Minister Lee Young Visits Workplaces with Fewer Than 30 Employees Regarding '8-Hour Overtime Sunset'

Sunset of 8-Hour Overtime System for Workplaces with Fewer Than 30 Employees, Guidance Period Granted This Year

Minister Lee Young

[Asia Economy Reporter Kim Cheol-hyun] The Ministry of SMEs and Startups announced that Minister Lee Young visited Ajin Mold, a manufacturing site with fewer than 30 employees, on the 2nd together with Minister Lee Jeong-sik of the Ministry of Employment and Labor. This visit was arranged to announce support measures such as granting a guidance period to alleviate concerns on-site following the expiration of the validity period of the 8-hour additional work system and to listen to opinions.

The 8-hour additional work system was introduced as part of the 52-hour workweek system agreed upon by ruling and opposition parties in 2018, allowing small businesses with fewer than 30 employees to work an additional 8 hours per week for a limited period of one and a half years from July 2021 to the end of 2022, considering the small scale of these businesses. However, unlike the situation at the time of the agreement, labor shortages worsened due to delays in the entry of foreign workers caused by COVID-19, and on top of that, the recent triple crisis of high inflation, high interest rates, and high exchange rates has compounded difficulties for small and medium enterprises. The government attempted to extend the validity period by amending the Labor Standards Act but failed to pass the National Assembly.

Accordingly, to ease difficulties on-site due to the expiration of the validity period, the government decided to grant a one-year guidance period until the end of this year. During the guidance period, businesses with fewer than 30 employees will be excluded from regular long-hour labor inspections. Furthermore, even if violations of working hours are identified during other labor inspections or complaint handling processes, a correction period of up to nine months will be provided to offer sufficient opportunity for rectification. However, in cases where special inspections are conducted due to social disturbances, no correction period will be granted, and immediate criminal processing will follow.

This guidance period is initially set for one year, referring to the guidance period granted during the phased implementation of the 52-hour workweek system in the past, but additional extensions are possible considering legislative circumstances such as labor hour system reforms and on-site difficulties. In addition to granting the guidance period, one-on-one customized consulting will be provided to resolve difficulties in operating and managing working hours, self-diagnosis sheets will be distributed to prevent long working hours and protect workers' health rights, and guidance and promotion of worker health centers will be conducted simultaneously. Moreover, in line with the record-high introduction of foreign workers, measures will be taken to allow more flexible use of foreign labor, including the abolition of the limit on the issuance of new employment permits and the extension of the increase in allowable employment for businesses with fewer than 50 employees.

Minister Lee Jeong-sik of the Ministry of Employment and Labor said, "While granting the guidance period may alleviate some difficulties for businesses with fewer than 30 employees, it cannot be a fundamental solution," and added, "To fundamentally resolve difficulties in operating and managing working hours, it is necessary to reform the working hours system in a way that expands autonomy and choice in working hours operation for both labor and management while simultaneously protecting workers' health rights." Minister Lee further stated, "Based on recommendations from the Future Labor Market Research Group, we will submit a legislative bill in the first half of this year to improve outdated and rigid aspects of the Factory Act era and establish a virtuous cycle structure of free and healthy labor."

Minister Lee Young of the Ministry of SMEs and Startups said, "With the guidance period granted by the Ministry of Employment and Labor, small businesses will be able to catch their breath to some extent. However, since the guidance period is only a temporary measure, companies suffering from chronic labor shortages will inevitably face damages such as failure to meet delivery deadlines if existing workers leave due to reduced overtime pay, so responsible action by the National Assembly is necessary." Minister Lee also said, "The Ministry of SMEs and Startups will continue to actively present industry opinions to the National Assembly and the Ministry of Employment and Labor regarding labor hour system reforms and foreign worker introduction, and this year, we will prepare measures to improve productivity in small and medium enterprises to increase corporate added value amid decreasing labor input such as labor shortages and insufficient working hours."