The following are our updates on important HR/labor law amendments that will be pertinent to companies in 2022 and the Ministry of Employment & Labor’s (MOEL) Change of Administrative Interpretation Concerning Annual Paid Leave.
 

1.   Serious Accident Prevention Act (SAPA) to go into Effect on January 22, 2022 for Businesses with 50 or more Employees 

SAPA seeks to secure the safety and health of workers in the workplace or the general public by holding the top decision maker of the business accountable for “serious accidents.”

The responsibilities of employers and responsible management personnel under SAPA include establishing a safety and health management system that covers workforce and budgetary issues, implementing necessary plans to prevent recurrence of serious accidents, and taking necessary measures to ensure compliance with relevant safety and health-related laws.
 

2.   Substitute Holidays Expanded

With the enactment of the Public Holidays Act, starting January 2022, employers must grant the next business day as a substitute holiday in cases where a national holiday (Independence Movement Day (March 1), Independence Day (August 15), National Foundation Day (October 3) and Hangul Proclamation Day (October 9)) or Children's Day (May 5) falls on a Saturday or Sunday.  The substitute holidays must be treated as paid holidays.

However, substitute holidays will not be granted for New Year’s Day (January 1), Buddha’s Birthday (April 8 in the lunar calendar), Memorial Day (June 6) and Christmas (December 25), even if such public holidays fall on Saturday or Sunday. 

In order to substitute holidays with other working days, a written agreement with the employee representative is required.
 

3.   Employees Can Seek Relief at Labor Relations Commission for Gender Discrimination and Sexual Harassment

Starting on May 19, 2022, if an employer displays sexual discrimination in recruitment, hiring, wages, educational opportunities, promotions, or retirement policies, fails to appropriately address the concerns of a victim of sexual harassment, or terminates the employment of or otherwise penalizes a victim who reports sexual harassment, the victim may seek remedy through the Labor Relations Commission. 

This change opens up the possibility for the Labor Relations Commission to issue corrective orders to an employer (which may include ordering the employer to cease such discriminatory acts, amend its working terms and conditions under the rules of employment or collective bargaining agreement, or pay out appropriate compensation (of up to three (3) times the amount of damages)).  Failure to comply with a finalized corrective order without justifiable grounds may result in an administrative fine of up to KRW 100 million. 
 

4.   Support System for Employees Returning to Work After an Industrial Accident

From January 1, 2022, the Korea Workers' Compensation and Welfare Service can request an employer to set up a support system for victims of industrial accidents who are returning to work.  This support system will be geared towards employees who require long-term medical care after an industrial accident or those who are expected to have disabilities after medical care.
 

5.   Minimum Hourly Wage of KRW 9,160 in 2022

The minimum hourly wage in 2022 is KRW 9,160, which is a 5.05% increase from the 2021 minimum hourly wage of KRW 8,720.

Regular bonuses exceeding 10% of the 2022 minimum hourly wage calculated on a monthly basis (KRW 1,914,440 based on a 209-hour work month) will be included in the calculation of minimum wage.  Cash welfare benefits in excess of 2% of such monthly minimum wage will be included in the calculation of the minimum wage as well.  The scope of items to be included in the calculation of minimum wage will continue to be expanded through 2024 (Article 6 (4) 2 and 3 of the Minimum Wage Act (Amended by Act No. 15666, Jun. 12, 2018); Article 2 of the Addenda to the same Act).
 

6.   The MOEL’s Change of Administrative Interpretation Concerning Annual Paid Leave 

The MOEL recently revised its administrative interpretation of Article 60 (1) of the Labor Standards Act (the “LSA”) concerning 15 days of paid annual leave granted to an employee who has recorded at least 80% attendance in a given year. 

Article 60 (1) of the LSA provides that employees who have worked for at least 80% of the year prior shall be granted 15 days of paid annual leave upon completing their first year of work, and for those employees who have worked for less than one (1) year or who have worked for less than 80% of the year prior shall be granted one (1) day of paid annual leave for each completed month of work under Article 60 (2).  In terms of fixed-term contract employees, the MOEL has been interpreting these LSA provisions to mean that fixed-term employees whose one-year employment contract has expired are entitled to up to 26 days (15 days + 11 days) of paid annual leave and compensation for unused days of paid annual leave. 

HOWEVER, in a case where the number of paid annual leave days granted to an employee who has worked as a fixed-term caregiver for the past one year was disputed, the Supreme Court ruled that the right to use paid annual leave under Article 60(1) of the LSA should be deemed to accrue on the day following the completion of one year's employment from the previous year based on the premise that the employment relationship would be maintained in the following year.  Therefore, an employee whose employment contract was not renewed but rather terminated upon the expiration of the one-year term would not be eligible for the 15 days of paid annual leave under Article 60 (1) and thus cannot make a claim to be compensated for such days.  Accordingly, the employee can only be guaranteed up to 11 days of paid annual leave or compensation for unused days of paid annual leave under Article 60 (2) of the LSA (Supreme Court Decision 2021Da227100, October 14, 2021).

And the MOEL recently revised its administrative interpretation of Article 60 (1) of the LSA as below:

• [Before Change] Where an employee has been employed for one year, with an attendance rate of at least 80%, and leaves the company immediately thereafter (i.e., has been employed for 365 days), although the employee may not be able to use annual leave, he/she may claim allowance for 15 days of unused annual leave. 

• [After Change] Even though an employee has been employed for one year with an attendance rate of at least 80%, the employee may claim allowance for unused annual leave upon resignation only when he/she is still employed on the following day of the completion of the one year of employment.

Although the change in the MOEL’s position with respect to paid annual leave seems to be in line with the Supreme Court’s decision No. 2021Da227100 rendered on October 14, 2021, it is meaningful in that the MOEL has also expressed its stance on the following issues, which were not expressly covered by the aforesaid Supreme Court’s decision:

• Even a regular employee may not claim allowance for 15 days’ annual leave accrued for one year of service with an attendance rate of at least 80% if he/she resigns immediately upon completion of one year of service; instead, the employee may request such compensation in full only if he/she resigns after the employment continues the next day.

• For paid annual leave accrued at the rate of one day for each completed month of continuous service with respect to an employee who has worked less than one year, the employee may claim allowance for accrued unused annual leave for services performed in the preceding month only if he/she leaves the company after his/her employment continues on the following day of the completion of such one month’s service.

• If a regular employee resigns upon completion of one full year of service in his/her last year of employment (e.g., resigns after completing two full years of service, etc.), the employee may not claim monetary compensation for paid annual leave accrued for such one full year’s service, even if he/she has recorded at least 80% attendance.