Deemed & Discretionary Working Hours
Deemed & Discretionary Working Hours
What does “deemed” mean?
- A special rule for when working hours are hard to calculate
- Discretionary work applies only to types of work specified by law
- It does not automatically apply to remote work
Adopting deemed or discretionary working hours shifts the basis for pay calculations from clock-in and clock-out records to the agreed hours. Overtime pay is calculated not on the actual time logged in the attendance system, but on the hours legally 'deemed worked.' So when a dispute arises, the evidence the company produces changes too: written agreements and work-assignment records, not time cards. If the requirements aren’t met, the switch itself is invalid, and the company must pay amounts recalculated on actual hours worked.
The two systems have entirely different requirements. Under deemed working hours, when work is done outside the workplace and hours are hard to measure, the employee is in principle treated as having worked the contractual hours. If the task normally takes longer than that, the longer time is recognized, and labor and management may also agree in writing in advance on what counts as the 'normal' time needed. Discretionary working hours, by contrast, are limited by law and notice to specific types of work: R&D, information-system design and analysis, news gathering and editing, design and creative work, broadcast producing and directing, and accounting, legal, or management consulting. Nothing else qualifies. On top of that, a written agreement with the worker representative is not optional but a condition for the system to be valid, and the agreement must state the covered work, that the employer gives no specific instructions on how the work is done or how time is allocated, and how working hours are calculated.
Some things stay fully in force even when the system is applied. The 52-hour weekly cap, rest breaks, the 50% premium for night work (10 p.m. to 6 a.m.), holiday-work premiums, and annual leave are not exempted. Deemed and discretionary hours are just a way of counting time, not a way to eliminate premium pay. People often confuse this with a comprehensive (flat-rate) wage arrangement, but they are separate systems, and if the agreement doesn’t say how night and holiday premiums will be settled, the whole thing becomes a dispute a few years later. The written agreement must be kept for 3 years.
The points where this most often breaks down in practice are remote work and managers’ habit of giving instructions. Remote work that leaves access logs and involves daily reporting is hard to treat as work whose hours are difficult to calculate, and there are cases where deemed hours applied just because someone works from home were overturned in a complaint or a labor inspection. The same goes for discretionary work: if you write the agreement but still set daily arrival times or direct work in hourly increments, the employee’s discretion is denied. Then overtime and night pay must be settled retroactively on actual hours worked, not the agreed hours, and three years of wage claims plus late-payment interest pile on top. Target work types and requirements may be amended, so have a labor attorney review before adoption.
Hwi KimCEO of HRDIST & Talent Development Systems Consultant
Jongmu KimSpecialist in corporate talent development and job competency buildingKorea’s Labor Standards Act provides for deemed working hours for work performed outside the workplace, and for discretionary working hours, which apply only to work specified by law and operate under a written agreement with the worker representative (Article 58).
Company A, a medical device distributor with 140 employees, has 47 field sales staff and 12 researchers in its affiliated research lab. For over three years it operated on the basis that 'field staff are on deemed hours, so no overtime pay.' The problem surfaced when two former sales reps filed complaints over unpaid overtime. With a labor attorney on board, the company redesigned the system over six months. (Hypothetical example)
- When the HR head pulled six months of sales CRM logs, all 47 people were logging visit starts and ends in the app an average of 6.3 times a day, and the advising labor attorney was blunt: "At this level, this is work whose hours can be calculated."
- The head of sales dug in, saying, "That would upend our field-work allowance system." In the end, only the 9 staff who travel the provinces going straight from home to site and back remained under deemed hours, and the other 38 moved to actual-hours management based on mobile attendance records.
- The 12 researchers at the affiliated research institute do R&D work, which qualifies for discretionary work. After electing an employee representative (82% turnout), the company signed a written agreement setting 8 hours per day as deemed time, no core hours, and a clause that no instructions are given on how the work is performed.
- Right after the agreement, the lab director still tried to keep a daily 9 a.m. video check-in. The labor attorney pointed out, "The moment you dictate arrival times, discretionary work falls apart," so they switched to a weekly Thursday progress review and scrapped the daily report form.
- Six months later, both complaints were settled by agreement, and back pay originally estimated at KRW 120 million (≈ US$89,800) fell to KRW 34 million (≈ US$25,400). Night and holiday premium pay for the research lab was split out as a separate settlement item and is now paid at an average of KRW 2.1 million (≈ US$1,570) per month.