HR Updates

• Performance bonus contributions in retirement pension plans

If performance bonuses are deemed to be compensation for work performed, it is considered part of wages and must be included in the total amount of wage - used as the basis for calculating contributions to retirement pension plans.

However, where performance bonuses are contingent and variable depending on corporate performance and do not qualify as wages under the Labor Standards Act, such performance bonuses are excluded from the contribution calculation base under the Act on the Guarantee of Employee Retirement Benefits. In principle, these payments should be contributed as employee contributions, meaning that the employees concerned voluntarily make contribution to their Defined Contribution (DC) or Individual Retirement Pension (IRP) accounts, rather than as employer contributions.

That said, if an employer intends to contribute such performance bonuses as employer contributions, the contribution method and criteria must be clearly stipulated in advance in the retirement pension plan rules or a labor-management agreement. For example, through agreement between labor and management, the rules may allow additional contributions of performance bonuses on top of regular contributions, and such contributions should then be made on a regular basis in accordance with the established set of rules.

Furthermore, where executives are enrolled in a retirement pension plan, their management performance bonuses may also be contributed to their retirement pension accounts, subject to the applicable plan rules. 

Although the relevant system is in place, further review is required regarding the detailed implementation methods through consultation with local labor or legal advisers.

• Introduction of the government subsidy program for employers who allow “10 a.m. flexible work schedule” to employees with childcare responsibilities” (effective January 1, 2026)
  

The government introduced a new subsidy program for employers who allow “10 a.m. flexible work schedule” to their employees with childcare responsibilities to reduce their daily working hours by one hour, either by starting work later, leaving work earlier, or through a combination of both, without any reduction in salary.

This government subsidy program is available to employers of small and medium-sized enterprises (preferential support enterprises; 우선지원대상기업) and mid-sized enterprises that satisfy the conditions explained below.

Government subsidy details
• Amount: KRW 300,000 per month and per employee, provided to the employer
• Period: Up to one year from the start date of the reduced working hours arrangement (paid in three-month installments)
The support period is capped at one year in total, including any government support received under the existing Work-Life Balance Job Subsidy (Reduced Working Hours Program) and the 10 a.m. Flexible Work Schedule.
• Scope: Limited to 30% of the total number of employees, with a maximum of 30 employees per company

Requirements
To qualify for this government subsidy program, the following conditions must be met:
• The employee must be allowed to reduce working hours for childcare purposes (children aged 12 or younger, or elementary school students up to grade 6).
• Existing wage levels must be maintained.
• Daily working hours must be reduced by one hour (e.g., from 35 - 40 hours per week to 30 - 35 hours per week).

• The system must be stipulated in company policies such as employment rules or HR regulations, and employee attendance must be properly managed.
• It must be used for at least one month.

This program does not impose a legal obligation on employers. It is an incentive program that provides subsidies to companies that voluntarily introduce a reduced working hours system. The subsidy is provided for up to one year per employee, regardless of the number of children. The one-hour reduction in working hours may be applied at the start of the workday, the end of the workday, or a combination of both, if the total reduction equals one hour per day.

• Introduction of spousal miscarriage/stillbirth leave and related legislative updates

There are recent changes to the Equal Employment Opportunity and Work-Family Balance Assistance Act, which introduced a new spousal miscarriage/stillbirth leave and strengthened related support and enforcement provisions. Key updates are summarized below.

To enhance employees’ family care rights, a new leave entitlement has been established:
• Eligibility: Employees who request leave due to their spouse’s miscarriage or stillbirth
• Leave period: Up to 5 days
• Paid leave: At least 3 days must be paid leaves
• Application deadline: Within 20 days from the date of miscarriage or stillbirth
• Exclusion: Not applicable in cases of an artificial termination of pregnancy

Previously, the government support in the form of benefits equivalent to ordinary wages (maternity leave benefits) was available for maternity leave and infertility treatment leave. Following the amendment, this eligibility has been expanded to include spouses, who are now entitled to receive benefits equivalent to ordinary wages during their miscarriage or stillbirth leave period.
Such eligibility is limited to cases where the insured person is employed by a preferential support enterprise (우선지원대상기업).

Penalties for non-compliance have been reinforced. Employers may be subject to fines in the following cases:
• Failing to grant leave requested due to a spouse’s pregnancy or childbirth
• Failing to provide such leave as paid leave where required
• Failing to grant spousal miscarriage/stillbirth leave or failing to provide the first 3 days as paid leave

• Introduction of short-term childcare leave (effective August 20, 2026)

Short-term childcare leave is a newly introduced program that allows employees to take childcare leave in units of one or two weeks to care for their children in cases such as school closures, vacations, or a child’s illness, as prescribed by the Ministry of Employment and Labor. This program will take effect on August 20, 2026. Eligibility for short-term childcare leave is the same as for standard childcare leave. It applies to employees who are parents of children aged 8 or younger, or those in the second grade of elementary school or below. 

Short-term childcare leave may only be taken in units of one or two weeks and cannot be used for partial periods (e.g., 9 days). It is limited to once per year, and any period used will be deducted from the employee’s total childcare leave entitlement (currently up to 1 year and 6 months). While standard childcare leave may be taken in up to 4 separate periods (split up to 3 times), the use of short-term childcare leave does not count toward this limit. For example, an employee may use short-term childcare leave in addition to taking regular childcare leave in up to 4 separate periods.

As a limited exception, during school vacation periods, if allowing childcare leave at the time requested by the employee would cause significant disruption to business operations, the employer may, in consultation with the employee, change the timing of the leave. In such cases, the employer must provide written notice to the employee, including the reason for the change and the revised leave period.
Employees are eligible to receive childcare leave benefits under employment insurance even during periods of short-term childcare leave. While previously benefits were only available when childcare leave was taken for at least 30 days, under this new system, benefits may be claimed for periods as short as seven days (1 full week).

Penalties for non-compliance have been reinforced. Employers may be subject to fines in the following cases:
• Refusing an employee’s request for childcare leave (including the short-term childcare leave)
• Failing to reinstate an employee to the same or an equivalent position (with the same level of pay) after childcare leave