Flexible Working Hours System
Variable Working Hours System
What is a flexible working hours system?
- A system that meets the legal standard by averaging over a unit period
- The longer the unit period, the stricter the procedural requirements
- Daily working hours must be fixed in advance
What changes once the system is introduced is not the shift schedule but the baseline for counting overtime. Normally, you check at the end of each week whether 40 hours were exceeded. Under this system, the average over the entire unit period is what counts. Working 48 hours a week in peak season does not automatically make those 8 hours eligible for premium pay; instead, off-season weeks are cut to 32 hours to balance the total. Put differently, the schedule of daily hours the company sets in advance becomes the standard itself.
In practice, the requirements differ by unit period. Up to 2 weeks, it can be introduced through the rules of employment, but no single week may exceed 48 hours. Up to 3 months requires a written agreement with the worker representative, with limits of 52 hours in any week and 12 hours on any day (52-hour workweek). Going beyond 3 months, up to 6 months, raises the bar a step further: at least 11 consecutive hours of rest between workdays, a wage-protection plan, and advance notice of weekly hours 2 weeks ahead. Flexible working hours, where the company sets the schedule, are a different arrangement from the flextime system, where workers choose their own start and end times.
The most common point where this breaks down on the shop floor is the misconception that "we have flexible hours in place, so there is no overtime pay." Premium pay is waived only for hours within the schedule fixed in advance; hours worked beyond that schedule are still overtime. Even riskier is running the system without setting daily working hours, on the idea of "let's adopt it first and adjust as we go." In that case the system itself is not recognized, so every hour over 40 per week throughout the unit period is retroactively counted as overtime, and the accumulated premium pay is treated as unpaid wages all at once, leading to complaints and a labor inspection.
Employees who are excluded must also be screened out in advance. Minors aged 15 to under 18 and pregnant employees cannot be placed under this system, so even on the same line they need separate schedules. Requirements and procedures for each unit period may be amended, so check the latest statutes and have a labor specialist review before signing the agreement.
Hwi KimCEO of HRDIST & Talent Development Systems Consultant
Jongmu KimSpecialist in corporate talent development and job competency buildingThe Labor Standards Act provides for two types of flexible working hours: one with a short unit period set in the company's work rules, and one with a longer unit period that requires a written agreement with the employee representative. It also sets out what the agreement must include and the health protection measures required (Article 51 and others).
Company A, which makes air-conditioner parts, is a mid-sized manufacturer with 140 employees and annual revenue of about KRW 42 billion (≈ US$31,423,000). 70% of annual orders are concentrated in the six months from March to August, when production staff barely stay within 52 hours a week, while from November to February the lines run at half capacity. When overtime pay alone cost KRW 600 million (≈ US$448,900) last year, the CEO said, "This isn't a labor cost problem, it's a structural problem," and told HR to review the system. (Hypothetical example)
- When the HR director pulled attendance data for the past two years, peak-season weeks averaged 48.2 hours and off-season weeks averaged 33 hours. Because the swing runs on a six-month cycle, a three-month unit period would not average out, so the proposal under review used a six-month unit period.
- The labor attorney advising the company pointed out that a six-month unit period comes with 11 consecutive hours of rest between workdays, a wage compensation plan, and notice of weekly working hours two weeks in advance. "If even one of these is missing, the whole arrangement is invalid," the attorney stressed.
- The 96 production employees voted to elect an employee representative, and three rounds of consultation followed. The Line 2 assembly foreman pushed back: "In peak season our bodies wear out just the same, but the pay goes down. Who would agree to that?" To offset the reduction, the company created a KRW 120,000 (≈ US$90) monthly compensation allowance.
- The written agreement covered 96 employees on three lines, a unit period of March 1 to August 31, daily schedules of 48 hours per week in peak season and 32 hours per week in off-season, and a one-year term. The finalized schedule was posted on the intranet and line bulletin boards three weeks before launch.
- An urgent order came in June, and the floor supervisor directed Saturday overtime. Because those hours were not in the confirmed schedule, the full premium pay applied. HR re-sent a notice to every supervisor: "Flexible working hours exempt overtime only within the schedule."
- One year after adoption, overtime pay fell 35%, from KRW 600 million (≈ US$448,900) to KRW 390 (≈ US$1) million, and the company still had KRW 70 million (≈ US$52,400) left after paying KRW 140 million (≈ US$104,700) in compensation allowances. The bigger result: all 96 production employees kept their jobs, with no unpaid leave in the off-season.