Ordinary Wage in Korea: Calculation Formula & Included Items – Complete Guide for Foreign Workers

What Is Ordinary Wage (통상임금)?

Under Article 6 of the Enforcement Decree of the Labor Standards Act (근로기준법 시행령 제6조), ordinary wage (통상임금) means "the hourly, daily, weekly, monthly, or piece-rate amount fixed to be paid to a worker on a regular, uniform, and fixed basis." It is an extremely important concept in practice because it serves as the basis for calculating various statutory allowances, including overtime pay (연장근로수당), night-work pay (야간근로수당), holiday-work pay (휴일근로수당), advance notice pay for dismissal (해고예고수당), and annual leave pay (연차수당).

Note for foreign workers: Your employment contract may specify amounts above the statutory minimum, but the legal calculation rules below apply to all workers in Korea regardless of nationality.

Items Included in Ordinary Wage

The Supreme Court's en banc decision of 2013 (2012다89399) established that whether a wage item qualifies as ordinary wage is determined by three criteria: regularity (정기성), uniformity (일률성), and fixedness (고정성).

Category Examples
Included Base pay, job-duty allowance, position allowance, skills allowance, license allowance, regular bonuses (fixed portion)
Excluded Expense reimbursements (actual meal/transportation costs), performance-based pay that varies with work results, welfare benefits

In particular, regular bonuses (정기상여금) are included in ordinary wage if they are paid on a fixed basis regardless of work performance, attendance rate, or other conditions. Conversely, if a bonus is subject to a condition such as "paid only to employees who have worked a certain number of days," it lacks fixedness and may be excluded.

Formula for Converting Ordinary Wage to an Hourly Rate

The hourly ordinary wage (시간급 통상임금), which is the foundation for calculating statutory allowances, is derived as follows:

Hourly Ordinary Wage = Total Monthly Ordinary Wage ÷ Monthly Scheduled Work Hours

Monthly scheduled work hours (월 소정근로시간) for a workplace on a 40-hour workweek are calculated as follows:

Monthly Scheduled Work Hours = (Weekly Scheduled Hours + Weekly Holiday Hours) × (365 ÷ 7 ÷ 12)
                             = (40 + 8) × 4.345 ≈ 209 hours

For example, a worker receiving a monthly base pay of KRW 2,500,000, a job-duty allowance of KRW 200,000, and a fixed bonus (monthly equivalent) of KRW 300,000 would have an hourly ordinary wage of:

(2,500,000 + 200,000 + 300,000) ÷ 209 ≈ KRW 14,354

Key Allowances Calculated Based on Ordinary Wage

Common Mistakes

  1. Automatically excluding meal and transportation allowances – A fixed meal allowance paid uniformly to all employees (not as actual expense reimbursement) may be included in ordinary wage.
  2. Miscalculating scheduled work hours – Monthly scheduled work hours differ between a 40-hour workweek and a 44-hour workweek (workplaces still subject to the old law).
  3. Overlooking the conditions attached to regular bonuses – Always check the payment conditions set out in the work rules (취업규칙) and collective agreement (단체협약).

Check Quickly with Bylaw (바이로)

If ordinary wage calculation feels complicated, try the Bylaw (workbylaw.com) salary take-home calculator. Enter your base pay and various allowances to instantly see your after-tax take-home pay as well as the hourly ordinary wage needed to calculate statutory allowances. You can also use the AI search feature to ask immediately whether a specific item in your situation qualifies as 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.