[News Terms] 'Working Hours Savings Account System' Allowing One Month Vacation

The 'Working Hours Savings Account System' is a system that allows workers to save compensation for overtime, night, and holiday work in hours and use them as leave if they wish. When the workload is heavy, workers accumulate compensation by working overtime, and then use the saved hours as leave when the workload is light. By combining the accumulated annual leave and compensated hours (leave) in the savings account, it becomes possible to take long-term leave or sabbaticals for a month.

According to the current Labor Standards Act, additional pay must be provided for overtime, night, and holiday work. The idea is to allow this additional pay to be received not only in cash but also as future leave (saved leave), which was one of President Yoon Suk-yeol's campaign promises. The Working Hours Savings Account System can be seen as a concept that replaces and strengthens the 'compensatory leave system' stipulated in the Labor Standards Act.

Minister of Employment and Labor Lee Jeong-sik.
Photo by Yonhap News Agency

To introduce this system in a workplace, a written agreement between the employer and the workers' representative, i.e., a labor-management agreement, is required. Workers can accumulate wages or leave as compensation for overtime, night, and holiday work, and employers provide leave instead of additional wages (allowances). The saved leave can be used at the worker's desired time, but if it causes significant disruption to business operations, the employer can change the timing of the leave. Unused working hours at the settlement period are either settled (forfeited) or carried over.

In Germany, 81% of workplaces with 250 or more employees have introduced the Working Hours Savings Account System, and the saved leave is known to be used for childcare, parenting, retraining, sabbaticals, and so on.

According to the Ministry of Employment and Labor, the annual number of holidays and leave days for workers in South Korea is between 82 and 92 days, which is slightly higher compared to major countries (around 80 days). However, as of 2021, the utilization rate of annual leave was only 76.1%, and only 40.9% of companies have workers who use all their annual leave. This is why skeptical responses such as "How can we use saved leave when we can't even properly use annual leave?" are emerging among workers.

The government plans to launch a nationwide campaign to promote the use of leave, including group leave, so that workers can take leave without feeling pressured, along with the introduction of the Working Hours Savings Account System.

This content was produced with the assistance of AI translation services.