Overtime, Night, and Holiday Work Premium Pay
Overtime, Night and Holiday Premium Pay
What is overtime?
- Base rule: a premium of at least 50% on the ordinary wage
- Overtime and night premiums stack when they overlap
- Without records, the company can't rebut a claim
What premium pay really changes isn't the pay scale but the work schedule. The same 8 hours cost 1.5× or 2× the base labor rate depending on whether they fall in daytime or at 11 p.m., so how you build shift rosters and which weekdays you assign deadline-driven volume to translates directly into cost. Whoever builds the schedule effectively sets labor cost, so production, sales, and HR need to work from the same numbers. It also helps to state up front that even if a contract says 'overtime pay included,' any shortfall must be settled separately when actual hours exceed that limit.
Premiums attach by type and add up when they overlap: overtime 50 percent, night 50 percent, holiday work within 8 hours 50 percent, and holiday hours beyond 8 at 100 percent. Suppose an employee with an hourly ordinary wage of KRW 10,000 (≈ US$7) works 10 hours on a holiday, 2 of them after 10 p.m. That is KRW 120,000 (≈ US$90) for the first 8 hours, KRW 40,000 (≈ US$30) for the 2 extra hours, and a KRW 10,000 (≈ US$7) night premium on top, for KRW 170,000 (≈ US$125) a day. The boundaries of coverage also matter. Premium rules don't apply to workplaces with fewer than 5 employees, and managers and supervisors are exempt from overtime and holiday premiums but still receive the night premium.
If the hourly ordinary wage, the denominator in the calculation, is off, every formula above becomes meaningless. Payments made regularly, uniformly, and on a fixed basis count toward the ordinary wage regardless of what they are called, so a company that has been excluding meal or position allowances at its own discretion must recalculate several years at once. Some companies use compensatory leave instead of premium pay, but this too must be granted for hours that reflect the premium rate and requires a written agreement with the employee representative. Unused compensatory leave must ultimately be paid out as wages, so the system doesn’t make the cost disappear.
Where this most often goes wrong in practice is the belief that 'unapproved overtime isn't working time.' If the workload itself can't be finished within regular hours, it is often treated as an implied instruction and recognized as working time, and the bigger problem is that the company then has no counter-evidence to offer. Without records, the commute photos, messenger timestamps, and access-card logs an employee submits become virtually the only evidence. Keep approval and recording separate: log the time first, then decide on payment. Retroactive settlement can grow to three years' worth, and the average wage used for severance pay rises along with it.
Inwoo LeeExpert in leadership, communication and performance management
Hwi KimCEO of HRDIST & Talent Development Systems ConsultantThe Labor Standards Act requires a premium of at least 50% of the ordinary wage for overtime, night, and holiday work. It also defines the night-work hours and the premium rules for holiday work (Article 56).
Company A, a second-tier parts supplier in the Seoul metropolitan area (140 employees, annual revenue of about KRW 32 billion (≈ US$23,941,300)), runs its line in two shifts, day and night. For nearly 10 years it has settled pay the same way, with a single line in the annual salary contract: 'includes 20 hours of overtime pay per month.' After two former employees filed complaints over unpaid overtime, it now has to re-examine the last three years of records. (Hypothetical example)
- When the HR manager cross-checked six months of access-card records against production MES logs, actual overtime averaged 31 hours per employee, not the 20 hours per month stated in the contracts.
- The production manager said, 'The night shift starts at 8 p.m., so the night premium covers only the four hours after 10 p.m.,' but once overtime was added, about seven days a month had more than six night hours.
- On advice from a labor law firm, the company amended the appendix to its pay regulations to include the KRW 120,000 (≈ US$90) meal allowance and the fixed position allowance in ordinary wages, and built a formula into its payroll system that calculates holiday work beyond 8 hours and overlapping night hours separately.
- When the CEO asked, 'Why pay for overtime we never approved?', the HR director put it this way: 'Always keep the record; decide on payment afterward.' The company switched to tallying unapproved overtime as well.
- Three months later, the estimated monthly unpaid amount fell from KRW 18 million (≈ US$13,500) to KRW 2.1 million (≈ US$1,570). Once overtime, night, and holiday hours were itemized on pay statements, 1 of 2 labor complaints was withdrawn, and overtime hours themselves dropped 18%.