Annual Leave Allowance in Korea: How to Calculate Unused Leave Pay

What Is Annual Leave Allowance?

Annual leave allowance (연차휴가 미사용 수당) is the monetary compensation an employer must pay when a worker has unused annual leave (연차유급휴가) days remaining. The formal name is unused annual leave allowance, and it is based on Article 60 and Article 61 of the Labor Standards Act (근로기준법 제60조 및 제61조).

When and How Much Annual Leave Accrues

Under Article 60 of the Labor Standards Act (근로기준법 제60조), a worker who has attended work 80% or more of the days in a year is entitled to 15 days of paid annual leave. After 3 or more consecutive years of service, 1 additional day is added for every 2 years, up to a maximum of 25 days.

In the first year of employment, 1 day of leave accrues for each full month worked, up to a maximum of 11 days on a monthly basis. These monthly-accrued days are deducted from the 15 days that arise at the one-year mark (see Supreme Court Decision 2021다227100).

Annual Leave Allowance Calculation Formula

The calculation is relatively straightforward:

Annual Leave Allowance = Number of Unused Leave Days × 1 Day's Ordinary Wage

Ordinary wage (통상임금) includes the base salary plus any fixed, uniform allowances (e.g., position allowances, qualification allowances). Items that reimburse actual expenses — such as meal subsidies or commuting allowances — are in principle excluded (Supreme Court en banc Decision 2013다11226).

One day's ordinary wage is calculated by dividing the monthly ordinary wage by the monthly scheduled working hours to get an hourly rate, then multiplying by the daily scheduled working hours (normally 8 hours).

Example: Monthly ordinary wage of KRW 3,000,000, monthly scheduled working hours of 209 hours, 5 unused leave days
- Hourly rate: 3,000,000 ÷ 209 ≈ KRW 14,354
- 1 day's ordinary wage: 14,354 × 8 = KRW 114,833
- Annual leave allowance: 114,833 × 5 = KRW 574,165

Note: Your employment contract may specify terms different from the statutory minimum; always check your contract.

When Must Annual Leave Allowance Be Paid?

For workplaces that have not used the annual leave use-promotion system, the obligation to pay annual leave allowance arises on the day after the leave-use period (normally 1 year) expires. Upon resignation or retirement, all unused annual leave must be settled and paid as of the date of separation.

When Annual Leave Allowance Can Be Waived

If an employer has lawfully carried out the annual leave use-promotion measures (연차 사용 촉진 조치) under Article 61 of the Labor Standards Act (근로기준법 제61조), the employer's obligation to pay monetary compensation is extinguished even if the worker does not use the leave. The promotion procedure must follow two mandatory steps: ① written notice requesting the worker to designate a leave period → ② if the worker fails to designate, the employer designates the period by written notice. If either step is not properly completed, the promotion has no legal effect and the allowance must still be paid.

What About Workplaces with Fewer Than 5 Employees?

Workplaces with fewer than 5 full-time workers are exempt from Article 60 of the Labor Standards Act, so there is no statutory annual leave obligation. However, if the rules of employment or employment contract separately provide for annual leave, the employer must comply with those provisions.

Calculate Your Allowance on Bylaw

To find out exactly how many annual leave days you have accrued and how much unused leave allowance you are owed, use the annual leave calculator at Bylaw (workbylaw.com). Simply enter your start date and working conditions to instantly see your accrued leave and estimated allowance. If your employer refuses to pay, you can also use Bylaw's complaint drafting feature to easily prepare a complaint to the Ministry of Employment and Labor (고용노동부).

This article is for informational purposes only and does not constitute legal advice. For specific cases, consult a certified labor attorney (노무사) or lawyer.