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Korean Employers Opposed to Government’s Minimum Wage Act Revision
Controversy over Hourly Wage Calculation
Korean Employers Opposed to Government’s Minimum Wage Act Revision
  • By Jung Suk-yee
  • August 28, 2018, 10:41
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The Korea Employers Federation (KEF) is opposed to the Korean government's plan to revise the enforcement decree of the Minimum Wage Act.

The Korea Employers Federation (KEF) raised an objection to the Ministry of Employment and Labor’s revision of the enforcement decree of the Minimum Wage Act, claiming that the current enforcement decree is legitimate. According to the current enforcement decree, paid holidays are excluded and actual working hours alone are included in hourly wage calculation for determining whether or not a company abides by the act.

According to the ministry’s pre-announcement of legislation, both paid holidays and actual working hours are to be taken into account for the determination. The current Labor Standards Act stipulates that an employer is required to provide at least one paid holiday for an employee working for 40 hours a week, and many companies are doing so on Sunday. This means the worker works for approximately 174 hours a month while receiving a monthly pay for his or her labor equivalent to 209 hours. The ministry has maintained this calculation method is based on an administrative guideline.

However, the Supreme Court recently ruled that paid holidays should be excluded from the wage calculation for the determination because workers do not actually work on the holidays. “What the ministry is trying to do is to circumvent the Supreme Court ruling by specifying the guideline in a legally binding way,” the KEF pointed out, adding, “Once the revision becomes effective, only employees at large corporations, who have more paid non-working days, will benefit from it.” It went on to say that controversy surrounding compliance or non-compliance with the Minimum Wage Act is rooted in the weekly paid holiday rule unique to South Korea and, as such, the issue needs to be discussed not by the ministry alone but legislatively.

The ministry said in response that the revision of the enforcement decree is no trick at all. “The decree is to correct the reference working hours, which have been administratively interpreted due to the lack of legal clarity,” it refuted, continuing, “The existing guideline has been accepted by labor law experts and those in charge of labor affairs at enterprises, and the Supreme Court ruling will change naturally once the decree is revised.” The revised decree is scheduled to become effective in October.