the balance of work and family and the use of childcare leave. Applicants who apply for childcare leave will be subject to this amendment after it is enacted.
This amendment is encouraging, given that the legislative purpose of annual leave is to provide workers with adequate mental and physical free time to encourage greater productivity while enabling workers to balance work and family.
III. Extension of the Scope of “Industrial Accident” for an Accident while Commuting to and from Work (Revision of the Industrial Accident Compensation Insurance Act)
ONLY an accident which happened while the worker was commuting to and from work under the control of the employer, such as by using transportation provided by the employer, or the equivalent thereof, could be recognized as a work-related accident.
A legal definition of “Commuting to and from work” was prepared. According to the revised law, “Commuting to and from work” means moving between residence and workplace or from one work place to another work place in connection with work (Article 5 (8)).
Even though an accident may not have happened while the worker was commuting to and from work under the control of the employer, if it happened while commuting in the ordinary course and methods of work, such accident is considered an industrial accident (Article 37 (1) 3).
However, an accident which happens while deviating from or stopping from the ordinary course of work, or an accident which happens thereafter shall not be recognized as an industrial accident. However, if such deviation and stop fall under any reason stated in the Presidential Decree as a necessary act for everyday life, it shall be deemed as an industrial accident (Article 37 (3)). However, if it falls under any occupation for which the commuting course and method are not consistent, as stated in the Presidential Decree, it shall not be recognized as an industrial accident (Article 37 (4)).
The revised law shall take effect on January 1, 2018, and shall be applied to all accidents occurring while commuting after the enforcement date.
IV. Increase in the Amount of Child-care Leave Benefits, etc.
(Revision of the Presidential Decree of the Employment Insurance Act)
During childcare leave, 40/100 of ordinary wage in childcare leave benefits were provided (monthly maximum of KRW 1 million, monthly minimum of KRW 500,000).
In addition, 75/100 of child-care leave benefits were paid during the childcare leave and 25/100 of child-care leave benefits were paid if a worker returned to the workplace concerned after the end of childcare leave and continued to be employed for six (6) months