Statutory holidays, contractual holidays and public holidays
There are two types of holidays for employees: statutory and contractual. ① Statutory holidays include a weekly holiday with pay (normally Sunday) specified by the Labor Standards Act and Labor Day (May 1) as specified in the Labor Day Act. ② Contractual holidays are days when management and labor agree that rest will be provided.
On the other hand, public holidays are, in principle, days when government offices rest. Why did “holiday = day off” become a common generalization? Because most companies designate public holidays as ‘contractual holidays’ in their employment rules or collective agreements. If that’s the case, isn’t it necessary to pay a holiday work allowance if the company doesn’t stipulate that Independence Movement Day (March 1) is a contractual holiday in a collective agreement?
In the future, companies need to ensure that public holidays are paid
As mentioned before, if a public holiday is not stipulated as a contractual holiday in the collective agreement, there has been no obligation to pay a holiday work allowance for work performed on that day. However, in accordance with Article 55 (2) of the recently revised Labor Standards Act, public holidays shall be paid in the future. The government announced that holidays in the ‘Regulations on Public Holidays for Public Offices’ would be included in holidays prescribed by Presidential Decree. In other words, public holidays, which previously applied only to public institutions, are being forced on private companies as paid holidays.
Therefore, employers must guarantee that weekly holidays, Labor Day, and public holidays (excluding Sundays) are paid. This will be enforced January 1, 2020, beginning with workplaces with 300 employees or more.
Paying holiday work allowances
There had been controversy over the provision of double premiums for overtime pay and holiday work allowance, but this has been resolved by the revised Labor Standards Act, which stipulates that holiday work of 8 hours or less will be paid only with a holiday work allowance equal to an additional 50% of the ordinary wage. However, for the hours of holiday work exceeding 8 hours, 100% of ordinary wages shall be added.
For example, if an employee works 10 hours on a public holiday, the company shall pay an additional 50% of that worker’s ordinary wage for the first 8 hours and an additional 100% for the remaining 2 hours.
Establishing and replacing holiday work
Are there any cases where a holiday work allowance is not paid for holiday work? Article 55 (2) of the revised Labor Standards Act provides for the replacement of holidays. In other words, holidays can be replaced with a specific day of work if agreement in writing with the employees’ representative is obtained. If agreement to rest on Wednesday instead of working on a public holiday is reached, the public holiday becomes a normal working day and the Wednesday becomes a holiday.
This means that the concept of ‘holiday replacement,’ which has been recognized in court cases, is now stipulated in law. Previously, it had only been recognized by judicial precedent and administrative interpretations.
According to a Supreme Court ruling, holiday replacement is allowed only when the day to be replaced is predetermined with the consent of employees. In other words, it is legitimate only when (1) it is stipulated in the collective agreement, employment rules, etc. or the prior consent of employees has been obtained, or (2) the employee(s) involved have specified the day to be a substitute holiday in advance. Administrative interpretations show that there should be notification at least 24 hours prior to changing the designated holiday if collective agreement, etc. is provided as evidence.
However, from the date of enactment (2020) of the revised Labor Standards Act, employers will need to ensure they obtain the written consent of a representative of employees to replace any public holiday. Here, “representative” means the trade union organized by a majority of employees or the person representing a majority of employees. For workplaces without a trade union organized by a majority of employees, it is necessary to select a person who is supported by a majority of employees instead.
If the above requirements to replace a holiday are met, the holiday work allowance does not have to be paid separately. However, if an employee provides work again on the replacement day, the company must pay him/her a holiday work allowance.
Keep in mind that Labor Day is fixed by law as May 1 every year and is set as a paid holiday. It cannot be replaced with another day. If an employee provides work on Labor Day, the company must pay a holiday work allowance.
Distinction from compensatory leave
Similar to holiday replacement, compensatory leave, stipulated in Article 57 of the Labor Standards Act, is an institution by which an employee is given paid leave, instead of monetary compensation, for the overtime, night, or holiday work he/she has provided.
One thing to note is that companies must reflect the premium when it provides paid leave. In other words, if an employee has worked 8 hours on a holiday, 12 hours’ leave must be guaranteed as 12 hours’ wage, reflecting the additional 50% of ordinary wage that would have been paid for overtime.
Thus, both schemes are identical in that an employee works on a holiday and rests on a specific working day (usually a weekday). However, holiday replacement conceptually demands a change of holiday in advance (1 for 1), while the compensatory leave is a vacation granted, instead of wages, after working on a holiday (1 for 1.5).
Whether or not a day off is specified in advance is a key difference. Holiday replacement should be set in advance, such as “This Sunday off will be replaced with this coming Wednesday, so Sunday is the working day and Wednesday is the day off instead.” On the other hand, for compensatory leave, the day off does not need to be specified, and “This Sunday is a working day and any date next month will be off” is fine instead.
Taking advantage of holiday replacement and compensatory leave
Holidays will also increase as working hours are being shortened. The burden on enterprises will further increase as weekly holidays (about 52 per year), Labor Day (1 day), and public holidays (about 15 days per year) must be paid.
To find a balance between effective operation of the enterprise and the workers’ right to rest, both schemes regulated by law, first of all, should be actively utilized. In cases where holiday work is likely to be persistent for managerial reasons, it is necessary to take advantage of holiday replacement or compensatory leave to allow flexibility with holidays in accordance with business conditions.
It should also be noted that even if holiday replacement has been customary, after enactment of the revised law, an explicit agreement with a representative of employees will be necessary.
To avoid disputes or unnecessary payment of additional wages over holiday work allowances, provisions on holiday replacement are needed in the collective agreement or employment rules, which will need to be stated in a way that broadly embraces the reasons for holiday replacement.