New criteria for determining violation of overtime rules pursuant to a recent Supreme Court decision

At a glance

• The Supreme Court recently rendered a decision (Supreme Court Decision 2020Do15393, 7 December 2023 (Decision)) contrary to the current position taken by the Ministry of Employment and Labour (MOEL) with respect to the criteria for determining whether a company has violated the overtime rules under the Labor Standards Act (LSA).
• The Decision focused on determining violation of the 12-hour overtime weekly limit by looking at the number of hours worked beyond the total 40 weekly working hours, regardless of whether the working hours exceeded eight hours per day.
• The MOEL just announced through a press release that it will amend its administrative interpretation and apply the new interpretation set forth by the Decision to cases currently under investigation/supervision.

This article has been reproduced with the permission of the authors Weon Jung Kim, Ki Young Kim, Sun Ha Kweon, Paul Cho and Hoin Lee at Kim & Chang.

The Supreme Court recently rendered a Decision contrary to the current position taken by the MOEL with respect to the criteria for determining whether a company has violated the overtime rules under the LSA.

The Decision is important as it is the first ruling under which the standard for determining whether an employer has violated the LSA’s limit on overtime hours is based on the 52-hour weekly working hour system, which can result in more flexibility for employers as to working hours. On the other hand, there are some concerns within the labour community and the National Assembly that such interpretation for the Decision will infringe upon the health of workers.

As you may know, standard working hours in Korea must not exceed 40 hours per week (excluding rest periods), but the working hours may be extended by up to 12 hours per week through an agreement between the employee and employer (Articles 50(1) and 53(1) of the LSA).

In this case, the employer was criminally indicted for alleged violations of Article 53(1) of the LSA (ie allegations of employees working beyond the 12-hour weekly overtime limit), and both courts of the first and second instance made their determination based on whether the sum of working hours exceeding eight hours per day went beyond the 12-hour overtime limit per week. This interpretation was consistent with the MOEL’s previous interpretation and thus, a company could be deemed to have violated the overtime limit under the LSA even if the total weekly working hours are within the limit of 52 working hours per week.

Nevertheless, this Decision focused on determining a violation of the 12-hour overtime weekly limit by looking at the number of hours worked beyond the total 40 weekly working hours, regardless of whether the working hours exceeded eight hours per day.

Please refer to the following chart illustrating the differences between MOEL (and the courts’ decisions in the first and second instance) versus the Decision by the Supreme Court.

The grounds for the Decision are as follows:

• Article 53(1) of the LSA only limits overtime work to 12 hours per week;
• the criteria for overtime work hours under Articles 56(1) and 53(1) of the LSA is not required to be treated in the same manner;
• in a case involving criminal liability for violation of the weekly overtime limit, the courts consider a need to strictly interpret the wording as it involves criminal liability.

Considering the above, the MOEL just announced through a press release that it will amend its administrative interpretation and apply the new interpretation set forth by the Decision to cases currently under investigation/supervision. In this regard, we will monitor future legislative trends and government policies.