Many people working at companies accumulate annual leave days they can't use. Whether due to heavy workloads, transition responsibilities, or company culture, you often have to 'give up' taking vacation. But there's something you shouldn't give up: compensation for unused annual leave. The Labor Standards Act clearly stipulates that employees have the right to receive compensation for unused annual leave days.
All workers employed for one year or longer are eligible for unused annual leave compensation. Whether you're a full-time, contract, or part-time employee, anyone covered by the Labor Standards Act has this right. However, you must have worked for at least three consecutive months, and you earn 15 days of annual leave per year.
An important point is that companies cannot force employees to take vacation. Some companies try to require employees to use their annual leave, but if a worker doesn't want to, the company must pay compensation instead. However, when you retire, all unused annual leave must be paid out as compensation.
Unused annual leave compensation is calculated using this formula:
Annual Leave Allowance = (Monthly Salary ÷ 30 days) × Number of Unused Annual Leave Days
For example, if your monthly salary is 3 million won and you have 5 unused days:
This is the compensation you should receive. An important note: the calculation is based on 'base salary' only. Bonuses and allowances are excluded, and various taxes are deducted.
Some companies try to pay less or calculate based on minimum wage instead of base salary. This is illegal, so you should request a correction.
Retirement is a critical point to ensure you receive your annual leave compensation. Article 55 of the Labor Standards Act requires companies to pay compensation for unused annual leave at retirement.
Checklist before retirement:
Many workers only collect retirement pay and miss out on annual leave compensation. Always check whether annual leave allowance is included in your separation notice or final pay slip.
If your company doesn't pay unused annual leave compensation, you can take the following steps:
Step 1: Written Request
Request payment of unused annual leave compensation via email or certified mail. It's important to keep evidence.
Step 2: Report to the Ministry of Employment and Labor
You can file a report for 'wage non-payment' at your local labor office or employment agency. The Ministry of Employment and Labor provides free mediation for labor disputes and issues administrative guidance to the company.
Step 3: Apply to the Labor Commission
If negotiations with the Ministry of Employment and Labor fail, you can apply for collective dispute mediation at your regional labor commission. This process is free.
Step 4: Small Claims or Labor Lawsuit
If the amount is small, you can file a small claims suit; if it's larger, you can proceed with a general civil lawsuit. You may need a lawyer's help.
If the company is found to have violated the Labor Standards Act, it must not only pay the unused annual leave compensation but also pay late payment interest (20% annually).
Q: My company said 'unused annual leave is forfeited'
A: That's incorrect. Under the Labor Standards Act, unused annual leave must be paid out as compensation. Some companies set 'expiration dates,' but they cannot forcibly forfeit leave without explicit consent.
Q: Can the company provide 'substitute days off' instead of payment?
A: No. If the employee doesn't agree, it must be paid in cash. The company cannot force vacation on the employee's behalf.
Q: Do I earn annual leave during suspension periods?
A: Some suspensions, such as parental leave or military service leave, are recognized as working periods, so annual leave continues to accrue. However, this varies by company and type of suspension, so check with your HR department.
Q: Can I transfer my annual leave to a new company when changing jobs?
A: No. At retirement, all unused annual leave must be received as compensation, and you start fresh with a new year at your new company.
Annual leave is a fundamental worker's right. Even if your company culture suggests 'not taking vacation is virtuous,' legally it's your rightful entitlement. Especially at retirement, you must always check and receive unused annual leave compensation. Don't overlook a small amount—think of it as fair compensation for your labor.
When you receive your separation pay statement, carefully review whether it includes an annual leave compensation line item and verify the amount is correct. If you have questions, you can get free expert consultation from the Ministry of Employment and Labor.
This article is information provided by AI analysis and compilation of various sources. Please confirm more accurate information with relevant agencies or professionals.
