The Concept and Types of Contractual Holidays and Contractual Leave
Bongsoo Jung (Korean labor attorney, KangNam Labor Law Firm)

I. Introduction        
An important question every company needs to have an answer to is whether it is required to provide paid off-days on public holidays and paid leave in cases where an employee was absent due to sickness caused by non-occupational activities. In short, if the public holidays are statutory holidays, and if sick leave is statutory leave, the answer is “Yes”. In some cases, it is left to the company’s discretion, or the requirements of the collective agreement or Rules of Employment. That is, in cases where these days are stipulated as paid off-days according to labor law, they become statutory holidays and statutory leaves. However, if they are not so stipulated, whether to pay or not is the company’s decision, upon which they would be considered contractual holidays and contractual leaves. Only Labor Day, public holidays, and the weekly holiday are legally considered statutory holidays. Contractual holidays are those holidays approved by the company. “Statutory leave” refers to annual paid holidays, maternity leave, and paternity leave, etc., while “contractual leave” consists of congratulatory and condolence leave, sick leave, and summer leave, etc. I’d like to look into this in more detail, as well as examples of application.

II. Contractual holidays
1. Concept
Unlike statutory holidays, contractual holidays must be stipulated in the Rules of Employment or collective agreement in order to be legally recognized as paid or unpaid holidays. Statutory holidays shall be granted on particular dates and if work is done on those days, the company shall pay an additional holiday work allowance. Statutory holidays consist of a weekly holiday (Article 55 of the LSA: An employer shall allow a worker on the average one or more paid holidays per week) and Labor Day (Act Concerning Establishment of Labor Day: The day of May 1st shall be proclaimed as Labor Day and is a paid holiday as determined by the National Labor Relations Commission.) However, contractual holidays are determined exclusively by the employer regarding particular dates and whether the holidays are paid or unpaid. If an employee works on a holiday stipulated as paid, the company shall pay an additional overtime allowance.

2. Types of contractual holidays
(1) Public holidays
Public holidays refer to off-days for public workplaces as designated by Regulations Regarding Off-days for Public Offices. Accordingly, public holidays apply only to government employees in principle, and cannot be taken for granted as paid off-days for private sector employees as they are not stipulated as holidays according to labor law, unless they are stipulated as such in the collective agreement and the Rules of Employment. Public holidays, according to Regulations Regarding Off-days for Public Offices (Presidential Decree 24273, Dec 28, 2012) include: Sunday; Independence Movement Day, National Liberation Day, National Foundation Day, Hangul Proclamation Day, New Year’s Day (Jan 1st); Lunar New Year’s Day (Dec 31~Jan 2 according to the lunar calendar), Thanksgiving Day (Aug 14~16 according to the lunar calendar); Buddha’s Birthday (Apr 8 according to the lunar calendar), Christmas Day (Dec 25), Children’s Day (May 5), Memorial Day (Jun 6), and Election Day (designed to elect new officials due to expiration of their term in accordance with the Public Official Election Act), and other particular days specified by the Government.
(2) Corporate holidays (Company Foundation Day, etc.)
Corporate holidays refer to paid off-days, such as Company Foundation Day, Labor Union Day, etc., that the company has designated in the collective agreement and the Rules of Employment.

3. Relationship between labor law and contractual holidays
In cases where contractual holidays are settled as paid off-days, employees are exempted from provision of labor, and if employees had to work on contractual holidays like paid public holidays, they are entitled to paid wages (100%), which are already included in monthly wages, and additional holiday work allowance (150%) (Article 56 of the LSA: Additional Allowances).

III. Contractual Leave
1. Concept
Contractual leave refers to paid vacation, free of labor provision in accordance with employer approval, a collective agreement or the Rules of Employment. Such leaves include congratulatory and condolence leave, sick leave, summer vacation, and other special leave, etc. Contractual leaves are not statutory like annual paid leave, or maternity/paternity leave, but are introduced to maintain traditional Korean values and improve employee well-being, and can be stipulated as paid, partially paid, or unpaid leaves. A company that does not stipulate these contractual leaves is not in violation of the Labor Standards Act.

2. Types of contractual leave
(1) Congratulatory and condolence leave
Many companies provide congratulatory and condolence leaves for wedding and funeral services in accordance with traditional Korean rituals. Although the coverage and number of leaves vary from company to company, these leaves are granted as an addition to annual paid leaves. A maximum of five leave days are given for an employee’s wedding as congratulatory leave, a maximum of five days are given as condolence leave in the event of the death of an employee’s direct family member, and one day is given for a parent’s 60th birthday.
(2) Sick leave
Should an employee be unable to carry out his/her duties due to non-occupational injury or illness, the employee shall use annual paid leave to receive medical treatment and shall bear the medical expenses him/herself as there is no statutory sick leave. Government employees can use up to 60 days per year sick leave according to Article 18 of the Government Employee Service Regulations (Sick Leave). In the private sector, if an employee has used up all his/her annual leave days, he/she may request unpaid leave to take care of illness or injury. If the employee has to continually be absent in order to receive treatment for his/her illness or injury, the company can dismiss the employee for reasons attributable to the employee. Many companies have some restricted types of sick leave, such as follows.
Type 1        No regulation for sick leave days. Annual paid leave shall be used instead.
Type 2        “The company may grant unpaid sick leave of up to 90 days per calendar year.
Type 3        “If an employee requires an extended time of absence due to accident or illness unrelated to his/her duties, he/she may request to use paid leave. The period shall not exceed 14 calendar days, provided that the accrued annual leave has been used up already.”
Type 4        “In case of a leave of absence due to non-work related injury or illness, 90% of monthly ordinary wage shall be paid for the first month, 70% of monthly ordinary wage for the second month and 50% of monthly ordinary wage for the third to sixth months.”
(3) Summer vacation
Summer vacation refers to contractual leave granted of a maximum one week besides annual paid leave during the heat of the summer in order to promote employee morale. This summer leave is used collectively by production companies, while smaller companies generally use annual paid leave days as summer vacation.

3. Relationship between labor law and contractual leave
(1) It is impossible to change the date for congratulatory or condolence leave or to apply for it retroactively (Gungi 68207-1452, Sep 14, 1994)
Congratulatory and condolence leave refers to paid leaves granted on particular days or for a particular period to the corresponding employee in accordance with the collective agreement or Rules of Employment so that the employee can participate in congratulatory or condolence events. It is not possible to change the period of leave nor retroactively apply for them.
(2) Congratulatory and condolence leave not granted during labor strikes (Gungi 68207-883, Dec 15, 1999)
According to the Labor Standards Act (LSA), “holiday” refers to a day when the employee is exempted from the provision of labor for the employer, while “leave” refers to days exempted from the obligation to provide work even though the employer is available to receive the labor service. While contractual holidays or contractual leaves stipulated by a collective agreement or Rules of Employment are not statutory holidays exempted from work provision according to the Labor Standards Act (LSA), they are to be exempted from work provision on working days due to special agreement between employer and employee. Accordingly, if there is a certain condition where the employer, in reality, could neither receive the employee’s labor nor exempt him/her from providing labor, then the contractual holiday or contractual leave cannot occur. However, for those who did not participate in strikes during labor disputes, whether a contractual holiday or contractual leave occurred should be judged according to whether the employer could receive the employee’s labor or not.
(3) Calculation of average wages during periods of leave (Retirement Pension Dept-518, Oct 21, 2008)
“Average wages” where an employee came to resign after a period of leave from work that the employee took with approval from the employer due to non-occupational injury, illness or other reason shall be calculated as follows: “average wages” to calculate severance pay refer to the amount calculated by dividing the total amount of wages paid to the relevant employee during three calendar months prior to the date of calculation by the total number of calendar days during those three calendar months (Article 2 of the LSA). If the amount calculated by this method is lower than the ordinary wages of the employee concerned, the amount of the ordinary wages shall be deemed as average wages. In cases where the period of calculating average wages includes the period falling under a period of leave from work with approval from the employer caused by non-occupational injury, illness, or other reason, the period and wages paid for that period shall be deducted respectively from a basis period for the calculation of average wages and the total amount of average wage (Article 2 of Enforcement Decree of the LSA). Therefore, in cases where an employee took a leave of absence for non-occupational injury, illness or other reason in accordance with Article 2 (8) of the Enforcement Decree of the LSA (with approval from the employer), the remaining period and wages excluding the period mentioned above shall be used for the calculation of average wages. If the leave of absence exceeds three months, the first day of the leave of absence shall be the date for calculating average wages based on the previous three months. In any case, if the amount calculated above is lower than the ordinary wages of the employee concerned, the amount of the ordinary wages shall be deemed as average wages.
(4) In cases where change of contractual leave is considered a disadvantageous Rule of Employment (Working Conditions Inspection Team-1774, Mar 25, 2009)
A particular company has provided 5 to 10 days of ‘health vacation’ per year according to rank and length of service, but did not set any restrictions on the time of use. If it were to later decide to allow its use only after annual paid leave is used up, this would be restricting free use of the contractual leave, and so would be acceptable and applicable after consent is received according to the appropriate procedures (Article 94 of the LSA).

IV. Conclusion
Contractual holidays and contractual leaves are only effective if they are regulated by a collective agreement, Rules of Employment or the employment contract. As sick leave is widely accepted by many countries as statutory leave, many foreign employees assume sick leave is statutory in Korea too, but as I have explained earlier, it is considered contractual leave. Accordingly, by taking advantage of these contractual holidays and contractual leaves, healthy medium-sized companies can use these holidays and leaves to improve employee morale, while small companies can use them to adjust their working conditions.