How to Introduce and Use Flexible Working Systems

How to Introduce and Use Flexible Working Systems

Bongsoo Jung, Korean labor attorney at KangNam Labor Law Firm

?

I. Introduction?

?Productivity depends on increasing production or achievements in a limited time. The term ‘52-hour week’ originated from the introduction of ‘one week’ in Article 2 of the Labor Standards Act, which states that "one week is seven days including holidays."[1] A statutory work week is 40 hours, (a total of 52 hours with maximum allowable overtime of up to 12 hours per week). In order to achieve better results with a reduction of working hours, a flexible working time system that focuses on the characteristics of the work is urgently needed. In 2006 I provided wage consultation for a French company that was in charge of the operation of subway line 9, and what the manager told me is still vivid in my mind. "Koreans work 44 hours per week, but are less productive than those who work 32 hours per week" the French manager said. At that time, when I considered what he said, I thought it was because Korea was constantly working on extended work and holiday work due to the rigid working hours. Most Korean companies still work from 9 am to 6 pm, Monday through Friday. In order to be efficient during these traditional hours, an introduction of flexible working hours as allowed by the Labor Standards Act is urgently required.

?The Labor Standards Act includes (i) flexible working hours, (ii) selective working hours, (iii) deemed working hours, and (iv) discretionary working hours. How to adopt and use these four flexible working systems is described in detail below.[2]?

?

II. The Flexible Working Hours System

1. Concept

?'Flexible working hours' means a shortening of the working hours of other working days or other weeks instead of extending the working hours of particular days or weeks, so that the average working hours of a given period shall remain within the limit of statutory standard working hours (40 hours per week). For example, if you work 45 hours (9 hours x 5 days) in the first week and 35 hours (7 hours x 5 days) in the second week, the two weeks will have an average of 40 hours per week, and so it will not be necessary to pay overtime for the extended 5 working hours of the first week.

?For the workers, increased leisure time as a result of a reduction in working hours, a decrease in the number of commuting days, and increased holidays, all of which cause a change in their biorhythms resulting in increased fatigue, is coupled with a decrease in real wages due to reduced overtime allowances.

From the perspective of the employers, labor costs can be reduced by increasing the efficiency of working hours and reducing the need for overtime by arranging working hours to proactively respond to market conditions and management, thereby avoiding the too-strict fixed statutory time system.

?

2. How to Introduce Flexible Time

(1) Introduction of flexible working hours within a two–week period

?In order to introduce flex-time in two weeks, it must be prepared in advance through the establishment and revision of the rules of employment. In order for this system to be introduced through the employment rules, the opinion of the labor union, or workers representing the majority, should be heard, and consent should be obtained if introduction of the system will affect the workers disadvantageously.

(2) Introduction of flexible working hours within a 3- month period

?This system requires labor-management agreement. The employer should receive a written agreement from the labor union which comprises a majority of the workers, or the employee representative for the majority of the workers. The contents of the written agreement must include (i) the scope of the covered workforce, (ii) the unit period, (iii) the working day in the unit period, and the working hours for each working day, and (iv) the validity period of the agreement.

1) The scope of covered workers does not necessarily have to include all workers, as it can apply to only some workers engaged in specific sectors, industries and occupations. However, it cannot be applied to young workers (between 15 and 18 years of age) or pregnant workers.

2) Since the unit period is within 3 months, it can be implemented in various unit periods such as 3 months, 2 months, 1 month, or 3 weeks.

3) The working day and the working hours for each working day must be specified. Workers should be notified of the work schedule before the start of the unit period by specifying the work day by work type and working hours by work day in the work schedule. Working hours in a particular week may not exceed 52 hours, and working hours on a particular day shall not exceed 12. If more than that, overtime work allowance must be paid.

?4) There is no special limitation on the validity of written agreements. If an expiration date is set, an automatic renewal clause or an auto-expansion clause may be implemented in case the expiration date passes.

?

3. How to use Flexible Time

(1) Let’s use the instance of a brick factory.[3] “We use a combination of sand, special cement, and water to make differentiated bricks in the factory. In January each year, temperatures drop below -20 degrees, and when the water completely freezes at this temperature, it is almost impossible to produce bricks. Therefore, workers come to work as usual and perform chores such as cleaning rather than producing bricks. But in March, the situation is completely different. As construction starts in earnest, there is no choice but to work overtime due to the large volume of brick orders.” For this company, a flexible working-hour system could solve their problem. Workers could work 30 hours per week in January, 40 hours per week in February, and 50 hours per week in March. In this case, the average working hours per week would be 40 hours, which would mean the company is not obligated to pay an overtime allowance in March, even though the work week at that time exceeds 40 hours.

(2) For a luxury-brand store: December is the peak season, and so customers shop a lot and store workers work overtime. On the other hand, January is off-season and customers don't go to luxury brand stores as much, resulting in an overabundance of workers who must be paid, but have minimal production. In this kind of store, flexible working hours could reduce labor costs and enhance work efficiency. In December, during peak season, workers would work 52 hours a week, but in January, during the off-season, they could work just 28 hours a week.

?

III. Selective Working Hours System

1. Concept

The Selective Working Hours System sets only the total working hours of the settlement period within one month, allows workers to arbitrarily select a working time for each work day per week within the standard working time range, and to freely determine their commute time for each day and each week. In other words, the system sets only the total working hours within one month and leaves the start and end times of working hours to the workers' discretion. Therefore, the selective working hours system gives workers the choice of commute times, enabling them to balance work and life to increase their work efficiency while improving their quality of life.

?

2. How to introduce a Selective Working Hours System

(1) Introduction through the employment rules: Employers must stipulate that the start and end times of work are left to each worker's discretion for a group of workers subject to selective working hours, through the establishment or revision of employment rules.

(2) Written agreement with the employee representative: To introduce a selective working hours system, a written agreement with the labor union or worker representing the majority of the workers is required. The written agreement shall include (i) the scope of workers subject to this system, (ii) the adjustment period (within one month) and the total working hours within the adjustment period, (iii) starting and finishing limit of working hours if a mandatory work period (core time) is in force, (iv) starting and finishing time of eligible hours for selection by workers (selective time), and (iv) standard working hours to become the basis for paid leave.

?1) The scope of covered workers: In general, it is easy to apply the system to managers and supervisors who do not have strict restrictions on commuting, etc., and for professional, research, and office workers, where the emphasis is on quality rather than the amount of work. However, this system can be introduced in any workplace.

?2) The settlement period and total working hours: The discretionary period for which the worker chooses to provide the work can be set within one month (two weeks or four weeks). The total working hours are usually calculated as the total sum of the contractual working hours within the settlement period (e.g. 40 hours x 30 days/7 days = 171.4 hours) prior to the introduction of the system. If the total working hours are set, even if the working hours in a given unit exceed the legal working hours per day or per week within the total working hours of the settlement period, they will not be considered extended working hours subject to O/T allowance.

?3) Core working hours and selective working hours: A core working time is the time when the worker must work, and the selective working time is the time when the worker can decide which hours to work.

?4) Standard working hours: Standard working hours refers to the working hours for one day, as set by labor and management, which becomes the basis of calculation for paid leave, etc. in the selective working hour system. For paid leave, it is considered that the standard working hours of 1 day are used.

?

3. How to use

(1) General selective working hours system: The selective working hours system is divided into mandatory working hours and selective working hours. Standard working hours, based on the calculation of paid leave, are from 09:00 to 18:00. For example, workers are given discretionary hours from 07: 00 - 11: 00 for coming to the office and from 15: 00 - 20: 00 for leaving the office. Mandatory working hours for all workers are between 11: 00 and 15: 00.

(2) Jobs where it is difficult to verify working hours, and/or with high waiting times (The 00 company specializes in renewable energy): Employees were dissatisfied because they did not get paid overtime due to difficulties in verifying their working hours. Also, for after-sales service, irregular overtime work occurred frequently and there were many waiting hours. The company introduced a selective working hours system on a monthly basis for the sales and AS teams through written agreements with labor representatives after consultation between labor and management. As a result, it was possible to adjust working hours according to work volume and reduce unnecessary waiting time and overtime work by carrying out flexible and efficient work.[4]

(3) Jobs related to irregular work types: The 00 company, which is a refrigeration facility installation and management company, works according to the project schedules requested by clients and their companies, due to their unique natures. There was a lot of overtime hours due to irregular, nighttime and holiday work. The company therefore introduced a selective working hours system which allowed each worker to manage their time of arriving and leaving work according to the circumstances and demands of client companies. This has minimized unnecessary overtime. As a result, workers could adjust their working hours according to the schedule of their clients, which made it possible to reduce overtime caused by irregular working hours.[5]

?

IV. Deemed Working Hours System

1. Concept

?The Deemed Working Hours System is a system for recognizing working hours when it is difficult for workers to calculate all or part of their working time outside the workplace due to business or other reasons. In this case, in principle, the prescribed contractual working hours are considered to be worked. However, in the case where work in excess of predetermined working hours is normally required for performance of the work, the required time is generally regarded as working time. If labor and management have determined generally-necessary working hours in writing in advance, such working hours are regarded as working hours performed. The deemed working hours system outside the workplace is sometimes referred to as an authorized labor system, and was established to make working hours more rational in consideration of the increasing number of working hours outside the workplace due to the development of the service industry and the progress of automation. Difficulties in calculating such working hours include sales, AS service, business trips, taxi driving, reporters’ work, and home-stay work.

?

2. How to introduce a Deemed Working Hours System

(1) Provision of work outside the workplace: Work outside the workplace should be judged after comprehensive consideration of the place of work and the type of work performed. A working place is a situation in which a worker deviates from the management of working hours at his or her own place of work. The form of work performance refers to the conduct of work without specific direction and supervision from the employer's working time management organization.

(2) Difficulty in calculating working hours: It is difficult to calculate working hours because the starting and finishing time when working outside the workplace are discretionary for the workers concerned, and because the workers concerned work the number of working hours due to each unique situation and working conditions involved. Therefore, if it is possible to calculate working hours when specific direction and supervision by the employer is applied directly to workers working outside, those workers are exempted from application of the deemed working hours system.

(3) How to introduce: If (1) and (2) above are met, workers’ working hours, regardless of actual working hours, should be considered as working hours as either: (i) predetermined working hours, (ii) time normally required for the performance of the work, or (iii) agreed working hours between labor and management.

?

3. How to use

Overseas business trips: When traveling for long-distance overseas business trips or returning home, flight times, immigration procedures, and travel time are all likely to exceed actual working hours. In such cases, it is desirable to establish a written agreement with the worker representative. Generally, the company guarantees paid or alternative leave for the time required for the work because of overseas business regulations. In this regard, the courts and the Labor Ministry consider working time spent abroad as working hours.[6]

?

V. Discretionary Work System

1. Concept

?The discretionary work system is a system that requires the delegation of the method of work to the discretion of the workers, in light of the nature of the work.

?Due to technological advances, information-oriented work, the increasing share of the service industry, increase of knowledge labor, etc., workers have a lot of discretion in the way they work, and so their remuneration depends on the quality of their work rather than the number of working hours.

?Professional work that requires creativity (such as R&D, information processing, system analysis, design work, news article composition, and editorial work) is not appropriately regulated by the number of working hours in the same way as for general workers. But it is preferable for both labor and management to leave working hours to the discretion of such professional workers rather than to control them.

?

2. How to introduce a Discretionary Work System

(1) Work falling under ‘discretionary work’.

?Work that may be considered discretionary work is limited to the work prescribed in Article 31 of the Enforcement Decree of the Labor Standards Act. The work must be at the discretion of the workers. They should not be given specific instructions as to how to perform, but this should not be left to the full discretion of the workers either, so the employer can direct the basic content of the work. However, the employer must not give specific instructions regarding the distribution of working hours. ?(i) Research and development of new products or technologies, and research in the areas of the humanities or the social or natural sciences; (ii) Design or analysis for data processing systems; (iii) Gathering, compiling and editing of news in a newspaper, broadcasting or publication business; (iv) Design or creation of clothing, interior decoration, industrial goods, advertising, etc.; (v) Work as a producer or director in the business of producing broadcasting programs, motion pictures, etc.; and (vi) Consultation, advice, appraisal or an agency with the delegation or commission of others in the affairs of accounting, legal cases, tax payment, legal affairs, labor management, patents, appraisals, etc.

(2) There must be written agreement on statutory matters.

?In order to introduce a discretionary work system, the employer must specifically identify the work concerned, as well as all other necessary items, through a written agreement with the employee representative. Statutory matters that must be included in the written agreement include: (i) provision as to the work to be provided; (ii) provision that the employer would not give directions to the worker regarding how to perform the work, and details concerning the allocation of working hours; and (iii) provision for the computation of working hours as determined by written agreement.

?

3. How to use

In order for the company to adopt and use discretionary work hours for certain occupations, departments, and duties within the organization, its application must include (i) the six discretionary work tasks mentioned above, (ii) discretionary rights in work performance must be allocated and (iii) there should be a written agreement with the worker representative.

?

VI. Conclusion

? In order to improve the productivity of the company and improve the quality of life of the workers, it is necessary to introduce a working-hour system tailored to the characteristics of workers’ jobs. Through this, it will be possible to create a desirable work culture where work and life are equally compatible.

?

?

[1] The Labor Standards Act was revised on the concept of one week (March 30, 2018).

[2] Ministry of Employment and Labor, “Flexible Working Hour System Guides”, September 2019; MOEL, “Q&A for Flexible Working Hour System”, December 2017.

[3] Boksoo Kim, “The Practical Use of the Flexible Working Hour System” <Labor Law>, June 2018.

[4] MOEL, “Flexible Working Hour System Guides”, September 2019, p. 52.

[5] Above guide, pp. 53-54.

[6] Suwon District Court ruling on November 25, 2016: 2015 gadan 505758; Labor Ministry Guideline on June 14, 2001: 68207-1909,