Ministry meets with 7 small and venture firms in Daejeon to hear concerns over flat-rate wage and fixed overtime practices; officials stress working-hour recordkeeping and promote flexible work arrangements for R&D and office staff

Office buildings in Pangyo, home to a concentration of IT companies [The Herald Business DB]
Office buildings in Pangyo, home to a concentration of IT companies [The Herald Business DB]

The Ministry of Employment and Labor has launched on-site guidance visits to small and venture businesses, warning that employers must pay the difference when statutory overtime, night-shift or holiday pay — calculated on actual hours worked — exceeds the amount stipulated in a flat-rate wage or fixed overtime agreement.

For sectors such as research and development and office work, where uniform tracking of working hours is difficult, the ministry said it would help companies make use of existing flexible work arrangements rather than relying on flat-rate wage agreements.

The ministry held a "Daejeon Small and Venture Business On-Site Communication Forum" on Monday at Daedeok Venture Tower in Yuseong-gu, Daejeon, with representatives from the Innopolis Venture Association and seven local businesses in attendance.

The forum was organized to hear about the actual operating conditions and difficulties of companies that had participated in a consulting program on the misuse of flat-rate wage agreements, conducted for knowledge-service businesses in the Daejeon and Cheongju areas in August.

At the forum, officials reviewed how each workplace uses flat-rate wage and fixed overtime arrangements and how working hours are recorded and managed. They also explained the "Guidance on Preventing the Misuse of Flat-Rate Wage Agreements to Eliminate Unpaid Labor," which took effect in April.

Under the guidelines, employers must fulfill their obligation to record and manage working hours, taking into account the nature of the work and whether working hours and allowances can be itemized on pay stubs.

Even where a flat-rate wage agreement is in place — regardless of whether it takes the form of a fixed-sum pay system or a fixed-allowance system — employers must pay any shortfall if statutory entitlements such as overtime, night-shift and holiday pay, calculated on actual hours worked, exceed the agreed amount.

The ministry stressed that so-called "unpaid labor" — where an employer fails to pay proper statutory allowances based on actual hours worked simply because a flat-rate wage agreement exists — is not permitted.

However, participants raised concerns about the practical difficulty of tracking working hours. For R&D and office roles, they said, the nature of the work makes uniform hour-tracking difficult, and differences in work patterns, workforce composition and pay structures across workplaces make it hard to apply a one-size-fits-all approach.

In response, the ministry said it would support workplaces in managing working hours in a way suited to their individual circumstances by promoting the use of existing flexible work systems, including discretionary and flexible working-hour arrangements.

The Korea Labor Foundation also introduced its "Workplace Innovation Consulting" project, which supports reforms to working-hour systems including flat-rate wage arrangements, and shared case studies of improvements to working-hour and pay structures at various workplaces.

Company representatives at the forum shared their views on why they had adopted flat-rate wage and fixed overtime arrangements, the problems that arise in practice, and how they record and manage working hours such as clock-in and clock-out times.

Vice Minister of Employment and Labor Kwon Chang-jun said the practical challenges of managing working hours would vary widely given that every workplace differs in the nature of its work, work patterns, workforce composition and pay structure. "We will continue to communicate and provide support so that a reasonable and effective working-hour system — one that both employers and workers can accept — takes proper hold on the ground, while preventing the misuse of flat-rate wage agreements," he said.


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