Ordinary Wage in Korea Explained: The IBK Case & What It Means for Foreign Workers

Why Does the IBK Bank Ordinary Wage Ruling Matter?

The "IBK ordinary wage" (기업은행 통상임금) case is a topic so widely searched that it appears in Naver's autocomplete suggestions. The lawsuit filed by IBK Industrial Bank of Korea workers demanding that their regular bonuses (정기상여금) be included in ordinary wage (통상임금) is not simply one company's problem — it is a case that brought the core question of whether regular bonuses qualify as ordinary wage to national attention.

What Is Ordinary Wage?

Ordinary wage (통상임금) is defined under Article 6 of the Enforcement Decree of the Labor Standards Act (근로기준법 시행령 제6조) as "the hourly, daily, weekly, monthly, or piece-rate amount set to be paid to a worker regularly, uniformly, and on a fixed basis." Because ordinary wage serves as the basis for calculating overtime, night-shift, and holiday work allowances, annual leave allowances, and severance pay (퇴직금), a higher ordinary wage means higher supplementary allowances across the board.

The Core Issue in the IBK Case

The disputed item in the IBK case was the regular bonus (정기상여금). The company argued that because the bonus was conditioned on continued employment, it lacked the "fixed" character required for ordinary wage. However, in its 2013 en banc ruling (Supreme Court 2012다89399), the Supreme Court held that a bonus paid regularly and uniformly qualifies as ordinary wage if it meets the fixedness requirement.

Subsequently, the 2024 Supreme Court en banc ruling (대법원 2020다247190) further clarified the existing precedent, determining that regular bonuses conditioned on being an incumbent employee are, in principle, included in ordinary wage. This ruling sent major shockwaves through IBK and the broader financial and large-enterprise sectors.

Three Criteria for Determining Whether Pay Counts as Ordinary Wage

Whether a particular item of pay qualifies as ordinary wage is assessed against the following three requirements:

  1. Regularity (정기성): Paid continuously at fixed intervals.
  2. Uniformity (일률성): Paid to all workers, or to all workers who meet a specified condition.
  3. Fixedness (고정성): A predetermined amount paid regardless of work performance or results.

For example, a regular bonus paid every month at 100% of base salary satisfies all three requirements and therefore qualifies as ordinary wage. By contrast, a performance bonus whose payment depends on business results lacks fixedness and is excluded from ordinary wage.

Note for foreign workers: Your employment contract may specify bonus conditions that differ from the statutory minimum — always check your contract alongside the legal standards above.

How an Expanded Ordinary Wage Affects Workers

When the scope of ordinary wage widens, the following items increase accordingly:

This is precisely why the workers in the IBK lawsuit claimed back-pay differentials covering several years.

What to Check in Practice

To verify whether ordinary wage is properly reflected in your pay slip, carefully review every allowance and bonus item paid each month. If your employer has set a narrow definition of ordinary wage and has been underpaying allowances as a result, you may claim the difference for up to 3 years in back pay (Article 49 of the Labor Standards Act / 근로기준법 제49조; 3-year statute of limitations).

Check Your Pay with Bylaw

If you want to know whether your annual salary and various allowances are being calculated correctly, try the Bylaw (바이로) annual take-home pay calculator at workbylaw.com. If ordinary-wage-based allowance calculations feel complicated, Bylaw's AI search can give you answers tailored to your situation right away. If you suspect unpaid wages, a complaint-filing (진정서 작성) feature is also available.

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