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.