{"content_id":"aoagzx4b78","slug":"korea-inclusive-wage-guideline-fixed-ot","locale":"en","schema_type":"Article","category":"knowledge_base","category_name":"Knowledge Base","title":"Changes to Fixed Overtime and Working Hours Management Standards Following the Implementation of the Comprehensive Wage Guidelines","summary":"The key point of the guidelines on comprehensive wages is that even if a fixed overtime allowance has been set, if the actual overtime, night shift, or holiday work allowances are higher, the difference must be paid. Companies must separately itemize base pay and allowances and record and manage working hours; for jobs where calculating working hours is difficult, they should consider implementing the deemed working hours system or the discretionary working hours system.","author":{"name":"Injoys Editorial Team","url":"https://injoys.com/ko/about"},"key_points":["The comprehensive wage system is not so much a separate system explicitly defined by law as it is a method of wage calculation that has been recognized to a limited extent in case law and legal practice.","Even if an employer pays a fixed overtime allowance, if the statutory overtime pay calculated based on actual working hours is higher, the employer must pay the difference.","A pay structure that does not distinguish between base pay and overtime, night shift, and holiday pay has increased the risks associated with pay stubs, working hour management, and determining whether wages are in arrears.","Even in cases where it is difficult to calculate working hours, employers should review the requirements for the “deemed working hours outside the workplace” system or the “discretionary working hours” system rather than substituting them with a lump-sum wage system.","Since the misuse of the comprehensive wage system can lead to long working hours and wage arrears, there is a growing trend toward strengthening enforcement focused on supervision, reporting, and corrective action."],"content_markdown":"## Changes at a Glance\n\nThe comprehensive wage system is a method of paying overtime, night shift, and holiday work allowances by including them in advance within a monthly salary or fixed allowance, rather than calculating them each time based on the actual hours worked. Originally used as an exception for jobs where it was difficult to accurately track working hours, it has in fact been widely adopted across various occupational groups—including office workers, IT professionals, startup employees, and sales staff—sparking controversy over “unpaid overtime.”\n\nThe core of recent guidelines and enforcement policies regarding the lump-sum wage system is simple. **Even if there is a predetermined fixed overtime allowance—that is, “fixed OT”—if the statutory allowance calculated based on actual working hours is greater, the difference must be paid.** Additionally, base pay and allowances must be listed separately, and hours of extended, night, and holiday work must be recorded and managed.\n\n## What Is the Lump-Sum Wage System?\n\nThe lump-sum wage system refers to a method of payment in which base pay, overtime pay, night shift pay, and holiday pay are bundled into a single wage or fixed allowance under an employment contract or wage agreement. The Korean Labor Standards Act does not explicitly stipulate a separate system called the “lump-sum wage system”; rather, it is a concept that has been recognized to a limited extent in court precedents and wage practices.\n\n### Summary of Key Terms\n\n| Term | Meaning | Key Issues |\n|---|---|---|\n| Comprehensive Wage System | A method of paying statutory allowances by including them in the base wage in advance | If the amount paid is less than the actual allowances, it may lead to wage arrears issues |\n| Fixed Overtime | Overtime pay paid as a fixed monthly amount based on a predetermined number of overtime hours | If actual overtime pay exceeds the fixed amount, the difference must be paid |\n| Lump-Sum Pay System | A system in which total compensation is paid as a single amount without distinguishing between base pay and various allowances | High risk of disputes due to uncertainty over which amounts constitute base pay and which are allowances |\n| Fixed Allowance System | A system in which statutory allowances are paid as a fixed monthly amount while maintaining a base salary | The hours covered and calculation criteria must be clearly defined |\n| Statutory Allowances | Allowances that must be paid as a surcharge under the Labor Standards Act for extended, night, or holiday work | Records of actual working hours are crucial |\n\n## Why Did This Become an Issue?\n\nThe fundamental principle of the Labor Standards Act is that wages must be paid based on the actual hours worked, and premium pay must be provided for work exceeding statutory working hours or for work performed at night or on holidays. However, as the comprehensive wage system became widely adopted, the following problems repeatedly arose.\n\n- A practice emerged where no additional allowances were paid even when there was significant actual overtime.\n- The system was operated as if employers were not required to accurately record working hours.\n- Base pay and allowances were commingled, making it difficult for workers to understand their pay structure.\n- Long working hours became entrenched, and it became difficult to determine whether wages were being withheld.\n\nIn other words, the bigger problem than the lump-sum wage system itself was **the practice of covering all overtime with a fixed wage without verifying actual working hours**.\n\n## Key Changes to the Lump-Sum Wage Guidelines\n\n### 1. If actual statutory overtime pay exceeds the fixed overtime allowance, the difference must be paid\n\nEven if a company includes fixed overtime pay in the monthly salary, this does not fulfill its obligation to pay all overtime allowances. If the allowances calculated based on actual extended, night, or holiday work hours exceed the fixed overtime pay, the employer must pay the shortfall.\n\nFor example, if the monthly fixed overtime allowance is set at 20 hours but the actual extended work hours total 35 hours, and the statutory allowance for that difference is higher, the excess must be paid separately. Failure to do so may result in a wage arrears violation.\n\n### 2. Base Pay and Allowances Must Be Listed Separately\n\nIf base pay and statutory allowances are listed as a single lump sum, it is difficult for employees to understand how their wages were calculated. The guidelines require that the following items be clearly distinguished on pay stubs and in employment contracts:\n\n- Base Pay\n- Fixed Overtime Allowance or Fixed OT\n- Night Shift Allowance\n- Holiday Work Allowance\n- Other Allowances\n- Deductions\n- Calculation criteria and methods\n\nThis distinction is not merely a matter of formality. Basic pay and allowances must be separated in order to determine regular wages, the minimum wage, overtime pay, and whether wages have been withheld.\n\n### 3. The Importance of Recording and Managing Working Hours\n\nEven when operating under a lump-sum wage system, employers are not relieved of their responsibility to manage working hours. In particular, workplaces where overtime, night work, or holiday work occurs must maintain the following records:\n\n- Start and end times\n- Break times\n- Approval of and actual hours worked for overtime\n- Night work hours\n- Holiday work hours\n- Methods for verifying work hours for employees working from home or in the field\n\nWithout proper records, employers will find it difficult to refute actual working hours in the event of a dispute, and the risk of wage arrears may increase during inspections.\n\n### 4. Strengthened Enforcement Focused on Reporting and Inspection\n\nThe misuse of the lump-sum wage system is not merely a matter of guidance; it can lead to wage arrears, violations of working hours, and violations regarding the content of pay stubs. Enforcement procedures—such as anonymous reporting, targeted inspections, corrective orders, and orders to pay back wages—may be applied in conjunction.\n\n## The Lump-Sum Wage System Is Not Always Prohibited\n\nA lump-sum wage agreement is not automatically invalid in all cases. However, it is difficult to have its validity recognized if the following requirements are not met:\n\n- It must be genuinely difficult to calculate working hours, or there must be a necessity for a lump-sum calculation.\n- It must not be disadvantageous to the employee.\n- The composition of the base salary and allowances, the included overtime hours, and the calculation method must be clear.\n- If the actual statutory overtime pay exceeds the agreed-upon amount, the difference must be paid.\n- There must be the employee’s consent or a basis in the employment contract.\n\nTherefore, the purpose of the guidelines is to restrict the practice of assuming that “any agreement labeled a ‘lump-sum wage’ automatically includes all overtime pay.”\n\n## Alternative Systems for Cases Where Calculating Working Hours Is Difficult\n\nThere are indeed jobs where it is difficult to accurately measure working hours. In such cases, it is safer to consider separate working hour systems under the Labor Standards Act rather than resorting to a lump-sum wage system.\n\n### Deemed Working Hours System Outside the Workplace\n\nThe “deemed working hours outside the workplace” system is a mechanism whereby a certain number of hours are deemed to have been worked when an employee is working outside the workplace—such as on business trips, field assignments, or client visits—and it is difficult for the employer to calculate the actual working hours.\n\nThis system can typically be considered for the following types of work:\n\n- Sales positions focused on field work\n- Client visit duties\n- On-site inspection duties\n- Door-to-door sales or in-home service duties\n\nHowever, this system is not automatically applied simply because work is performed outside the workplace. If working hours can be calculated through the employer’s direction and supervision, mobile work reports, location tracking, or schedule management systems, the application of the Deemed Working Hours System may be restricted.\n\n### Discretionary Working Hours System\n\nThe discretionary working hours system leaves the method of performing work and the allocation of time to the employee’s discretion, and deems the hours specified in a written agreement between labor and management as hours worked. It is used in cases where, due to the nature of the work, it is difficult for the employer to specify working hours in detail, and where the employee’s professional judgment is critical.\n\nExamples of eligible work include the following:\n\n- Research and development\n- Analysis and design of information processing systems\n- Certain specialized tasks with a high degree of discretion, such as design, advertising, and content planning\n- Professional services such as legal and accounting work that meet specific requirements\n\nThe discretionary work hours system requires a written agreement, which must clearly specify the eligible tasks, deemed working hours, work methods, and health protection measures. It cannot be applied to all employees simply because they are “developers” or “professionals.”\n\n### Differences Between the Two Systems\n\n| Category | Deemed Working Hours System Outside the Workplace | Discretionary Working Hours System |\n|---|---|---|\n| Reason for Application | Difficulty in calculating working hours due to location | Discretion and performance are more important than time measurement due to the nature of the work |\n| Typical Situations | Field work, business trips, visits to clients | Research and development, system design, specialized planning tasks |\n| Key Requirements | Work performed outside the workplace and difficulty in calculating hours | Relevance of the work to the system and a written agreement between labor and management |\n| Points to Note | May not apply to field workers if time management is feasible | Does not automatically apply to all office and IT positions |\n\n## Checklist for Companies\n\n### Review of Wage Structure\n\n- Are base pay and statutory allowances clearly separated?\n- Is the number of hours included in fixed overtime clearly indicated?\n- Are the wage basis and calculation formula for fixed overtime explained?\n- Is there a procedure for paying the difference when actual statutory allowances exceed fixed overtime?\n- Are there any issues regarding the determination of the minimum wage and regular wage?\n\n### Review of Working Hours Management\n\n- Are objective records of arrival and departure times maintained?\n- Are there procedures for prior approval and post-hoc verification of overtime work?\n- Are there methods in place to verify working hours for employees working from home, on field assignments, or on business trips?\n- Are rest periods actually guaranteed and recorded?\n- Is work done via instant messaging or email at a manager’s direction counted as working hours?\n\n### Review of Alternative Systems\n\n- Is it truly difficult to calculate working hours for this specific work?\n- Does it meet the requirements for the “deemed working hours system” outside the workplace?\n- Does the work fall under the “discretionary working hours system”?\n- If a written agreement between labor and management is required, was the agreement drawn up in accordance with the law?\n- Are there health protection measures in place to prevent long working hours?\n\n## Items Employees Should Verify\n\nEmployees need to verify the following items in their employment contracts and pay stubs.\n\n1. Check whether the fixed overtime hours included in the monthly salary are specified.\n2. Check whether the base salary and overtime, night shift, and holiday work allowances are listed separately.\n3. Keep a record of whether actual overtime hours exceed the fixed overtime hours.\n4. Check whether night shift and holiday work are calculated separately.\n5. If the company does not keep records of your arrival and departure times, keep your own work logs, approval records, and instructions received via instant messaging.\n\nIn particular, the obligation to pay statutory allowances does not disappear simply because the company explains that “there are no additional allowances under the lump-sum wage system.”\n\n## Comparison with Overseas Systems\n\nThe Korean-style lump-sum wage system is characterized by the widespread practice of including a fixed amount in advance, regardless of actual working hours. Other countries generally operate by requiring records of working hours, paying overtime premiums, and distinguishing between exempt and non-exempt job categories.\n\n| Region/Country | Basic Structure | Differences from the Korean Lump-Sum Wage System |\n|---|---|---|\n| European Union | Strong emphasis on the employer’s obligation to objectively record working hours | Focus on recording actual hours and guaranteeing rest periods rather than a fixed lump-sum payment |\n| United States | Under the FLSA, non-exempt employees are typically paid overtime for hours worked beyond 40 per week | Distinguishes between exempt employees (who meet certain job and wage requirements) and non-exempt employees |\n| Japan | Practices involving fixed overtime allowances and the “Highly Professional” system exist, but requirements are strict and the system is controversial | Even with fixed allowances, issues arise regarding the clarity of included hours and amounts, as well as payment for hours worked beyond the fixed amount |\n| South Korea | Fixed overtime pay or comprehensive wage agreements have been widely used | Demands are growing for payment of the difference based on actual working hours and for the separation of wage components |\n\n## Key Conclusions\n\nThe core of the comprehensive wage guidelines is not to completely eliminate the comprehensive wage system, but rather to **prevent structures where workers are paid less than they actually worked and to normalize working hour records and wage calculations**. Going forward, even if companies maintain a fixed overtime system, they must pay any shortfall compared to actual overtime, night shift, and holiday pay, and must transparently separate base pay from allowances.\n\nFor jobs where calculating working hours is difficult, it is more appropriate to review the requirements for the “deemed working hours system” or the “discretionary working hours system” rather than handling them under the “lump-sum wage” system. For employees, verifying their pay stubs and records of actual working hours is the most important means of protecting their rights.","content_html":"\u003ch2\u003e\u003ca href=\"#changes-at-a-glance\" class=\"anchor\" id=\"changes-at-a-glance\"\u003e\u003c/a\u003eChanges at a Glance\u003c/h2\u003e\n\u003cp\u003eThe comprehensive wage system is a method of paying overtime, night shift, and holiday work allowances by including them in advance within a monthly salary or fixed allowance, rather than calculating them each time based on the actual hours worked. Originally used as an exception for jobs where it was difficult to accurately track working hours, it has in fact been widely adopted across various occupational groups—including office workers, IT professionals, startup employees, and sales staff—sparking controversy over “unpaid overtime.”\u003c/p\u003e\n\u003cp\u003eThe core of recent guidelines and enforcement policies regarding the lump-sum wage system is simple. \u003cstrong\u003eEven if there is a predetermined fixed overtime allowance—that is, “fixed OT”—if the statutory allowance calculated based on actual working hours is greater, the difference must be paid.\u003c/strong\u003e Additionally, base pay and allowances must be listed separately, and hours of extended, night, and holiday work must be recorded and managed.\u003c/p\u003e\n\u003ch2\u003e\u003ca href=\"#what-is-the-lump-sum-wage-system\" class=\"anchor\" id=\"what-is-the-lump-sum-wage-system\"\u003e\u003c/a\u003eWhat Is the Lump-Sum Wage System?\u003c/h2\u003e\n\u003cp\u003eThe lump-sum wage system refers to a method of payment in which base pay, overtime pay, night shift pay, and holiday pay are bundled into a single wage or fixed allowance under an employment contract or wage agreement. The Korean Labor Standards Act does not explicitly stipulate a separate system called the “lump-sum wage system”; rather, it is a concept that has been recognized to a limited extent in court precedents and wage practices.\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#summary-of-key-terms\" class=\"anchor\" id=\"summary-of-key-terms\"\u003e\u003c/a\u003eSummary of Key Terms\u003c/h3\u003e\n\u003cdiv class=\"overflow-x-auto\"\u003e\u003ctable\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth\u003eTerm\u003c/th\u003e\n\u003cth\u003eMeaning\u003c/th\u003e\n\u003cth\u003eKey Issues\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd\u003eComprehensive Wage System\u003c/td\u003e\n\u003ctd\u003eA method of paying statutory allowances by including them in the base wage in advance\u003c/td\u003e\n\u003ctd\u003eIf the amount paid is less than the actual allowances, it may lead to wage arrears issues\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eFixed Overtime\u003c/td\u003e\n\u003ctd\u003eOvertime pay paid as a fixed monthly amount based on a predetermined number of overtime hours\u003c/td\u003e\n\u003ctd\u003eIf actual overtime pay exceeds the fixed amount, the difference must be paid\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eLump-Sum Pay System\u003c/td\u003e\n\u003ctd\u003eA system in which total compensation is paid as a single amount without distinguishing between base pay and various allowances\u003c/td\u003e\n\u003ctd\u003eHigh risk of disputes due to uncertainty over which amounts constitute base pay and which are allowances\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eFixed Allowance System\u003c/td\u003e\n\u003ctd\u003eA system in which statutory allowances are paid as a fixed monthly amount while maintaining a base salary\u003c/td\u003e\n\u003ctd\u003eThe hours covered and calculation criteria must be clearly defined\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eStatutory Allowances\u003c/td\u003e\n\u003ctd\u003eAllowances that must be paid as a surcharge under the Labor Standards Act for extended, night, or holiday work\u003c/td\u003e\n\u003ctd\u003eRecords of actual working hours are crucial\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\u003c/div\u003e\n\u003ch2\u003e\u003ca href=\"#why-did-this-become-an-issue\" class=\"anchor\" id=\"why-did-this-become-an-issue\"\u003e\u003c/a\u003eWhy Did This Become an Issue?\u003c/h2\u003e\n\u003cp\u003eThe fundamental principle of the Labor Standards Act is that wages must be paid based on the actual hours worked, and premium pay must be provided for work exceeding statutory working hours or for work performed at night or on holidays. However, as the comprehensive wage system became widely adopted, the following problems repeatedly arose.\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eA practice emerged where no additional allowances were paid even when there was significant actual overtime.\u003c/li\u003e\n\u003cli\u003eThe system was operated as if employers were not required to accurately record working hours.\u003c/li\u003e\n\u003cli\u003eBase pay and allowances were commingled, making it difficult for workers to understand their pay structure.\u003c/li\u003e\n\u003cli\u003eLong working hours became entrenched, and it became difficult to determine whether wages were being withheld.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eIn other words, the bigger problem than the lump-sum wage system itself was \u003cstrong\u003ethe practice of covering all overtime with a fixed wage without verifying actual working hours\u003c/strong\u003e.\u003c/p\u003e\n\u003ch2\u003e\u003ca href=\"#key-changes-to-the-lump-sum-wage-guidelines\" class=\"anchor\" id=\"key-changes-to-the-lump-sum-wage-guidelines\"\u003e\u003c/a\u003eKey Changes to the Lump-Sum Wage Guidelines\u003c/h2\u003e\n\u003ch3\u003e\u003ca href=\"#1-if-actual-statutory-overtime-pay-exceeds-the-fixed-overtime-allowance-the-difference-must-be-paid\" class=\"anchor\" id=\"1-if-actual-statutory-overtime-pay-exceeds-the-fixed-overtime-allowance-the-difference-must-be-paid\"\u003e\u003c/a\u003e1. If actual statutory overtime pay exceeds the fixed overtime allowance, the difference must be paid\u003c/h3\u003e\n\u003cp\u003eEven if a company includes fixed overtime pay in the monthly salary, this does not fulfill its obligation to pay all overtime allowances. If the allowances calculated based on actual extended, night, or holiday work hours exceed the fixed overtime pay, the employer must pay the shortfall.\u003c/p\u003e\n\u003cp\u003eFor example, if the monthly fixed overtime allowance is set at 20 hours but the actual extended work hours total 35 hours, and the statutory allowance for that difference is higher, the excess must be paid separately. Failure to do so may result in a wage arrears violation.\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#2-base-pay-and-allowances-must-be-listed-separately\" class=\"anchor\" id=\"2-base-pay-and-allowances-must-be-listed-separately\"\u003e\u003c/a\u003e2. Base Pay and Allowances Must Be Listed Separately\u003c/h3\u003e\n\u003cp\u003eIf base pay and statutory allowances are listed as a single lump sum, it is difficult for employees to understand how their wages were calculated. The guidelines require that the following items be clearly distinguished on pay stubs and in employment contracts:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eBase Pay\u003c/li\u003e\n\u003cli\u003eFixed Overtime Allowance or Fixed OT\u003c/li\u003e\n\u003cli\u003eNight Shift Allowance\u003c/li\u003e\n\u003cli\u003eHoliday Work Allowance\u003c/li\u003e\n\u003cli\u003eOther Allowances\u003c/li\u003e\n\u003cli\u003eDeductions\u003c/li\u003e\n\u003cli\u003eCalculation criteria and methods\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThis distinction is not merely a matter of formality. Basic pay and allowances must be separated in order to determine regular wages, the minimum wage, overtime pay, and whether wages have been withheld.\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#3-the-importance-of-recording-and-managing-working-hours\" class=\"anchor\" id=\"3-the-importance-of-recording-and-managing-working-hours\"\u003e\u003c/a\u003e3. The Importance of Recording and Managing Working Hours\u003c/h3\u003e\n\u003cp\u003eEven when operating under a lump-sum wage system, employers are not relieved of their responsibility to manage working hours. In particular, workplaces where overtime, night work, or holiday work occurs must maintain the following records:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eStart and end times\u003c/li\u003e\n\u003cli\u003eBreak times\u003c/li\u003e\n\u003cli\u003eApproval of and actual hours worked for overtime\u003c/li\u003e\n\u003cli\u003eNight work hours\u003c/li\u003e\n\u003cli\u003eHoliday work hours\u003c/li\u003e\n\u003cli\u003eMethods for verifying work hours for employees working from home or in the field\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eWithout proper records, employers will find it difficult to refute actual working hours in the event of a dispute, and the risk of wage arrears may increase during inspections.\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#4-strengthened-enforcement-focused-on-reporting-and-inspection\" class=\"anchor\" id=\"4-strengthened-enforcement-focused-on-reporting-and-inspection\"\u003e\u003c/a\u003e4. Strengthened Enforcement Focused on Reporting and Inspection\u003c/h3\u003e\n\u003cp\u003eThe misuse of the lump-sum wage system is not merely a matter of guidance; it can lead to wage arrears, violations of working hours, and violations regarding the content of pay stubs. Enforcement procedures—such as anonymous reporting, targeted inspections, corrective orders, and orders to pay back wages—may be applied in conjunction.\u003c/p\u003e\n\u003ch2\u003e\u003ca href=\"#the-lump-sum-wage-system-is-not-always-prohibited\" class=\"anchor\" id=\"the-lump-sum-wage-system-is-not-always-prohibited\"\u003e\u003c/a\u003eThe Lump-Sum Wage System Is Not Always Prohibited\u003c/h2\u003e\n\u003cp\u003eA lump-sum wage agreement is not automatically invalid in all cases. However, it is difficult to have its validity recognized if the following requirements are not met:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eIt must be genuinely difficult to calculate working hours, or there must be a necessity for a lump-sum calculation.\u003c/li\u003e\n\u003cli\u003eIt must not be disadvantageous to the employee.\u003c/li\u003e\n\u003cli\u003eThe composition of the base salary and allowances, the included overtime hours, and the calculation method must be clear.\u003c/li\u003e\n\u003cli\u003eIf the actual statutory overtime pay exceeds the agreed-upon amount, the difference must be paid.\u003c/li\u003e\n\u003cli\u003eThere must be the employee’s consent or a basis in the employment contract.\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eTherefore, the purpose of the guidelines is to restrict the practice of assuming that “any agreement labeled a ‘lump-sum wage’ automatically includes all overtime pay.”\u003c/p\u003e\n\u003ch2\u003e\u003ca href=\"#alternative-systems-for-cases-where-calculating-working-hours-is-difficult\" class=\"anchor\" id=\"alternative-systems-for-cases-where-calculating-working-hours-is-difficult\"\u003e\u003c/a\u003eAlternative Systems for Cases Where Calculating Working Hours Is Difficult\u003c/h2\u003e\n\u003cp\u003eThere are indeed jobs where it is difficult to accurately measure working hours. In such cases, it is safer to consider separate working hour systems under the Labor Standards Act rather than resorting to a lump-sum wage system.\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#deemed-working-hours-system-outside-the-workplace\" class=\"anchor\" id=\"deemed-working-hours-system-outside-the-workplace\"\u003e\u003c/a\u003eDeemed Working Hours System Outside the Workplace\u003c/h3\u003e\n\u003cp\u003eThe “deemed working hours outside the workplace” system is a mechanism whereby a certain number of hours are deemed to have been worked when an employee is working outside the workplace—such as on business trips, field assignments, or client visits—and it is difficult for the employer to calculate the actual working hours.\u003c/p\u003e\n\u003cp\u003eThis system can typically be considered for the following types of work:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eSales positions focused on field work\u003c/li\u003e\n\u003cli\u003eClient visit duties\u003c/li\u003e\n\u003cli\u003eOn-site inspection duties\u003c/li\u003e\n\u003cli\u003eDoor-to-door sales or in-home service duties\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eHowever, this system is not automatically applied simply because work is performed outside the workplace. If working hours can be calculated through the employer’s direction and supervision, mobile work reports, location tracking, or schedule management systems, the application of the Deemed Working Hours System may be restricted.\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#discretionary-working-hours-system\" class=\"anchor\" id=\"discretionary-working-hours-system\"\u003e\u003c/a\u003eDiscretionary Working Hours System\u003c/h3\u003e\n\u003cp\u003eThe discretionary working hours system leaves the method of performing work and the allocation of time to the employee’s discretion, and deems the hours specified in a written agreement between labor and management as hours worked. It is used in cases where, due to the nature of the work, it is difficult for the employer to specify working hours in detail, and where the employee’s professional judgment is critical.\u003c/p\u003e\n\u003cp\u003eExamples of eligible work include the following:\u003c/p\u003e\n\u003cul\u003e\n\u003cli\u003eResearch and development\u003c/li\u003e\n\u003cli\u003eAnalysis and design of information processing systems\u003c/li\u003e\n\u003cli\u003eCertain specialized tasks with a high degree of discretion, such as design, advertising, and content planning\u003c/li\u003e\n\u003cli\u003eProfessional services such as legal and accounting work that meet specific requirements\u003c/li\u003e\n\u003c/ul\u003e\n\u003cp\u003eThe discretionary work hours system requires a written agreement, which must clearly specify the eligible tasks, deemed working hours, work methods, and health protection measures. It cannot be applied to all employees simply because they are “developers” or “professionals.”\u003c/p\u003e\n\u003ch3\u003e\u003ca href=\"#differences-between-the-two-systems\" class=\"anchor\" id=\"differences-between-the-two-systems\"\u003e\u003c/a\u003eDifferences Between the Two Systems\u003c/h3\u003e\n\u003cdiv class=\"overflow-x-auto\"\u003e\u003ctable\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth\u003eCategory\u003c/th\u003e\n\u003cth\u003eDeemed Working Hours System Outside the Workplace\u003c/th\u003e\n\u003cth\u003eDiscretionary Working Hours System\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd\u003eReason for Application\u003c/td\u003e\n\u003ctd\u003eDifficulty in calculating working hours due to location\u003c/td\u003e\n\u003ctd\u003eDiscretion and performance are more important than time measurement due to the nature of the work\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eTypical Situations\u003c/td\u003e\n\u003ctd\u003eField work, business trips, visits to clients\u003c/td\u003e\n\u003ctd\u003eResearch and development, system design, specialized planning tasks\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eKey Requirements\u003c/td\u003e\n\u003ctd\u003eWork performed outside the workplace and difficulty in calculating hours\u003c/td\u003e\n\u003ctd\u003eRelevance of the work to the system and a written agreement between labor and management\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003ePoints to Note\u003c/td\u003e\n\u003ctd\u003eMay not apply to field workers if time management is feasible\u003c/td\u003e\n\u003ctd\u003eDoes not automatically apply to all office and IT positions\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\u003c/div\u003e\n\u003ch2\u003e\u003ca href=\"#checklist-for-companies\" class=\"anchor\" id=\"checklist-for-companies\"\u003e\u003c/a\u003eChecklist for Companies\u003c/h2\u003e\n\u003ch3\u003e\u003ca href=\"#review-of-wage-structure\" class=\"anchor\" id=\"review-of-wage-structure\"\u003e\u003c/a\u003eReview of Wage Structure\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eAre base pay and statutory allowances clearly separated?\u003c/li\u003e\n\u003cli\u003eIs the number of hours included in fixed overtime clearly indicated?\u003c/li\u003e\n\u003cli\u003eAre the wage basis and calculation formula for fixed overtime explained?\u003c/li\u003e\n\u003cli\u003eIs there a procedure for paying the difference when actual statutory allowances exceed fixed overtime?\u003c/li\u003e\n\u003cli\u003eAre there any issues regarding the determination of the minimum wage and regular wage?\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3\u003e\u003ca href=\"#review-of-working-hours-management\" class=\"anchor\" id=\"review-of-working-hours-management\"\u003e\u003c/a\u003eReview of Working Hours Management\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eAre objective records of arrival and departure times maintained?\u003c/li\u003e\n\u003cli\u003eAre there procedures for prior approval and post-hoc verification of overtime work?\u003c/li\u003e\n\u003cli\u003eAre there methods in place to verify working hours for employees working from home, on field assignments, or on business trips?\u003c/li\u003e\n\u003cli\u003eAre rest periods actually guaranteed and recorded?\u003c/li\u003e\n\u003cli\u003eIs work done via instant messaging or email at a manager’s direction counted as working hours?\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch3\u003e\u003ca href=\"#review-of-alternative-systems\" class=\"anchor\" id=\"review-of-alternative-systems\"\u003e\u003c/a\u003eReview of Alternative Systems\u003c/h3\u003e\n\u003cul\u003e\n\u003cli\u003eIs it truly difficult to calculate working hours for this specific work?\u003c/li\u003e\n\u003cli\u003eDoes it meet the requirements for the “deemed working hours system” outside the workplace?\u003c/li\u003e\n\u003cli\u003eDoes the work fall under the “discretionary working hours system”?\u003c/li\u003e\n\u003cli\u003eIf a written agreement between labor and management is required, was the agreement drawn up in accordance with the law?\u003c/li\u003e\n\u003cli\u003eAre there health protection measures in place to prevent long working hours?\u003c/li\u003e\n\u003c/ul\u003e\n\u003ch2\u003e\u003ca href=\"#items-employees-should-verify\" class=\"anchor\" id=\"items-employees-should-verify\"\u003e\u003c/a\u003eItems Employees Should Verify\u003c/h2\u003e\n\u003cp\u003eEmployees need to verify the following items in their employment contracts and pay stubs.\u003c/p\u003e\n\u003col\u003e\n\u003cli\u003eCheck whether the fixed overtime hours included in the monthly salary are specified.\u003c/li\u003e\n\u003cli\u003eCheck whether the base salary and overtime, night shift, and holiday work allowances are listed separately.\u003c/li\u003e\n\u003cli\u003eKeep a record of whether actual overtime hours exceed the fixed overtime hours.\u003c/li\u003e\n\u003cli\u003eCheck whether night shift and holiday work are calculated separately.\u003c/li\u003e\n\u003cli\u003eIf the company does not keep records of your arrival and departure times, keep your own work logs, approval records, and instructions received via instant messaging.\u003c/li\u003e\n\u003c/ol\u003e\n\u003cp\u003eIn particular, the obligation to pay statutory allowances does not disappear simply because the company explains that “there are no additional allowances under the lump-sum wage system.”\u003c/p\u003e\n\u003ch2\u003e\u003ca href=\"#comparison-with-overseas-systems\" class=\"anchor\" id=\"comparison-with-overseas-systems\"\u003e\u003c/a\u003eComparison with Overseas Systems\u003c/h2\u003e\n\u003cp\u003eThe Korean-style lump-sum wage system is characterized by the widespread practice of including a fixed amount in advance, regardless of actual working hours. Other countries generally operate by requiring records of working hours, paying overtime premiums, and distinguishing between exempt and non-exempt job categories.\u003c/p\u003e\n\u003cdiv class=\"overflow-x-auto\"\u003e\u003ctable\u003e\n\u003cthead\u003e\n\u003ctr\u003e\n\u003cth\u003eRegion/Country\u003c/th\u003e\n\u003cth\u003eBasic Structure\u003c/th\u003e\n\u003cth\u003eDifferences from the Korean Lump-Sum Wage System\u003c/th\u003e\n\u003c/tr\u003e\n\u003c/thead\u003e\n\u003ctbody\u003e\n\u003ctr\u003e\n\u003ctd\u003eEuropean Union\u003c/td\u003e\n\u003ctd\u003eStrong emphasis on the employer’s obligation to objectively record working hours\u003c/td\u003e\n\u003ctd\u003eFocus on recording actual hours and guaranteeing rest periods rather than a fixed lump-sum payment\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eUnited States\u003c/td\u003e\n\u003ctd\u003eUnder the FLSA, non-exempt employees are typically paid overtime for hours worked beyond 40 per week\u003c/td\u003e\n\u003ctd\u003eDistinguishes between exempt employees (who meet certain job and wage requirements) and non-exempt employees\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eJapan\u003c/td\u003e\n\u003ctd\u003ePractices involving fixed overtime allowances and the “Highly Professional” system exist, but requirements are strict and the system is controversial\u003c/td\u003e\n\u003ctd\u003eEven with fixed allowances, issues arise regarding the clarity of included hours and amounts, as well as payment for hours worked beyond the fixed amount\u003c/td\u003e\n\u003c/tr\u003e\n\u003ctr\u003e\n\u003ctd\u003eSouth Korea\u003c/td\u003e\n\u003ctd\u003eFixed overtime pay or comprehensive wage agreements have been widely used\u003c/td\u003e\n\u003ctd\u003eDemands are growing for payment of the difference based on actual working hours and for the separation of wage components\u003c/td\u003e\n\u003c/tr\u003e\n\u003c/tbody\u003e\n\u003c/table\u003e\u003c/div\u003e\n\u003ch2\u003e\u003ca href=\"#key-conclusions\" class=\"anchor\" id=\"key-conclusions\"\u003e\u003c/a\u003eKey Conclusions\u003c/h2\u003e\n\u003cp\u003eThe core of the comprehensive wage guidelines is not to completely eliminate the comprehensive wage system, but rather to \u003cstrong\u003eprevent structures where workers are paid less than they actually worked and to normalize working hour records and wage calculations\u003c/strong\u003e. Going forward, even if companies maintain a fixed overtime system, they must pay any shortfall compared to actual overtime, night shift, and holiday pay, and must transparently separate base pay from allowances.\u003c/p\u003e\n\u003cp\u003eFor jobs where calculating working hours is difficult, it is more appropriate to review the requirements for the “deemed working hours system” or the “discretionary working hours system” rather than handling them under the “lump-sum wage” system. For employees, verifying their pay stubs and records of actual working hours is the most important means of protecting their rights.\u003c/p\u003e\n","tags":["Inclusive wage system","Fixed OT","Labor Standards Act","Working hours","Unpaid wages"],"faqs":[{"question":"Is the lump-sum wage system now completely banned?","answer":"It is difficult to conclude that this is completely prohibited. However, practices such as vaguely combining base pay and allowances—even when working hours can be calculated—or paying less than the actual statutory allowances carry a high risk of being classified as wage arrears and subject to inspection."},{"question":"If I work fixed overtime, am I not eligible for additional overtime pay?","answer":"No. If the actual overtime, night shift, and holiday pay exceeds the amount included in the fixed overtime pay, the employer must pay the difference."},{"question":"Is it okay if it just says that the allowance is included in my salary?","answer":"This is risky. To minimize disputes, wage components—such as base pay, fixed overtime pay, night shift premiums, and holiday pay—and their calculation standards must be clearly distinguished."},{"question":"Do workplaces under the comprehensive wage system also need to record employees' arrival and departure times?","answer":"Yes. Even if there is a lump-sum wage agreement, records and management of working hours are necessary to calculate actual overtime, night shift, and holiday pay."},{"question":"If there are no records of working hours, who is at a disadvantage?","answer":"In the event of a dispute, this could work against the employee. Employees are responsible for keeping track of their working hours, and without records, it may be difficult to refute claims of unpaid wages."},{"question":"Can the \"deemed working hours\" system be applied to all field workers?","answer":"No. Even when working off-site, if working hours can be calculated based on schedule management, work reports, and location records, the application of the deemed working hours system may be restricted."},{"question":"Are all IT developers subject to the discretionary working hours system?","answer":"No. The discretionary working hours system requires that the work in question meet the criteria specified by law, and a written agreement between labor and management is necessary. It is not automatically applied simply because the work involves development."},{"question":"If I don't work beyond the hours included in my fixed overtime, do I not get any additional pay?","answer":"Generally, if the actual statutory allowance falls within the range of fixed overtime pay that has already been paid, there may be no additional payment. However, the outcome may vary depending on whether the work was performed at night or on a holiday, as well as the method used to calculate regular wages."},{"question":"What evidence should an employee keep?","answer":"It is helpful to keep records of your commute, work instructions sent via messenger or email, overtime approval records, meeting minutes, and records of work performed at night or on holidays."},{"question":"What is the most significant aspect of the guidelines on comprehensive wages?","answer":"The goal is to reduce the practice of using “comprehensive wages” as a pretext to avoid paying overtime wages, and to ensure transparency in wage payments by separating wage components and maintaining accurate records of working hours."}],"sources":[{"url":"https://www.law.go.kr/법령/근로기준법","title":"National Law Information Center: Labor Standards Act","type":"source"},{"url":"https://www.law.go.kr/법령/근로기준법시행령","title":"National Law Information Center: Enforcement Decree of the Labor Standards Act","type":"source"},{"url":"https://www.moel.go.kr/","title":"Ministry of Employment and Labor","type":"source"},{"url":"https://www.dol.gov/agencies/whd/overtime","title":"U.S. Department of Labor: Overtime Pay","type":"source"},{"url":"https://curia.europa.eu/juris/liste.jsf?num=C-55/18","title":"Court of Justice of the European Union: Case C-55/18","type":"source"}],"images":[{"id":150,"url":"https://injoys.com/rails/active_storage/blobs/redirect/eyJfcmFpbHMiOnsiZGF0YSI6MTQ1OCwicHVyIjoiYmxvYl9pZCJ9fQ==--0ae88f42ae5b88f0d26da0eeb5d1bdabdd9b40b7/ai-22b5db35.webp","is_representative":true,"generation_method":"ai_image","license":"ai_generated","mime_type":"image/webp","translations":{"ko":{"alt":"근로시간 대시보드와 문서, 저울 위 동전과 시계, 보호 방패가 있는 일러스트","caption":"고정OT와 근로시간 관리를 임금·준법 관점에서 점검하는 모습을 나타낸다.","description":null},"en":{"alt":"Work-hour dashboard, documents, coins, clock, scale, and compliance shield illustration","caption":"The illustration links fixed overtime, wage control, and work-hour compliance.","description":null},"ja":{"alt":"労働時間ダッシュボード、書類、硬貨、時計、天秤、保護シールドのイラスト","caption":"固定残業代と労働時間管理を賃金・コンプライアンスの視点で示している。","description":null},"es":{"alt":"Panel de horas, documentos, monedas, reloj, balanza y escudo de cumplimiento","caption":"La ilustración relaciona horas extra fijas, salarios y control del tiempo laboral.","description":null},"id":{"alt":"Dasbor jam kerja, dokumen, koin, jam, neraca, dan perisai kepatuhan","caption":"Ilustrasi ini mengaitkan lembur tetap, upah, dan kepatuhan pengelolaan jam kerja.","description":null},"pt":{"alt":"Painel de horas, documentos, moedas, relógio, balança e escudo de conformidade","caption":"A ilustração conecta horas extras fixas, salários e controle da jornada.","description":null},"zh-hant":{"alt":"工時儀表板、文件、硬幣、時鐘、天平與合規盾牌插圖","caption":"此插圖呈現固定加班費、薪資與工時合規管理的關聯。","description":null}}},{"id":151,"url":"https://injoys.com/rails/active_storage/blobs/redirect/eyJfcmFpbHMiOnsiZGF0YSI6MTQ2NCwicHVyIjoiYmxvYl9pZCJ9fQ==--58bbee6fd3c70959848f3faadb1c152092fe2565/ai-79832e2f.webp","is_representative":false,"generation_method":"ai_image","license":"ai_generated","mime_type":"image/webp","translations":{"ko":{"alt":"시계와 달력, 사무실 출근자와 재택근무자, 체크 표시 방패가 연결된 근로시간 관리 일러스트","caption":"근무 장소와 일정, 준수 기준을 함께 관리하는 모습을 보여준다.","description":null},"en":{"alt":"Clock and calendar linked to an office commuter, remote worker, and checkmark shield for work time management","caption":"The illustration shows work locations, schedules, and compliance controls connected.","description":null},"ja":{"alt":"時計とカレンダー、出社する人と在宅勤務者、チェック付きの盾がつながる労働時間管理のイラスト","caption":"勤務場所、予定、遵守管理がつながっている様子を示している。","description":null},"es":{"alt":"Reloj y calendario conectados con una persona que va a la oficina, una teletrabajadora y un escudo de verificación","caption":"La ilustración muestra ubicaciones de trabajo, horarios y controles de cumplimiento conectados.","description":null},"id":{"alt":"Jam dan kalender terhubung dengan pekerja kantor, pekerja jarak jauh, dan perisai centang untuk manajemen waktu kerja","caption":"Ilustrasi ini menunjukkan lokasi kerja, jadwal, dan kontrol kepatuhan yang saling terhubung.","description":null},"pt":{"alt":"Relógio e calendário ligados a trabalhador no escritório, pessoa em home office e escudo de verificação","caption":"A ilustração mostra locais de trabalho, horários e controles de conformidade conectados.","description":null},"zh-hant":{"alt":"時鐘與日曆連結辦公室通勤者、遠距工作者和打勾盾牌的工時管理插圖","caption":"插圖呈現工作地點、排程與合規控管相互連結。","description":null}}}],"published_at":"2026-07-12T17:10:36+09:00","updated_at":"2026-07-12T17:10:36+09:00","license":"cc_by","translation_status":"reviewed","available_locales":["ko","en","ja","es"],"data_locales":["ko","en","ja","es","id","pt","zh-hant"],"url":"https://injoys.com/en/articles/korea-inclusive-wage-guideline-fixed-ot"}