Annual Leave Allowance Calculator Guide for Foreign Workers in Korea – How It's Earned and Calculated

What Is Annual Leave Allowance (연차수당)?

Annual leave allowance (연차수당) is monetary compensation paid to workers for unused annual paid leave (연차유급휴가). Article 60 of the Labor Standards Act (근로기준법 제60조) requires employers to grant paid leave to workers who meet certain conditions. Article 61 (제61조) of the same Act provides that if an employer has followed the leave-use promotion procedure yet the worker still did not use the leave, the employer may be exempt from the obligation to pay monetary compensation. Conversely, if the employer did not follow the promotion procedure, the employer must pay an allowance for any unused annual leave.

Annual Leave Accrual at a Glance

Annual leave accrues through two main paths.

① Workers employed for less than 1 year (monthly accrual)
One day of paid leave accrues for each full month of attendance after joining. Up to 11 days may accrue in total, and each day must be used within 1 year of the date it accrues.

② Workers employed for 1 year or more (yearly accrual)
A worker who attends at least 80% of working days in a year is entitled to 15 days of paid leave. One additional day is added for every 2 years of continuous service thereafter, up to a maximum of 25 days (Article 60, Paragraph 4 of the Labor Standards Act / 근로기준법 제60조 제4항).

Annual Leave Allowance Calculation Formula

The key figure is the ordinary daily wage (1일 통상임금).

Annual Leave Allowance = Number of Unused Leave Days × Ordinary Daily Wage

Ordinary wages (통상임금) include not only base pay but also any allowances paid on a regular, uniform, and fixed basis — such as job-duty allowances and position allowances (Supreme Court en banc decision 2013다4969 / 대법원 2013다4969 전원합의체 판결). Meal and transportation allowances paid uniformly to all employees may also be included in ordinary wages, so care is needed.

Example: Calculating the Ordinary Daily Wage
- Total monthly ordinary wages: ₩3,000,000
- Scheduled monthly working hours: 209 hours (based on a 40-hour week)
- Hourly ordinary wage: ₩3,000,000 ÷ 209 = approx. ₩14,354
- Ordinary daily wage (based on 8 hours): ₩14,354 × 8 = approx. ₩114,833

If 5 days of annual leave remain unused, the allowance would be approximately ₩574,165.

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

Statute of Limitations and Payment Timing

The right to claim unused annual leave allowance is subject to a 3-year statute of limitations (Article 49 of the Labor Standards Act / 근로기준법 제49조). Claims remain possible within 3 years even after resignation. In principle, payment falls due at the point the leave expires — normally the next wage payment date after 1 year has passed from the date the leave accrued. Upon resignation, the allowance must be settled within 14 days of the date of separation.

What About Workplaces with Fewer Than 5 Employees?

Article 60 of the Labor Standards Act (annual paid leave) does not apply to workplaces with fewer than 5 full-time employees. Accordingly, there is no statutory obligation to pay annual leave allowance at such workplaces. However, if the employment rules (취업규칙) or employment contract explicitly guarantee annual leave, the employer must pay in accordance with that agreement.

Calculate Your Annual Leave Allowance Yourself

If the components of your ordinary wages are complex, or if you are unsure how to calculate your start date or attendance rate, try the annual leave calculator at Bylaw (workbylaw.com). Enter your start date and pay information to automatically calculate your remaining leave days and estimated allowance. You can use the results to negotiate with your employer, or proceed directly to the complaint-filing feature if a dispute arises.

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