Ordinary Wage in Korea: Definition, Calculation, and What's Included — Foreign Workers' Guide

What Is Ordinary Wage (통상임금)?

Ordinary wage refers to wages paid to a worker on a regular, uniform, and fixed basis. Article 6 of the Enforcement Decree of the Labor Standards Act (근로기준법 시행령 제6조) defines ordinary wage as "an hourly, daily, weekly, monthly, or piece-rate amount set to be paid to a worker regularly and uniformly for prescribed work or total work performed."

Ordinary wage matters because it serves as the base for calculating various statutory allowances, including overtime, night-shift, and holiday work premium pay, annual leave allowances (연차수당), and advance notice of dismissal pay (해고예고수당). If ordinary wage is calculated too low, the allowances a worker is entitled to receive are reduced accordingly.

Note for foreign workers: Your employment contract may specify pay items differently from the statutory minimum, but the legal criteria below determine what actually counts as ordinary wage regardless of how items are labeled.

Whether a Pay Item Qualifies: 3 Criteria

The Supreme Court en banc decision of December 18, 2013 (대법원 2013다4급 전원합의체 판결, 2013. 12. 18.) established the following three requirements for determining whether a pay item constitutes ordinary wage.

1. Regularity (정기성): Is it paid continuously at fixed intervals?
2. Uniformity (일률성): Is it paid to all workers, or to all workers who meet a certain condition?
3. Fixed nature (고정성): Is the amount determined in advance, regardless of work performance or results?

A pay item must satisfy all three requirements to qualify as ordinary wage.

Pay Items Included in Ordinary Wage

• Base salary (기본급): Always included.
• Position allowance / job duty allowance (직책수당·직무수당): Included if paid uniformly according to position or job duty.
• Qualification allowance (자격수당): Included if paid as a fixed amount to holders of a specific qualification.
• Seniority allowance (근속수당): Included if paid regularly according to length of service.
• Meal allowance / commuting allowance (식대·교통비): Included if paid as a fixed amount to all employees. (Excluded if reimbursed as actual expenses.)

Pay Items Excluded from Ordinary Wage

• Performance pay / incentives (성과급·인센티브): Vary with results, so they lack fixed nature.
• Holiday bonuses (명절 상여금): Paid only at specific times and typically conditioned on being employed at the time of payment, so they lack fixed nature.
• Actual-expense reimbursements (실비 변상적 급여): Business travel expenses, actual commuting cost reimbursements, etc.
• Welfare benefits (복리후생비): Congratulatory/condolence money, optional welfare points, etc.

However, even a bonus (상여금) may be included in ordinary wage if it is paid regularly on a quarterly or monthly basis and is paid as a fixed amount with no condition of being employed at the time of payment. The actual payment method is the standard — not the name of the pay item.

How to Calculate Hourly Ordinary Wage

For monthly-salaried workers, hourly ordinary wage is calculated as follows:

Hourly ordinary wage = Total monthly ordinary wage ÷ Monthly prescribed working hours

Monthly prescribed working hours are typically 209 hours based on a 40-hour workweek.
(40 hours/week × 52 weeks ÷ 12 months + weekly holiday hours = approximately 209 hours)

For example, if total monthly ordinary wage is KRW 3,000,000:

3,000,000 ÷ 209 hours = approximately KRW 14,354/hour

This hourly rate is then used to calculate:
- Overtime work premium (×1.5)
- Night-shift work premium (×0.5)
- Holiday work premium (×1.5 or ×2.0)

Common Disputes in Practice

Ordinary wage disputes most often arise over whether bonuses and various allowances are included. If a company sets a narrow scope for ordinary wage and underpays allowances, a worker may claim unpaid allowances within the 3-year statute of limitations under Article 49 of the Labor Standards Act (근로기준법 제49조). When the amounts involved are significant, cases may proceed to a labor office complaint (노동청 진정) or civil litigation.

Check Your Wages on Bylaw

If you want to know how much of your monthly pay counts as ordinary wage, or whether your overtime allowances have been calculated correctly, try the Bylaw (workbylaw.com) Take-Home Pay Calculator. Enter your base salary and various allowances to easily check your take-home pay and ordinary-wage-based allowance calculations. If you suspect any allowance items are missing, you can also use the AI search feature to look up relevant court decisions and administrative interpretations right away.

This article is for informational purposes only and does not constitute legal advice. For specific cases, consult a certified labor attorney (노무사) or lawyer.