Supreme Court Decision on the Scope of Management and Supervison Personnel

Under the Korean Labor Standards Act (LSA), certain exemptions apply to managerial or supervisory employees, freeing them from the 52-hour workweek limit, overtime pay, and holiday allowances. However, the law lacks a precise definition of what qualifies someone for this status. A recent Supreme Court ruling (Supreme Court Decision 9019Da223389, decided on April 12, 2024) sheds light on this issue, stressing that the determination must go beyond titles and allowances, focusing instead on the actual duties performed and the degree of supervision involved.

The case centered around a company policy that denied overtime allowances to employees receiving a responsibility allowance, which was intended for managerial positions. Although the lower court had supported the company’s stance, the Supreme Court reversed the ruling. The Court found that simply receiving a responsibility allowance or holding a managerial title does not automatically exempt employees from overtime pay. Instead, the key consideration is whether the employees were performing substantive managerial duties and if they operated under minimal supervision.

This ruling emphasizes the need for companies to look beyond job titles or internal policies when classifying employees under the LSA. Moving forward, businesses must carefully assess the actual responsibilities and supervision levels of their employees to ensure they are properly categorized and compliant with the law. If you have any questions about whether an employee might be considered a manager, please contact the experts at InterLEX for assistance!