Ordinary Wage in Korea: Complete Guide to Inclusions and Calculation for Foreign Workers
What Is Ordinary Wage (통상임금)?
Ordinary wage (통상임금) is defined under Article 6 of the Enforcement Decree of the Labor Standards Act (근로기준법 시행령 제6조) as "wages set to be paid to a worker regularly, uniformly, and on a fixed basis." The key point is that it refers to the pre-agreed amount, not the amount actually paid. Ordinary wage is important because it serves as the basis for calculating various statutory allowances — including overtime, night-work, and holiday-work allowances (each with a 50% premium), annual leave allowances (연차수당), and advance notice of dismissal allowances (해고예고수당) — so understanding it accurately is essential.
Note for foreign workers: Your employment contract may specify allowance amounts, but the statutory minimums based on ordinary wage cannot be waived.
Items Included in Ordinary Wage
The Supreme Court en banc decision (대법원 전원합의체 판결, Case Nos. 2013다4969 et al.) determines whether an item qualifies as ordinary wage based on three criteria: regularity (정기성), uniformity (일률성), and fixedness (고정성).
- Base salary (기본급): Included in full as a matter of principle
- Job-duty allowances / position allowances (직무수당·직책수당): Included if paid on a fixed basis according to job duty or position
- Technical allowances / qualification allowances (기술수당·자격수당): Included if paid simply for holding a qualification
- Meal allowances / transportation allowances (식대·교통비): Included if paid uniformly and on a fixed basis to all employees
- Regular bonuses (정기상여금): Included if paid unconditionally to any employee who remains employed, with no additional conditions (reflecting the direction of Supreme Court precedent from 2024 onward)
By contrast, performance-based pay that varies with results, holiday bonuses paid only to employees on the payroll at a specific point in time, and business-trip expenses of a reimbursement nature lack fixedness and are therefore excluded from ordinary wage.
How to Convert Ordinary Wage to an Hourly Rate
To calculate various statutory allowances, ordinary wage must be converted to an hourly rate.
Hourly ordinary wage = Monthly ordinary wage total ÷ Monthly scheduled working hours
For a standard 40-hour workweek, monthly scheduled working hours are typically 209 hours (40 hours × 52 weeks ÷ 12 months, including weekly holiday hours). If scheduled working hours differ, the figure must be recalculated accordingly.
Example
- Base salary ₩2,500,000 + Job-duty allowance ₩200,000 + Meal allowance ₩100,000 (paid uniformly to all employees)
- Monthly ordinary wage total: ₩2,800,000
- Hourly rate: ₩2,800,000 ÷ 209 ≈ ₩13,397
Applying the Hourly Rate to Statutory Allowance Calculations
Once the hourly ordinary wage is determined, each allowance is calculated as follows:
| Allowance Type | Formula |
|---|---|
| Overtime allowance (연장근로수당) | Hourly rate × 1.5 × overtime hours worked |
| Night-work allowance (야간근로수당) | Hourly rate × 0.5 × night hours worked |
| Holiday-work allowance (휴일근로수당) | Hourly rate × 1.5 (first 8 hours) or × 2.0 (beyond 8 hours) |
| Annual leave allowance (연차수당) | Hourly rate × daily scheduled working hours × unused annual leave days |
Common Mistakes in Practice
- Automatically excluding meal and transportation allowances: If these are paid on a fixed, uniform basis to all employees, they are included in ordinary wage.
- Automatically excluding bonuses: A bonus paid unconditionally to any employee who simply remains employed is subject to inclusion.
- Applying 209 hours to every workplace: If scheduled working hours differ, recalculation is mandatory.
- Confusing ordinary wage with average wage (평균임금): Severance pay (퇴직금) is calculated on the basis of average wage, while overtime allowances are calculated on the basis of ordinary wage.
Check It Instantly on Bylaw (바이로)
If your pay structure is complex or you are unsure whether a particular item is included in ordinary wage, try the Bylaw (바이로) salary take-home calculator at workbylaw.com. Enter your various allowance items to see your take-home pay along with a detailed breakdown. You can also use the AI search feature to ask specific questions such as "Is my company's meal allowance included in ordinary wage?"
This article is for informational purposes only and does not constitute legal advice. For specific cases, consult a certified labor attorney (노무사) or lawyer.