Korean Ministry of Employment and Labor Publishes Explanatory Note on Working Hours

Understanding what constitutes an employee’s working hours is more important than ever, due to recent amendments to the Korean Labor Standards Act (the “LSA”). The LSA was recently amended so as to limit weekly working hours to 52 (40 hours plus 12 overtime hours). Until now, many companies had relied on administrative guidance providing that up to 68 hours (40 hours plus 12 overtime hours plus 16 weekend hours) per week was permissible. The amendment will be phased in for employers of different sizes, and it has become effective as of July 1, 2018 for employers with 300 or more employees and government invested/controlled entities. 

In this regard, the Korean Ministry of Employment and Labor (“MOEL”) has published an explanatory note intended to clarify what activities must be counted as part of an employee’s “working hours” for purposes of the law (the “Note”). The Note briefly explains the criteria for determining an employee’s working hours, with references to noteworthy precedents and administrative guidance. The Note does not represent a change in MOEL’s official interpretation of what constitutes working hours. However, it is useful in that it collects and explains important established criteria and offers some advice on how to avoid problems. 

Significant topics addressed in the Note include: 

• Distinguishing between rest periods, which do not constitute working hours; and standby hours, which do.
• Determining whether time spent on training or education, and on workshops and seminars, are part of an employee’s working hours.
• Treatment of business trips and the effect of labor-management agreements on deemed working hours.
• Team/company get-togethers and client entertainment. 

The following are some of the more significant parts of the Note. They have been abbreviated and edited for clarity, and we have added some additional material and made changes for context and readability.

Criteria for Determining What Constitutes Working Hours

“Working hours” refers to any hours spent by an employee as a subordinate under the employer’s implicit/explicit direction and supervision.

To determine whether any given hours are spent under an employer’s direction and supervision, one should consider: whether the employer supervises the employee; whether the employee is obliged to perform requested tasks, and any adverse consequences imposed for rejecting such requests; and the degree to which the employee’s freedom is restricted, i.e., the employee is obliged to be at a certain place at a certain time.

According to the Supreme Court, whether any given hours are working hours is not determined based upon a single factor, but upon consideration of various factors such as the content of the employment agreement; the rules set forth in any collective bargaining agreement or the company’s rules of employment; the nature and manner of the employee’s work; whether the employer supervises or interferes with the employee while on recess; whether the employee is provided a place to freely use for recess; and whether there are any incidents where employees’ actual recesses are interfered with or they are supervised.1

Significant Court Decisions and Official Interpretation by MOEL

1. Rest periods and standby hours

Any free time enjoyed by employees without their employer’s direction and supervision is deemed a “rest period” (a/k/a “recess period”). Whereas any time spent by workers under the direction and supervision of their employers, including waiting (standby) time, is deemed to be working hours.2

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Case No. 2016da243078 (Sup. Ct. Dec. 13, 2017) 

A security guard’s night-shift work constituted “working hours” rather than a rest period. During these hours:

(i) the security guard could not freely leave the security office, and was required to respond promptly to any emergencies;

(ii) the guard had to keep the lights on in the office; and

(iii) the guard had to patrol during the nighttime, without any fixed schedule. These obligations interfered with the employee’s rest and thus this time could not be deemed a rest period; instead these were waiting hours in case of emergency.3

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2. Training (Education) Time 

When employers implement training programs to satisfy their legal obligations, the time spent for these programs is deemed working hours. To the contrary, where employees are themselves personally required as their own legal obligation, or merely recommended by their employers, to receive some sort of education, the time spent is unlikely to be deemed working hours.

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MOEL Authoritative Interpretation Labor Improvement Policy Div.-798 (Jan. 25, 2013).

If employees are not mandated to take certain training programs, and their employer does not impose any disadvantage for not taking those programs, the time spent cannot be deemed working hours. That an employer paid employees as encouragement to take certain training programs does not change their character to that of working hours.

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3. Business Trips

When it is difficult to calculate working hours because an employee works outside the workplace, such as when an employee goes on a business trip, the employee will be deemed to have worked for (i) the “contractual working hours” agreed with the Company; or (ii) the working hours “ordinarily required” to complete the work if that is greater than the agreed contractual working hours.

Practice Tip: It is recommended to have a written agreement with a workforce representative that establishes what “ordinarily required” working hours are. If there is such an agreement, the hours it specifies will be deemed to be the working hours “ordinarily required” for a given purpose—e.g. overseas travel— for purposes of the law. 4

4. Client Entertainment

Where an employee entertains a business-related third party such as a client, that time constitutes working hours only when the employer approves or directs the activity. 

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Case No. 2017gadan5217727 (Seoul Centr. Dist. Ct. Apr. 4, 2018)

A plaintiff claimed that time spent playing golf with clients on the plaintiff’s days off constituted working hours. This time did not constitute working hours, based on the following facts: (i) the plaintiff and the plaintiff’s superior decided for themselves on the place and time for the golf, on their days off; (ii) no one, including the plaintiff or the plaintiff’s superior, reported this to the company; (iii) the plaintiff, who was a department head at that time, was probably motivated by personal reasons to play golf with clients, such as to enhance his own reputation and business opportunities/performance.

One could consider the company to have accepted that golf events can be for business purposes, by treating entertaining expenses as business expenses; and most of the plaintiff’s golf rounds during the plaintiff’s days off were under the direction of the plaintiff’s boss. However, those facts were insufficient to consider the time spent golfing during days off as “working ours” under the LSA. 

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5. Workshops/Seminars

Workshops and seminars devoted to discussions related to job performance, under an employer’s supervision or direction, can be regarded as working hours. And where such activities occur beyond agreed contractual working hours, it can be regarded as overtime work.

On the contrary, workshops and similar programs implemented to encourage bonding among employees are not regarded as working hours.

Practice Tip: It is recommended to conduct job-related workshops and seminars within contractual working hours

6. Company Get-Togethers

Because company get-togethers are basically for the purpose of strengthening bonds among colleagues, which is not directly related to the employer’s business, company get-togethers are not regarded as working hours even if employers essentially require workers to participate in them.

7. Other Examples

Coming to work early

Where employees come to work earlier than the beginning of their regular working hours, it is not regarded as part of their working hours unless they are required to come earlier such as through the imposition of some punishment, or reduction of their wages.5

Additional Note:The cases above are applicable to employees protected under the LSA. An employee under the LSA is a person who provides labor to a business, as a subordinate, in return for pay. A person who has significant autonomy to perform a management function may be considered a nonemployee executive, and not protected by the LSA, including its working-hours restrictions. People who hold statutory positions under the Commercial Act, such as the representative director of a company, are normally presumed to be nonemployee executives who are not protected by the LSA. In addition, there is an exemption from the regulations concerning working hours for certain managerial/supervisory employees, though it is quite limited in scope.

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1 See Case No. 2014da74254 (Sup. Ct. Dec. 5, 2017).

2 LSA, art. 50 (3) (Working Hours).

3 Note that there is also precedent from the Supreme Court holding that employers do not have to pay employees their full amount of wages or statutory overtime/nighttime/day-off premium pay

for certain standby-type (i.e., very low-intensity) work, such as night duty where employees monitor the work premises on a rotational basis; whereas if the work intensity during such duty is

comparable to the employee’s ordinary workload, the employer must pay overtime/nighttime/dayoff premium pay as normal. This case and other similar holdings from lower courts have been a

source of much controversy among practitioners, as they may be considered, arguably, to be somewhat inconsistent with the Supreme Court’s holding that waiting time under an employer’s

direction and supervision constitutes working hours. Thus, each case must be considered carefully, considering all relevant factors including the nature of the work itself.

4 See LSA art. 58(2) (Special Cases for Calculation of Working Hours).

5 MOEL Authoritative Interpretation Guengi-01254-13305 (Aug. 29, 1988).

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 By Yulchon LLC, South Korea, a Transatlantic Law International Affiliated Firm.

For more information on this topic, please contact  korealabor@transatlanticlaw.com.

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