Annual Paid Leave · Accrual and Expiry
Annual Paid Leave
What is annual paid leave?
- Starts at 15 days for 80% attendance, with extra days added by length of service
- The reference date you choose changes the calculation
- At termination, compare against the hire-date basis and settle the difference
Annual leave is not a benefit the company grants at its discretion. It is a monetary claim that attaches to the employee automatically the moment the requirements are met. So the focus of management shifts from 'approve this leave or not' to a ledger: when did how many days arise, when do they expire, and how much must we pay if any remain? A company that has fixed the reference date and formula in its rules of employment gets the same numbers even after three changes of staff. A company running on verbal practice ends up producing new numbers every time an employee leaves.
The day-count structure is easiest to understand in three layers. In the first year of service, employees earn 1 day per month of full attendance, up to 11 days. With 80% or more attendance over the year, they receive 15 days. From 3 years of continuous service, they gain 1 additional day every 2 years, up to a cap. The leave itself expires after a year, but the unused-leave allowance paid in its place is a wage claim, so there is a window where the leave disappears but the money remains. Fix the treatment rules in a table as well: when counting attendance, work-injury recovery and parental leave periods count as attended, while unexcused absences count as absences. In practice, quite a few companies start the clock for additional leave at the promotion date rather than the hire date. Details and exceptions keep shifting with amendments and court rulings, so check the latest law.
The most common misconception is that once you use a fiscal-year basis, you can ignore the hire-date basis. Granting leave in one lump sum by fiscal year is only an administrative convenience. In practice, the principle is that at termination, leave must be settled so that the employee is no worse off than under the hire-date basis. Companies that skip this comparison end up paying several years of former employees retroactively. The same goes for leave-use promotion. You must urge each employee in writing at set times and, if there is no reply, designate and notify the leave dates yourself. Where a company relied on an intranet notice or a single group email, the procedural defect leaves the allowance obligation intact. And if, after promoting leave, you simply put to work an employee who came in that day, the company is deemed to have accepted the work and the allowance revives.
Inwoo LeeLeadership, communication, and performance management expert
Jongmu KimCorporate talent development and job skills expertUnder the Labor Standards Act, employees who attend at least 80% of working days over one year receive 15 days of paid leave, with additional days for those with three or more years of continuous service, up to a statutory cap. Employees with less than one year of service receive 1 day of paid leave for each month of perfect attendance (Article 60).
Consider a hypothetical case: Company A, a frozen-food maker in the Seoul metropolitan area. With 140 employees and annual revenue of KRW 38 (≈ US$1) billion, it has granted annual leave in one lump sum by fiscal year since its founding. Three production workers who left last year claimed KRW 6.4 million (≈ US$4,790) in unused annual leave pay, and the company was asked to submit the basis for its calculation.
- When the HR head recalculated the leave of 47 employees who left in the past three years using their hire dates, 22 had been underpaid by an average of 2.8 days. The CEO asked, "Is that all?"
- The company's labor advisor concluded, "The fiscal-year basis is only an administrative convenience. At separation, you must settle in the employee's favor by comparing it with the hire-date basis." The company then added a clause to Article 38 of its rules of employment requiring that comparison.
- The payroll manager scrapped the Excel ledger and set up the attendance system to calculate accrual dates, expiry dates, and remaining days automatically. The 11-day limit for employees under one year of service was split out as a separate item.
- It switched leave-use promotion to written notices handed to each employee on July 10, with a signed receipt. When the production foreman asked, "What if they come in and work after we have promoted leave?" the company decided to send them home that day with a notice declining their work.
- The 3 complaints were closed after KRW 6.4 million (≈ US$4,790) in retroactive payments. The following year, unused leave fell from an average of 6.2 days to 2.1 days per employee, cutting payouts for unused leave by about KRW 41 million (≈ US$30,700).