On March 6, 2023, the Ministry of Employment and Labor (“MOEL”) announced a plan (the “Reform Plan”) to reform the working hour system reflecting the Future Labor Market Research Group’s recommendation and issued a legislative notice to amend the Labor Standards Act (“LSA”) to implement the elements of the Reform Plan that require legislative amendment (e.g., expanding the calculation period for overtime work, longer calculation periods for selective working hour system, reforming the employee representative system, and introducing the working hour savings account system).  The LSA amendment bill will be subject to public review and comments and the MOEL plans to submit the final LSA amendment bill by July 2023.  Whether the LSA amendment bill will be approved by the National Assembly where the opposing party constitutes a majority will have to be seen and we will continue to monitor the developments.
 
The key details of the Reform Plan are: (i) flexibility in managing working hours; (ii) protection of workers’ “health right;” (iii) guaranteeing workers’ right to rest by encouraging taking of leave; and (iv) expanding flexible working hour systems.
 
The specific details of the Reform Plan include the following.
 
1.   Flexibility in Managing Working Hours and Protection of Workers’ Health Rights
 

The current 52-hour workweek is based on a weekly calculation of overtime (i.e., 12 hours per week).  The MOEL intends to provide more flexibility to working hour management by providing more options for overtime management, i.e., monthly, quarterly, semi-annual, and annual calculation periods.  This enhanced flexibility in managing overtime will be accompanied by the following measures to ensure protection of workers’ health rights: (i) granting 11 consecutive hours of rest between working days or setting a cap on weekly total working hours at 64 hours, (ii) ensuring the average weekly working hours over a four week period is less than 64 hours, and (iii) progressive reduction of the total permissible overtime working hours as the calculation period gets longer (e.g., from monthly to quarterly).
 
The MOEL also plans to initiate discussions this year on “employee’s right not to be reached after working hours,” with the intent of giving employees more flexibility in choosing their working hours.
 

In addition, the MOEL plans to reform the employee representative system to better reflect the needs of employees in certain occupations/job types who need to set different working hours.  As a prerequisite for expanding the right to choose working hours, the MOEL plans to implement a transparent working hour management system to prevent the abuse of the comprehensive wage system.  The MOEL also plans to reduce the scope of exemptions from the regulation on working hours for surveillance and intermittent workers and also allowing exceptions to the regulation on working hours for high-income and professional workers to enhance their autonomy in managing their working hours.
 

2.   Guaranteeing Workers’ Right to Rest by Encouraging Taking of Leave
 

The MOEL intends to overhaul various systems to encourage employee to take their leave.  The most representative proposal is the introduction of the “Working Hour Savings Account System,” which will complement the current compensatory leave system.  Under this system, employees will be able to accrue all or part of overtime, nighttime, and holiday work as paid time off in the account and use such accrued paid time off at the time the employee wishes.  In addition, the MOEL plans to encourage group leave, use of annual leave on an hourly basis, and long-term leave (ten days or longer), and further enhance the awareness that the right to rest is a basic right for employees.
 

3.   Expanding Flexible Working Hour Systems
 

The LSA amendment bill proposes to expand the calculation period of the selective working hour system to three months for all industries and six months for R&D work.  The LSA amendment bill also proposes that employers be allowed to change pre-determined working days and working hours in the flexible working hour system in consultation with the employee representative.
 

In addition to the various items in the Reform Plan that have been reflected in the LSA amendment bill, the MOEL also plans to take various measures in 2023 as noted in the attachment below.  We will continue to monitor and provide you with updates on legislative and administrative measures related to working hour management and the Reform Plan.
 

[Korean Version]