Annual Leave in Korea: How It Accrues and When Unused Leave Must Be Paid
Annual paid leave can be confusing. This is one of the areas where less experienced HR teams receive various inquiries and complaints from the employees.
This post walks through the statutory framework, shows how leave accrues with a worked example, and explains when unused leave should be paid out.
The Statutory Baseline: Article 60 of the Labor Standards Act
Below three points are the basic rules on leaves:
First, an employee who has attended work for 80% or more of a full year is entitled to 15 days of paid annual leave.
Second, an employee with less than one year of service, or one who attended less than 80% of the year, earns one day of paid leave for each month of perfect attendance.
Third, long service adds days. After three years of continuous service, one additional day accrues for every two years of service beyond the first year. The statutory cap is 25 days.
Year One: Monthly Accrual
A new hire does not wait a full year for leave. Under Article 60(2), each month of perfect attendance generates one day of leave, up to a maximum of 11 days in the first year.
Two points deserve attention. Each monthly leave day vests only if the employment relationship still exists on the day after that month of work is completed. And these first-year days must be used within one year of the hire date. Any balance left at the first anniversary lapses, subject to the compensation rules discussed below.
Year Two and Beyond: The 15-Day Grant
A 2017 amendment to the LSA, effective May 29, 2018, deleted the old offset rule. Before the amendment, first-year monthly leave was deducted from the second-year 15 days. Now the two accrue independently. An employee who works through the first two years can therefore earn up to 26 days in total: 11 monthly days plus the full 15-day grant.
There is one critical catch. In a decision dated October 14, 2021 (Supreme Court Case No. 2021Da227100), the Supreme Court held that the right to the 15-day grant arises on the day after the first full year of work is completed.
The practical result is stark. An employee who works exactly 365 days and leaves receives at most 11 days. An employee who works 366 days receives up to 26.
Unused Leave Can be a Wage Claim
Statutory leave expires if not used within one year. But expiry does not extinguish value. When leave lapses unused, or when employment ends with leave still on the books, the employee acquires a claim for unused annual leave allowance.
That classification drives the limitation period. Under Article 49 of the LSA, wage claims are extinguished three years after they arise. The Supreme Court has fixed the starting point precisely: the clock runs from the day after the one-year use period ends, because that is when non-use becomes final (Supreme Court, November 16, 2023, Case No. 2022Da231403). The same rule applies after termination. A departing employee can therefore reach back and claim allowances that accrued within the limitation window, which in practice can cover several years of leave cycles.
One statutory safe harbor exists. If the employer properly carries out the leave use promotion procedure under Article 61, including the required written notices at the required times, the obligation to compensate lapsed leave falls away. The procedure is technical, and courts scrutinize each step. A defective notice revives the payment obligation.
Final Thoughts
Annual leave in Korea is a wage issue wearing a welfare label. Every unused day is a latent monetary claim with a three-year tail. For foreign-invested companies, the risk rarely comes from bad intent. It comes from headquarters policies drafted for another jurisdiction and applied here without adjustment.
If you would like a review of your leave policy, contact me at sjchun@seoulcounsel.com.
This article is for general informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship. For advice on a specific situation, please consult a qualified Korean attorney.
© 2026 SJ Chun. All rights reserved. This article may not be reproduced, copied, or republished, in whole or in part, without prior written permission from the author.
