Weekly Contributions

Contractual Leave: Types and HR
Considerations

Bongsoo Jung (Labor Attorney, KangNam Labor Law Firm)

 

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 60^th 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

 

(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).   

 

4. Comments

 

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 leaves, healthy medium-sized companies
can use these leaves to improve employee morale, while small companies can use
them to adjust their working conditions.