Annual Leave in Korea
Entitlement, Management, and
Unused Leave
Who Is Entitled to Annual Leave in Korea?
In Korea, employees are entitled to paid annual leave under the Labor Standards Act. The number of annual leave days depends on the employee's length of service and attendance record.
Annual leave must be used within the applicable one-year period. Any leave not used within that period expires, but the employee is entitled to compensation for the unused leave, unless the employer has properly implemented the statutory leave usage encouragement procedure.
The annual leave provisions of the Labor Standards Act apply to workplaces with five or more employees.
How Much Leave Must Employers Provide?
◼ Employees with Less Than 1 Year of Service
During the first year of employment, employees earn 1 day of annual leave for each month in which they had full attendance during the preceding month. For example, if an employee joins the company on January 1 and has full attendance throughout January, 1 day of annual leave will be granted on February 1.
◼ Employees with 1 Year or More of Service
🔅Employees with an attendance rate of at least 80% during the year
If an employee’s attendance rate during the previous one-year period is at least 80%, the employee is entitled to 15 days of annual leave.
After three years of continuous service, one additional day is granted for every two years thereafter. However, the total number of annual leave days is capped at 25 per year.
🔅Employees with an attendance rate of below 80% during the year
The same rules apply as for employees with less than one year of service. If an employee’s attendance rate during the previous one-year period is below 80%, the employee earns one day of annual leave for each month in which they had full attendance during the previous month.
Fiscal-Year vs. Hire-Date Management
Under the Labor Standards Act, annual leave entitlement is determined based on each employee’s hire date. Annual leave is granted on the anniversary of the hire date and must be used or settled within the following one-year period. However, because employees have different hire dates, managing annual leave individually can be difficult. For this reason, many companies manage annual leave collectively based on January 1, in line with Korea’s fiscal year, rather than using each employee’s hire date.
To manage annual leave based on the fiscal year rather than the employee’s hire date, the employer must establish a clear basis in its rules of employment, collective agreements, or other internal regulations. In addition, if, at the time of an employee’s resignation or termination, the number of annual leave days granted under the fiscal-year system is less than the number that would have been granted based on the hire date, the employer must compensate the employee for the deficiency.
What Happens to Unused Annual Leave?
Annual leave must be used within the applicable one-year period. If the leave is not used within that period, it expires, and the employer must compensate the employee for the unused leave.
However, the employer and employee may agree to carry over unused annual leave to the following year instead of paying compensation. If the carried-over leave remains unused, the employer must still compensate the employee for the unused balance.
An employer may be exempt from paying compensation for unused annual leave if it has properly followed the statutory leave usage encouragement procedure, as explained below.
Can Employers Avoid Paying for Unused Annual Leave?
Korea's Statutory Leave Usage Encouragement System
The Labor Standards Act provides a statutory procedure that allows employers to encourage employees to use their annual leave rather than receive compensation for unused leave. If an employer properly follows this procedure and the employee still does not use the leave, the employer may be exempt from the obligation to compensate for the unused leave.
Because employees may lose their entitlement to unused annual leave allowance under this system, strict procedural requirements apply. First, within 10 days from the date that is six months before the annual leave period expires, the employer must notify the employee in writing of the remaining leave days and request that the employee specify when the leave will be used. If the employee does not respond, the employer must designate the dates on which the remaining leave is to be taken and notify the employee in writing no later than two months before the leave period expires.
If the employee reports to work on a designated leave day, the employer must clearly refuse to accept the employee's services. Otherwise, the employer may still be required to compensate the employee for the unused leave.
Frequently Asked Questions
How many days of annual leave are employees entitled to in Korea?
Employees who have worked for at least one year and have an attendance rate of at least 80% during the previous year are entitled to 15 days of annual leave. After three years of continuous service, one additional day is granted for every two years thereafter, up to a maximum of 25 days per year.
Do employees receive annual leave during their first year of employment?
Yes. During the first year of employment, employees earn one day of annual leave for each month in which they had full attendance during the preceding month, up to a maximum of 11 days.
What happens to unused annual leave?
Unused annual leave expires if it is not used within the applicable one-year period, and the employer must compensate the employee for the unused leave. However, the employer may be exempt from paying compensation if it has properly followed the statutory leave usage encouragement procedure.
Can unused annual leave be carried over to the following year?
Yes. The employer and employee may agree to carry over unused annual leave to the following year instead of paying compensation. If the carried-over leave remains unused, the employer must compensate the employee for the unused balance.
Can an employer require employees to use their annual leave?
An employer may encourage employees to use their annual leave by following the statutory leave usage encouragement procedure. If the required procedure is properly followed and the employee still does not use the leave, the employer may be exempt from paying compensation for the unused leave.
Does annual leave apply to workplaces with fewer than five employees?
No. The statutory annual paid leave provisions under the Labor Standards Act generally apply to workplaces with five or more employees. Employees working at workplaces with fewer than five employees are not statutorily entitled to annual paid leave under these provisions.
Employer Takeaways
Annual paid leave is one of the most frequently disputed HR issues in Korea. Employers should ensure that their annual leave policies and usage procedures are properly structured and administered in compliance with applicable legal requirements.
For assistance with annual leave compliance under Korean labor law, please contact us.
Entitlement, Management, and Unused Leave
In Korea, employees are entitled to paid annual leave under the Labor Standards Act. The number of annual leave days depends on the employee's length of service and attendance record.
Annual leave must be used within the applicable one-year period. Any leave not used within that period expires, but the employee is entitled to compensation for the unused leave, unless the employer has properly implemented the statutory leave usage encouragement procedure.
The annual leave provisions of the Labor Standards Act apply to workplaces with five or more employees.
During the first year of employment, employees earn 1 day of annual leave for each month in which they had full attendance during the preceding month. For example, if an employee joins the company on January 1 and has full attendance throughout January, 1 day of annual leave will be granted on February 1.
If an employee’s attendance rate during the previous one-year period is at least 80%, the employee is entitled to 15 days of annual leave. After three years of continuous service, one additional day is granted for every two years thereafter. However, the total number of annual leave days is capped at 25 per year.
The same rules apply as for employees with less than one year of service. If an employee’s attendance rate during the previous one-year period is below 80%, the employee earns one day of annual leave for each month in which they had full attendance during the previous month.
Under the Labor Standards Act, annual leave entitlement is determined based on each employee’s hire date. Annual leave is granted on the anniversary of the hire date and must be used or settled within the following one-year period. However, because employees have different hire dates, managing annual leave individually can be difficult. For this reason, many companies manage annual leave collectively based on January 1, in line with Korea’s fiscal year, rather than using each employee’s hire date.
To manage annual leave based on the fiscal year rather than the employee’s hire date, the employer must establish a clear basis in its rules of employment, collective agreements, or other internal regulations. In addition, if, at the time of an employee’s resignation or termination, the number of annual leave days granted under the fiscal-year system is less than the number that would have been granted based on the hire date, the employer must compensate the employee for the deficiency.
Annual leave must be used within the applicable one-year period. If the leave is not used within that period, it expires, and the employer must compensate the employee for the unused leave.
However, the employer and employee may agree to carry over unused annual leave to the following year instead of paying compensation. If the carried-over leave remains unused, the employer must still compensate the employee for the unused balance.
An employer may be exempt from paying compensation for unused annual leave if it has properly followed the statutory leave usage encouragement procedure, as explained below.
The Labor Standards Act provides a statutory procedure that allows employers to encourage employees to use their annual leave rather than receive compensation for unused leave. If an employer properly follows this procedure and the employee still does not use the leave, the employer may be exempt from the obligation to compensate for the unused leave.
Because employees may lose their entitlement to unused annual leave allowance under this system, strict procedural requirements apply. First, within 10 days from the date that is six months before the annual leave period expires, the employer must notify the employee in writing of the remaining leave days and request that the employee specify when the leave will be used. If the employee does not respond, the employer must designate the dates on which the remaining leave is to be taken and notify the employee in writing no later than two months before the leave period expires.
If the employee reports to work on a designated leave day, the employer must clearly refuse to accept the employee's services. Otherwise, the employer may still be required to compensate the employee for the unused leave.
How many days of annual leave are employees entitled to in Korea?
Employees who have worked for at least one year and have an attendance rate of at least 80% during the previous year are entitled to 15 days of annual leave. After three years of continuous service, one additional day is granted for every two years thereafter, up to a maximum of 25 days per year.
Do employees receive annual leave during their first year of employment?
Yes. During the first year of employment, employees earn one day of annual leave for each month in which they had full attendance during the preceding month, up to a maximum of 11 days.
What happens to unused annual leave?
Unused annual leave expires if it is not used within the applicable one-year period, and the employer must compensate the employee for the unused leave. However, the employer may be exempt from paying compensation if it has properly followed the statutory leave usage encouragement procedure.
Can unused annual leave be carried over to the following year?
Yes. The employer and employee may agree to carry over unused annual leave to the following year instead of paying compensation. If the carried-over leave remains unused, the employer must compensate the employee for the unused balance.
Can an employer require employees to use their annual leave?
An employer may encourage employees to use their annual leave by following the statutory leave usage encouragement procedure. If the required procedure is properly followed and the employee still does not use the leave, the employer may be exempt from paying compensation for the unused leave.
Does annual leave apply to workplaces with fewer than five employees?
No. The statutory annual paid leave provisions under the Labor Standards Act generally apply to workplaces with five or more employees. Employees working at workplaces with fewer than five employees are not statutorily entitled to annual paid leave under these provisions.
Annual paid leave is one of the most frequently disputed HR issues in Korea. Employers should ensure that their annual leave policies and usage procedures are properly structured and administered in compliance with applicable legal requirements.
For assistance with annual leave compliance under Korean labor law, please contact us.
