|Working Environment and Changes to Korean Labor Law in 2019
Written by Bongsoo Jung, Ph.D. / Labor Attorney / KangNam Labor Law Firm
I. Working environment
The current Moon Jae-in government, since his inauguration on May 10, 2017, has been pushing labor-friendly policies, reflected in the increased minimum wage, shortened working hours, additional vacation time and holidays, expanded coverage of industrial accident insurance, greater protection for vulnerable workers, and stronger labor supervision. Previous Korean regimes and administrations pursued growth policies that maximized corporate profits through low wages and long working hours. On the other hand, this administration is moving toward more balanced development, restricting growth-oriented policy and promoting fair distribution. While such worker-friendly policies have been criticized as deteriorating the business environment and productivity, they are expected to continue during the rest of Mr. Moon’s term.
The first major labor-friendly policy is the dramatic increase in minimum wage. The minimum hourly wage in 2017 was KRW 6,470, KRW 7,530 in 2018 and KRW 8,350 in 2019 – representing an increase of 29% in two years. If this increase is converted to a monthly rate based on 40 hours per week, the monthly minimum wage was KRW 1,352,230 in 2017, KRW 1,573,770 in 2018 and KRW 1,745,150 in 2019. In other words, there has been a KRW 392,920 increase in monthly minimum wage in two years. Workers receiving minimum wage have greatly benefited. On the other hand, many small and medium-sized employers have had to close down due to the higher labor costs while others have survived the harsh competition by reducing the number of workers or automating their service operations and adopting other methods to reduce labor costs.
In terms of working hours, the 52-hour workweek has been introduced and settled. By introducing the concept of one week referring to 7 days (including weekly holiday), the maximum weekly working hours were reduced from 68 to 52. In annual leave regulations, the number of days for employees working less than two years was limited to 15 over that two-year period. The related law was amended to allow for additional 11 off-days in the first year, and 15 days in the second. In addition, national holidays (currently 15) were introduced as statutory holidays.
Other working conditions that have been improved: (i) accidents occurring during the commute between home and work are now recognized as occupational industrial accidents; (ii) a workplace harassment prevention law was also introduced, which requires employers to have self-correcting rules in place to deal with workplace harassment; (iii) the employer’s ultimate responsibility for sexual harassment in the workplace has been strengthened to better protect victims; (iv) to protect workers with disabilities and promote their employment, mandatory education on raising awareness in the workplace of persons with disabilities was introduced to workplaces employing 50 or more people; a variety of allowances were increased, such as unemployment benefits and maternity allowance, while others were introduced.
Of particular note is that the Ministry of Employment and Labor has strengthened labor audits by hiring more than 500 labor inspectors in 2018. Labor inspectors used to audit workplaces to prevent violations of labor standards, but now correct violations by charging fines for non-compliance with the Labor Standards Act (LSA).
II. Increase to Minimum Wage
According to the current minimum wage system in Korea, a single minimum wage is applied at all workplaces, without distinction as to the industry or region, and all employers are obligated to pay at least the minimum wage. Employers can pay more than the minimum wage, and parts of employment contracts that stipulate a wage lower than the minimum wage shall be invalid, with the difference to be paid additionally. Employers shall be punished for violations with imprisonment of up to three years or a fine not exceeding KRW 20 million (Articles 6 and 28 of the Minimum Wage Act).
「Minimum Wage 」
Division Jan 1 ~ Dec 31, 2016 Jan 1 ~ Dec 31, 2017 Jan 1 ~ Dec 31, 2018 Jan 1 ~ Dec 31, 2019
Hourly wage KRW 6,030 KRW 6,470 KRW 7,530 KRW 8,350
(8 hours) KRW 48,240 KRW 51,760 KRW 60,240 KRW 66,800
Converted to monthly wage
(209 hours) KRW 1,260,270 KRW 1,352,230 KRW 1,573,770 KRW 1,745,150
(max. 3 months) KRW 5,427 (hourly)
KRW 1,134,243 (monthly) KRW 5,823 (hourly)
KRW 1,217,007 (monthly) KRW 6,777 (hourly)
KRW 1,416,393 (monthly) KRW 7,515 (hourly)
KRW 1,570,635 (monthly)
☞ 10% decrease for probationary workers, max. 3 months
☞ 40 contractual working hours per week (209 hours per month including 8 hours of paid weekly leave)
III. Reduced Working Hours, Increased Number of Holidays & Leave Days
In 2016, Korean workers worked 2,052 hours and were exposed to labor for long periods of time, resulting in low productivity and more industrial accidents. The industries where “special” working hours and recess time are allowed were defined so broadly that unlimited overtime was de facto permitted, and lower courts have rendered different judgments regarding additional overtime pay. Government policy on government holidays was discriminatory in that the right to rest applied to government workers and public institutions, but not to small businesses. Therefore, it was necessary to reduce working hours, resolve social disputes, and ensure workers' right to rest.
1. Up to 52 hours per week, including overtime and holiday work
There has been confusion as to what makes “one week”. It used to be based on 5 or 6 days, with the weekly holiday excluded. Therefore, there were 40 working hours plus up to 12 hours overtime, and then 8 hours of holiday work or 16 hours over 2 holidays could be added, which could total 68 hours a week. However, on March 20, 2018, Article 2 of the Labor Standards Act was amended to include the definition that “one week refers to seven days including holidays.” Due to this, the maximum working hours per week is now 52 hours including holidays. Employers shall be punished for violation with imprisonment of not more than 2 years or a fine of not more than KRW 20 million (Article 110 of the LSA, Penal Provisions)
Article 2 (Definition)
(1) Terms used in this Act are defined as follows
7. The term "one week" refers to seven consecutive days including holidays.
Before revision After revision
Max working hours per week: 68
* 68 hrs = 40 hrs + 12 hrs + 16 hrs
(if there are 2 holiday days) Max working hours per week: 52
* 52 hrs = 40 hrs + 12 hrs
2. Coordination of working hours for workers under 18 (from Jul. 1, 2018)
The term "minor" refers to a worker who is between 15 and 17 years of age. Working hours for minors cannot exceed 7 hours per day and 35 hours per week. However, if agreed between the parties, they may be extended 1 hour per day and 5 hours per week. That is, a minor can work up to 8 hours a day and 40 hours a week. Employers shall be punished for violations with imprisonment of not more than 2 years or a fine of not more than KRW 20 million (Article 110 of the LSA, Penal Provisions).
Article 69 (Working Hours) Working hours of a person aged between 15 and 17 shall not exceed seven hours per day and thirty five hours per week. However, the working hours may be extended by up to one hour per day, or five hours per week, upon agreement between the parties concerned. [Enforcement Date Jul.1,2018]
Before revision After revision
Max working hours per week : 46
* 46 hrs = 40 hrs + 6 hrs Max working hours per week : 40 hrs
* 40 hrs = 35 hrs + 5 hrs