Ordinary Wage in Korea: Definition, Included Items & Calculation Guide for Foreign Workers

What Is Ordinary Wage (통상임금)?

Ordinary wage (통상임금) 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 baseline for calculating various statutory allowances, including overtime, night-shift, and holiday work allowances (each with a 50% premium), annual leave allowances (연차수당), and severance pay (퇴직금). The higher the ordinary wage, the higher these allowances become.

Three Criteria for Determining Ordinary Wage

The Supreme Court en banc decision (2013다4급) evaluates whether a wage item qualifies as ordinary wage based on the following three requirements:

Regularity (정기성): Paid continuously at fixed intervals.
Uniformity (일률성): Paid to all workers or to all workers who meet a certain condition.
Fixed nature (고정성): Paid on a definite basis without additional conditions such as work performance or results.

All three requirements must be satisfied for a wage item to be recognized as ordinary wage. In practice, fixed nature has most often been the key point of contention.

Note: In 2024, the Supreme Court en banc effectively abolished the existing "fixed nature" requirement, ruling that a wage item qualifies as ordinary wage if it is paid regularly and uniformly as consideration for prescribed work. As a result, periodic bonuses subject to a continued-employment condition may now also be included in ordinary wage. This ruling is being broadly applied in lower courts and workplace practice.

Items Included vs. Excluded from Ordinary Wage

✅ Included Items

Base salary (기본급)
Job-duty allowances and position allowances (직무수당·직책수당)
Periodic bonuses paid regularly and uniformly (regardless of whether a continued-employment condition applies)
Family allowances (가족수당) paid uniformly to all employees
Meal and transportation allowances (식대·교통비) paid as a fixed amount to all employees

❌ Excluded Items

Expense-reimbursement payments (실비변상적 급여) such as business-trip expenses and fuel costs for company vehicles
Performance-based pay that varies according to work results
One-time welfare payments (복리후생 목적의 일시적 지급금) such as congratulatory/condolence money and gifts
Overtime allowances themselves (since they are calculated based on ordinary wage, they are excluded)

Note for foreign workers: Your employment contract may specify allowance amounts that differ from the statutory minimums; however, the statutory rules on what counts as ordinary wage apply regardless of contract terms.

How to Convert Ordinary Wage to an Hourly Rate

Calculating various allowances requires the hourly ordinary wage (시간급 통상임금). For monthly-salaried workers, the following formula applies:

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

For a standard 40-hour workweek, the monthly prescribed working hours are typically 209 hours (including weekly holiday hours).

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

3,000,000 ÷ 209 hours ≈ KRW 14,354 (hourly rate)

The allowance for one hour of overtime work would then be KRW 14,354 × 1.5 = KRW 21,531.

Common Disputes in Practice

The most frequent dispute involves whether periodic bonuses are included in ordinary wage. If a company excluded bonuses from ordinary wage when calculating allowances, a worker may claim the shortfall retroactively. However, the statute of limitations is 3 years under Article 49 of the Labor Standards Act (근로기준법 제49조), so claims can be filed within 3 years even after leaving the job.

Calculate Your Entitlements on Workbylaw

Once you have a clear picture of your ordinary wage, you can immediately calculate how much severance pay you are owed. The Workbylaw Severance Pay Calculator lets you compare average wage and ordinary wage and estimate your expected severance pay all in one place. If you suspect a shortfall in allowances, try Workbylaw's AI Labor Law Search or Complaint Drafting Assistant as well.

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