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

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 determined to be paid to a worker regularly and uniformly for the agreed working hours or total working hours."

Ordinary wage matters because it serves as the calculation base for various statutory allowances, including overtime, night-shift, and holiday work premium pay, annual paid leave (연차유급휴가) allowances, and advance notice of dismissal pay (해고예고수당). The higher the ordinary wage, the higher these allowances — which is why disputes between employers and workers in this area are common.

3 Criteria for Determining Ordinary Wage

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

Regularity (정기성): The payment must be made continuously at fixed intervals. Wages paid every month are the most typical example.
Uniformity (일률성): The payment must be made equally to all workers, or to all workers who meet a certain condition.
Fixed nature (고정성): The amount must be predetermined and not contingent on work performance or results. If whether or how much is paid depends on additional conditions, the fixed nature is denied.

Items Included in Ordinary Wage

Base salary (기본급): The most essential component.
Position allowance / job allowance (직책수당·직무수당): Included if paid regularly according to rank or job type.
Skills allowance / qualification allowance (기술수당·자격수당): Included if paid uniformly to workers who hold a certain qualification or meet a set condition.
Seniority allowance (근속수당): Included if paid regularly based on length of service.
Meal allowance / commuting allowance — fixed portion (식대·교통비 고정 지급분): May be included if a fixed amount is paid to all employees rather than reimbursing actual expenses.

Note: Whether a specific allowance in your employment contract qualifies as ordinary wage depends on how it is actually paid, not merely on how it is labeled.

Items Excluded from Ordinary Wage

Performance pay / incentives (성과급·인센티브): Excluded because the amount varies with results and therefore lacks fixed nature.
Conditional holiday bonuses (명절 상여금 — 조건부): If payment is conditioned on being employed at a specific point in time, fixed nature is denied. However, unconditional regular bonuses may be included.
Expense-reimbursement payments (실비 변상적 급여): Business trip expenses, actual commuting costs, and similar reimbursements that vary with actual expenditure are excluded.
Welfare benefits (복리후생적 급여): Congratulatory/condolence money, optional welfare points, and similar benefits are excluded in principle.

How to Convert to an Hourly Ordinary Wage Rate

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

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

Based on a 40-hour workweek including the weekly holiday allowance (주휴수당), the monthly agreed working hours are typically calculated as 209 hours (48 hours/week × 52 weeks ÷ 12 months ≈ 209 hours). Using this hourly rate as the base, overtime work is compensated at 1.5×, and the premium portion for night-shift or holiday work is an additional 0.5×.

Common Misconceptions in Practice

Many people mistakenly believe that only base salary counts as ordinary wage. As explained above, any allowance that satisfies the regularity, uniformity, and fixed-nature criteria may be included. Conversely, even a payment made every month is excluded if it lacks fixed nature. Furthermore, even if an employment contract or work rules (취업규칙) explicitly state that a certain item is "excluded from ordinary wage," it may still legally qualify as ordinary wage if the actual payment pattern meets the three criteria.

If you want to find out how much of your monthly pay constitutes ordinary wage and how it affects your take-home pay, try the Bylaw (workbylaw.com) Annual Salary Take-Home Calculator. Enter your various pay items and it will easily show you the allowances calculated on the basis of ordinary wage. If you are concerned about whether your employment contract correctly lists all wage items, also make use of Bylaw's contract review feature.

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