Overtime to be calculated on a monthly basis in South Korea

The incoming government will address the country’s 52-hour workweek policy and the seniority-based pay models adopted by most companies.
By: | June 27, 2022

Incoming Labour Minister Lee Jung-sik said the government will review options to allow companies to calculate overtime on a monthly basis in the future so that certain industries can handle excessive workloads better than they do on a weekly basis. Under the new scheme, overtime can be potentially extended up to 92 hours a week, but employees will be compensated with day-offs, he said.

The Moon Jae-in administration had limited the hours that people could work to 52 – which included 40 regular hours and 12 hours of overtime. The government then regulated the overtime to be calculated on a weekly basis to enforce the new law.

Whether companies adopt the new rule, however, will be up to individual management-labor negotiations, according to the ministry.

Lee explained that changes in the 52-hour workweek policy are needed as more industries, particularly those dealing with information technology and software, require a flexible working schedule based on industry demands and the nature of their jobs.

In addition, Lee stressed that the country should move away from seniority-based pay models. He argued that more companies should be able to introduce performance-based pay models so that management could better handle the increasing salaries of senior workers, which the country expects to expand further in the future due to a rapidly ageing population. 

Lee added that seniority-based pay systems do not fit with the current labour market’s high turnover rate.

READ: South Korean unions propose minimum wage rate

In South Korea, around 70% of the companies with over 1,000 workers currently adopt seniority-based pay models, while 55.5% of companies with over 100 employees use seniority-based pay models, according to The Korea Herald.