Hourly Annual Leave Taking Effect in 2027: Legal Issues Companies Must Review

Jeong Yeong-min, Attorney at Daeryun LLC

Under the amendment to the Labor Standards Act passed by the National Assembly plenary session on May 7, 2026, a legal basis will be established from June 10, 2027, allowing paid annual leave to be used in hourly units. Previously, the principle was to use annual leave in daily units, and partial use such as half-day or quarter-day leave was operated through workplace employment rules or labor-management agreements.

The core of this amendment is the addition of Paragraph 5 to Article 60 of the Labor Standards Act, which obligates employers to grant leave when a worker requests to divide annual leave within the hourly units and number of days prescribed by Presidential Decree. This institutionally reflects the demand for short leave such as hospital visits, dropping off and picking up children, and visits to government offices. However, the units and scope of use are to be determined by enforcement decree, so unlimited divided use is not permitted. It carries the significance of unifying hourly annual leave operations, which had varied by workplace, under a legal standard.

Companies must prepare for the legal issues that will arise in actual operation rather than the implementation of the system itself. Even after the amendment, the employer's right to change the timing is maintained, but the timing-change provision of former Article 60, Paragraph 5 has been moved to the proviso of Paragraph 6. The timing may be changed if granting leave at the time requested by the worker causes serious disruption to business operations, but this is not the authority to refuse the leave itself. In particular, hourly annual leave leaves a relatively smaller work gap than a full day of leave, so it may be even harder to prove 'serious disruption to business operations.' Going forward, disputes over the requirements for exercising the timing-change right are likely to increase.

Accordingly, companies must also overhaul their employment rules. Article 93, Item 1 of the Labor Standards Act stipulates matters concerning leave as mandatory items in employment rules. If the minimum unit of use for hourly annual leave, application procedures, approval criteria, and methods for calculating remaining leave are not specifically prepared, interpretive disputes over approval standards or leave-deduction methods may arise. Workplaces operating remote work or flexible working hours need to more clearly set the boundary between actual working hours and hourly annual leave. However, since specific operational standards are delegated to the enforcement decree, a phased overhaul reflecting these after the Presidential Decree and Ministry of Employment and Labor guidelines are finalized is advisable.

It is mentioned that the enforcement decree may consider measures such as limiting the minimum unit of use in hours or the number of annual leave days that can be used in hourly units to a certain range. However, this has not yet been finalized, so the final standard must be confirmed after the enforcement decree is promulgated.

There is another system worth noting along with this amendment. The proviso to Article 54, Paragraph 1 of the amended Labor Standards Act allows, from December 10, 2026, that when working hours are exactly four hours, a break need not be granted if the worker explicitly requests not to use the break. This does not mean the employer can unilaterally omit the break; it is important that an explicit request from the worker is a prerequisite. In practice, there may be interpretive controversy over whether the employer must accept such a request, so to prevent disputes it is advisable to secure written documents such as a 'request for non-provision of break time.'

The attendance management and wage settlement systems also need to be overhauled. As hourly annual leave expands, leave-deduction methods and remaining-leave calculations become complex, and if the criteria for handling decimals in hourly accumulation are unclear, this may lead to disputes over wages or unused-leave allowance calculations. Advancing attendance management systems using computer systems and HR solutions is expected to become effectively an essential task.

In addition, this amendment also newly established a provision prohibiting disadvantageous treatment on the grounds of using annual leave. Article 60, Paragraph 9 of the amended Labor Standards Act stipulates that an employer must not dismiss or otherwise disadvantage a worker on the grounds of the worker's request for or use of annual leave. Violation may result in a fine of up to 5 million won under Item 1 of amended Article 114. Furthermore, violating the obligation to grant hourly annual leave may, like violating the existing obligation to grant annual leave, be subject to imprisonment of up to two years or a fine of up to 20 million won.

This amendment is likely to serve not merely as a change to the leave system but as an occasion for the working-hours management system to shift from a 'day'-centered to an 'hour'-centered approach. Companies need to respond in phases, not stopping at amending employment rules but overhauling break-time operation procedures in 2026 and hourly annual leave regulations and computer systems before implementation in 2027. At the same time, it is advisable to establish criteria for exercising the timing-change right and personnel-evaluation principles in advance through consultation with labor-relations law experts, thereby minimizing the legal risks that may arise after the system takes effect.

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