when we unavoidably need to take time off from work due to a sudden illness or injury, we often use "sick leave". while we all deserve the right to take time off when we're sick, many workers and human resources professionals are confused about whether this time off is paid or unpaid.

a clear legal understanding is essential, especially if the period of sick leave is prolonged, as it affects not only payroll issues, but also severance pay calculations and the amount of annual paid leave accrued in the following year. from the perspective of one of the world's top blog content strategists, here's an in-depth look at the labor law's stance on sick leave and how companies can operate wisely.

1. key principles of paid and unpaid sick leave: 'committed leave', not statutory leave

the legal status of sick leave and the principle of unpaid leave

sick leave is time off when a worker is unable to provide normal work due to illness or injury for non-work reasons.it's important to note that this is distinct from industrial injury (worker's compensation), which is when someone is injured while performing their job.

the Labor Standards Act specifies certain leaves as statutory paid leave, including annual paid leave (Article 60), maternity leave (Article 74), and fertility treatment leave (Article 18(3)).sick leave, however, does not fall under any of these statutory paid leaves; its legal character is that of "contractual leave," which employers and employees decide autonomously whether to operate through contracts or regulations.

therefore, sick leave is generally treatedas unpaid leaveunder the principle of"no work, no pay,"meaning that the company is not legally obligated to pay the worker.

company policy determines paid sick leave

while unpaid sick leave is the rule, the only way an exception can be made is through your company's internal rules. if your company's employment rules or collective bargaining agreement clearly state what constitutes "paid sick leave," then your company must ensure that workers who take sick leave arepaidaccording to those rules.

when administering a sick leave program, human resources managers should have specific criteria for granting sick leave, application procedures, and required documentation, such as medical certificates or doctor's notes, to prevent indiscriminate use and keep the program organized. It's also important to note that unauthorized and prolonged absences may be treated as absent without leave and may be grounds for discipline.

paid holiday pay issues when using unpaid sick leave

there are important financial implications that workers who take unpaid sick leave should be aware of. if a sick leave period is long and unpaid, you lose the obligation to pay for paid holidays (weekends, public holidays, etc.) that fall within that period.

this is because Supreme Court precedent views periods of unpaid sick leave as a "period of suspension of the employment relationship," during which the employee's obligation to provide work and the employer's obligation to pay wages are temporarily suspended. Because the law holds that during a period of suspension of the employment relationship, the employer is not obligated to pay wages even for paid holidays, unpaid sick leave can result in collateral financial losses that effectively force the employee to forgo paid holiday pay.

2. analyze how sick leave usage affects severance pay calculations

principles of Continuous Service Credit

the Labor Standards Act requires employers to pay severance pay to employees who have worked continuously for at least one year. Whether or not the period during which an employee uses sick leave to treat an illness is included in this "continuous work period" is an important criterion for calculating severance pay.

if the sick leave was authorized by the company and used legitimately, the period of sick leaveis generally included in the period of continuous employment and is the basis for calculating severance pay. this is because a period of sick leave is interpreted as a "pause" in the employment relationship, rather than a "break" where the employment contract is completely terminated. Therefore, unless the company's internal rules exclude it, the period of sick leave will be added to the length of service.

terms and HR management of the tenure exclusion clause

however, if the company's employment rules or labor contract clearly states that the period of absence due to long-term personal circumstances is excluded from the length of service, the period of sick leave can be excluded from the severance pay calculation period.

this is where human resources (HR) managers need to manage the severance-related risks of long-term sick leave. if you want to exclude periods of long-term sick leave from the length of service, it is essential that your employment rules specifically and clearly state whether such periods are excluded from the length of service, rather than using vague terms such as "leave of absence due to personal illness. if the rules are lacking or ambiguous, the period may be viewed as a pause in the employment relationship and included in the length of service, increasing the company's severance pay burden.

sick leave periods should also be taken into account when calculating the average wage on which severance pay is based. As sick leave periods may result in no or partial wages being paid, they should be excluded from the average wage calculation period (the three months preceding the severance date) and the total wages paid during that period. this is to avoid distorting wages when calculating severance pay.

see also sick leave period treatment criteria (HR admin criteria) key impacts and notes period of continuous employment (severance pay) included in principle (suspension of employment) [Input Content] exclusion possible only by clearly stating the 'exclusion' clause in internal regulations average wage calculation

calculation after exclusion from the calculation period and wage

to prevent wage distortion when calculating severance pay

3. sick leave and annual leave relationship: importance of the latest administrative interpretation

the legality and illegality of annual leave pre-exhaustion rules

many companies have rules in their employment rules that require employees to exhaust their accrued annual paid leave before granting sick leave. if you have such a policy, it's unlikely that requiring employees to use accrued and granted annual leave first is a violation of the law.

however, human resources managers should be careful to distinguish where a violation of the Labor Standards Act may occur: requiring or compelling employees to take future annual leave that has not yet been accrued (unaccrued annual leave) in advance violates the intent of Article 60 of the Labor Standards Act, which is to give employees annual leave at the time they claim it.

changes to the annual leave attendance rate calculation and worker protections

the most recent labor law change to note is the Ministry of Employment and Labor's administrative interpretation of how the duration of sick leave affects the calculation of the attendance rate that determines whether annual paid leave accrues.

in the past, periods of sick leave for personal reasons were sometimes treated as simply "absences," penalizing workers for failing to meet the annual leave accrual threshold of working at least 80% of the time in a calendar year.

however, the latest administrative interpretation clarifies that periods of sick leave for personal reasonsshould no longer be treated as "absences. instead, sick leave periods should be viewed as a period of suspension of the rights and obligations of the employment relationship and should beexcluded from the prescribed number of working daysfor annual leave calculation.

this administrative interpretation is an important safeguard to prevent workers from being penalized by losing the right to accrue annual leave simply because they are sick. HR practitioners should immediately review the sections in their employment rules related to annual leave attendance calculation and update them to the latest interpretation to avoid legal disputes.

4. the right to take time off sick, the rise and use of sick pay schemes

overview and purpose of the sick pay system

within the practical constraints of sick leave being essentially unpaid,Sick Pay was introduced to allow workers to focus on their treatment without worrying about their income. It functions as a social safety net to counteract the risk of income loss and poverty when workers are unable to work due to non-work-related illness or injury.

sick Pay is currently being operated as apilot project targeting specific regions rather than nationwide. following the first phase of the pilot project (Jongno-gu, Bucheon-si, Cheonan-si, etc.), the second phase (Anyang-si, Yongin-si, etc.) is underway, and the payment amount is46,180 won ( 60% of the minimum wage in 2023) perday.

eligibility requirements for the wounded warrior allowance and its relationship to paid sick leave

there are strict eligibility requirements to receive the allowance, such as residing in the pilot area or being employed in the bottom 50% of income among workers at a business located in the area.

most importantly, the payment doesnot over lap with any other compensation the company is paying workers, such as paid sick leave.

despite the emergence of the sick pay program, there are limitations, including the fact that the payment is only 60% of the minimum wage and is subject to a complex income test. if companies were to abolish paid sick leave programs and encourage workers to receive only sick pay, it could weaken workers' ability to preserve their income. for this reason, experts have pointed out that in order to truly protect workers' health rights, both the injury allowance system and paid sick leave legislation should be promoted together as a 'package policy'.

5. conclusion: Smart sick leave management strategies for workers and businesses

sick leave is not mandatory under the Labor Standards Act, but it is essential for workers' health rights and for businesses to maintain productivity. whether it is paid or unpaid depends solely onthe company's employment rules, and if there are no rules, it is unpaid.

essential checklist for workers

  1. check therules: Before using sick leave , you should check your company's employment rules to understand whether it is paid or unpaid, the maximum duration, required documentation (medical certificate), and the approval process.

  2. avoidannual leave penalties: If you take unpaid sick leave, make sure your company treats the sick leave period as a "prescribed period of absence" rather than an "absence from work" when calculating attendance for annual leave purposes to avoid penalizing your annual leave accrual the following year.

HR's guide to regulatory overhaul

  1. clarify employment rules: paid vs. unpaid basis for sick leave , whether to include length of service in severance pay calculationsand the process for suspension and reinstatement in the event of an extended leave of absence should be clearly stated to minimize legal risk.

  2. update annual leave calculation rules: The annual leave calculation rules should be amended immediately to exclude periods of personal sick leave from the prescribed number of working days by treating them as "periods of suspension of employment rights and obligations" rather than absences.

  3. guidance on sick pay: Businesses in the pilot areas should proactively inform workers who are on unpaid sick leave about their eligibility and the process for applying for sick pay to help minimize workers' loss of income.