What Must Be Included in an Employment Contract?

Labor Attorney Choi Chang-gyun's Hospitality HR Q&A

02. What should hospitality businesses include when drafting employment contracts?

Hospitality HR Q&A Part 2

Writer: Choi Chang-gyun, Labor Attorney

Editor: ONDA Manager Lee Chae-eun

Seocho Labor Law Firm specializes in hospitality HR management. We currently handle HR for multiple hospitality businesses and conduct training for major hospitality franchises (Yanolja, Yeogi Eottae, etc.), contributing to happier workplaces across the industry.

Believing that happy workplaces create happy lives, we've launched this series to provide essential HR information to those building better workplaces together.

The most common disputes in hospitality operations involve minimum wage violations. Korea's 2022 minimum wage translates to a monthly salary of ₩1,914,440. But that's based on a standard 40-hour workweek — hospitality businesses operate differently and need separate guidelines.

Whether a business violates minimum wage laws is determined by the employee's actual working hours, and the employment contract is the most critical document for establishing those hours.

So in this installment, we'll cover the most common questions hospitality operators have about drafting employment contracts.

Q1. Why are employment contracts so critical in hospitality?

Hospitality businesses run 24/7. Those "24 hours" include sleep time, meal breaks, and waiting periods when there are no guests. If guests arrived at predictable times, it'd be easy to distinguish work from rest — but real operating conditions rarely allow for that. Much of a shift is spent waiting or taking breaks until the next guest arrives.

Under the Labor Standards Act, break time is unpaid, but waiting time counts as work hours and must be paid. Whether downtime between guests qualifies as "waiting time" or "break time" becomes the central issue in disputes.

Employment contracts are the most important evidence for distinguishing waiting time from breaks. That's why clearly separating work hours and break periods in the contract is crucial.

Q2. Do I need contracts for day laborers, foreign workers, or employees not enrolled in the four major insurances?

Employment contracts are required for all workers, regardless of employment type. That includes day laborers working a single shift, undocumented foreign workers, and those not enrolled in national insurance programs.

However, managing operators running the property under a consignment arrangement, or family members and acquaintances helping out without wages, may not qualify as employees under the Labor Standards Act — in which case, contracts aren't necessary.

Q3. What must be included in an employment contract?

Article 17 of the Labor Standards Act mandates written employment contracts and specifies the following required items:

① Wages (components, calculation method, payment method) ② Standard work hours ③ Days off ④ Leave policies

Let's break down each requirement.

"1) Wages" must list all wage components — base pay (including weekly paid holiday allowances), overtime pay, night shift pay, meal allowances, incentives (e.g., double-room bonuses), etc. You must also explain how each component is calculated and paid.

The example above shows how wages can be documented. Finally, include the wage calculation period and payment date.

"2) Standard work hours" must clearly specify workdays, shift start time, shift end time, and break periods. For hospitality, it's also good practice to designate a break location.

"3) Days off" should include the mandatory weekly day off, public holidays, and Labor Day. "4) Leave policies" should cover annual paid leave and any additional leave benefits.

For fixed-term or part-time workers, you must also include workplace location, job duties, contract period, and daily work hours.

Q4. What are the penalties for not having employment contracts?

Failing to provide employment contracts can result in fines up to ₩5 million and potential criminal charges. This applies not only to failure to provide the contract, but also to omitting required items.

Hospitality operators should include a delivery confirmation clause in contracts or use signature stamps to create evidence that the contract was provided.

Today we covered employment contract requirements — the most critical document in minimum wage disputes. Since failure to provide contracts can result in fines, operators should carefully review all required items.

Hospitality HR Inquiries (Seocho Labor Law Firm)

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