Managerial and Supervisory Employees in Korea Not Subject to 52-Hour Workweek Limit: Scope of Application Clarified by Korean Supreme Court

Non-Managerial and Non-Supervisory Employees in Korea are prohibited, in most cases, from working more than a 52-hour workweek under the Korean Labor Standards Act (“LSA”) and must be provided overtime and holiday allowances. However, the application of the 52-hour workweek limit, overtime allowances/holiday allowances does not apply under the Korean LSA to “managerial and supervisory employees.” (LSA, Article 63; Enforcement Decreee to the LSA, Article 34). The Labor Standards Act of Korea and its enforcement decrees do not define who is a “managerial and supervisory employee,” thus leaving uncertainty and leaving it to the Korean courts to define.

Scope of Application of Korea’s
52-Hour Workweek Law

The Korean Supreme Court case below highlights the importance of having nuanced, Korean-centric employment and remuneration rules, as well as internal controls and processes, in place to mitigate this substantial financial and legal risk. For an article on the calculation of overtime hours, please see: Calculating of Overtime Hours for 52-Hour Workweek Law.

Korean Supreme Court Precedent on Scope of Application of 52-Hour Workweek Limit, Overtime & Holiday Allowance

In Korean Supreme Court Decision 2019da223389 (April 12, 2024), the employer’s remuneration policy dictated that all “manager-level” employees such as team leaders and higher employees receive additional pay for these responsibilities, thus, these employees are exempt employees not eligible for overtime allowances.

The Supreme Court of Korea reversed the decision of the lower court upholding the policy of the employer noting that the lower court should determine if the specific employees are “Managerial or Supervisory Employees” and the title of the employee and pay are not conclusive to determine if an employee is a managerial or supervisory employee.

Factors the Supreme Court of Korea Considered in Determining if an Employee is a Managerial or Supervisory Employee

The main factors considered, in this case, by the Supreme Court were as follows:

1. The employees of the Korean company were performing tasks that may be considered tasks of rank-and-file workers and not managerial and supervisory employees, thus indicating, among other things, that the “managerial” title was a mere pretext or was a mere customary title.
2. The employees were required to receive approval from a supervisor to work over 52 hours, thus indicating that they were not managerial or supervisory employees.
3. The Korean employer had only 12 employees; thus, classifying eight of them as Managerial or Supervisory Employees appeared to be a mere pretext, or the titles were mere customary titles.

The Korean Supreme Court, in short, held that mere titles and pay were not conclusive in determining the applicability of the exemption, and the substantive reality must take precedence over the mere form. Thus, courts should look to the substance of the job responsibilities and degree of supervision and determine on a case-by-case basis if the employee is a managerial or supervisory employee.

Please note that the penalties for non-compliance with the 52-Hour Workweek Law can be severe and may include fines and even criminal punishment. It is essential to have Korean-centric employment rules and pragmatic and nuanced procedures and processes in place to mitigate these and other risks.

by Sean Hayes

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as a Top Attorney by AsiaLaw, and IPG Legal is consistently ranked Top Dispute Resolution Law Firm for our litigation and arbitration services.

If you would like a consultation with Sean Hayes from IPG Legal, please schedule a call at:  Schedule a Call with Attorney Sean Hayes.