Starting in mid-September 2026, the Ministry of Employment and Labor launched targeted labor inspections focusing on workplaces that misuse or abuse comprehensive wage systems and fixed overtime (OT) arrangements. Effective October 8, 2026, the revised Labor Standards Act, which strengthens penalties for wage arrears, will also take effect.
In a contributed article, Attorney Junhyo (Jun) Kim of SOLARIS outlined the core issues that companies operating comprehensive wage or fixed OT agreements must review.

• (Contract Validity and Difference Settlement) Comprehensive wage agreements adopted merely for the convenience of payroll calculation are difficult to uphold in court. Under fixed OT agreements as well, if statutory allowances based on actual hours worked exceed the fixed allowance, the company must pay the difference.

• (Legal Liabilities and Transaction Risks) Unpaid allowances not only carry the burden of up to three years of retroactive payments and severance pay recalculations, but can also escalate into criminal liability for management. Inadequate working hour records can also negatively affect valuations during investment attraction or M&A processes.

• (Working Hour Tracking and Limit Management) Waiting times, prep work, and pre-shift handover periods can all be counted as working hours. Companies must track actual hours worked, settle any differences during the monthly payroll closing, and separately ensure that overtime limits have not been exceeded.
  
  

In line with changes in the HR and labor landscape, SOLARIS will continue to provide legal support to help companies prevent labor regulatory risks and establish sound HR management systems.

-Link to the original contributed article: [According to the Law] Are Comprehensive Wage Contracts Safe Even Under Labor Inspections?