1. The Client's Situation
The client was reviewing the introduction of a "compensatory leave system," whereby, for certain job categories with frequent overtime, night, and holiday work, compensation would be provided in the form of paid leave instead of wage payments. However, the client had no prior experience operating a compensatory leave system, and there was a concern that confusion could arise in practice due to the absence of clear standards regarding consistency with the rules of employment or collective agreements and the satisfaction of legal requirements. Accordingly, the client requested legal advice in order to prepare a draft labor-management agreement for the effective introduction of the system.
2. Your Legal Team's Advice
Your Legal Team reviewed the legal requirements for the compensatory leave system under Article 57 of the Labor Standards Act and structured the provisions to suit actual on-site operations. In particular, to clarify the validity of excluding wage claim rights upon introduction of the compensatory leave system and the method of granting paid leave, we specified the calculation method for overtime, night, and holiday work hours and the timing of grant. We also designed the term of validity of the agreement and an automatic renewal clause so that it could be renewed by autonomous agreement between labor and management, thereby reducing the possibility of future disputes.
3. Result
Based on this advice, the client was able to smoothly consult with the employee representative and prepare to conclude a compensatory leave agreement. The client was able to reduce wage costs to a certain extent while simultaneously achieving protection of employees' rights and interests, and was able to respond to internal audits and external inspections without legal issues.