Ordinary Wage in Korea Explained: 2024 Supreme Court Ruling & 2026 Calculation Guide for Foreign Workers
What Is Ordinary Wage?
Ordinary wage (통상임금) is the base figure used to calculate overtime, night-shift, and holiday premium pay, annual leave allowances, and severance pay (퇴직금). 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 contracted work or total work performed."
Because higher ordinary wage raises all related allowances and severance pay, which items are included is critically important to both workers and employers.
Key Points of the Supreme Court en Banc Ruling
Through its en banc ruling (2013다4969, etc.), the Supreme Court established three criteria for determining whether an item qualifies as ordinary wage:
- Regularity (정기성): Paid continuously at fixed intervals.
- Uniformity (일률성): Paid to all workers, or to all workers who meet a specified condition.
- Fixed nature (고정성): Paid unconditionally, without dependence on work performance or other additional conditions.
The "fixed nature" requirement was the central issue in that ruling. Regular bonuses (정기상여금) paid only to workers who remained employed at the time of payment were deemed to lack fixed nature and were therefore excluded from ordinary wage.
What Changed with the 2024 en Banc Ruling
In its December 2024 en banc ruling (2020다247190), the Supreme Court overturned the prior precedent and abolished the "fixed nature" requirement. Now, an item qualifies as ordinary wage if it satisfies only regularity and uniformity.
As a result, regular bonuses subject to a continued-employment condition can now be included in ordinary wage. Even bonuses paid quarterly or semi-annually are treated as ordinary wage if they are paid on a fixed schedule and uniformly to all current employees.
Inclusion of Specific Pay Items
| Item | Included? | Notes |
|---|---|---|
| Base salary | ✅ Yes | Included as a matter of principle |
| Regular bonus | ✅ Yes | After abolition of the fixed-nature requirement |
| Position/job allowance | ✅ Yes | When paid uniformly |
| Fixed meal allowance | ✅ Yes | When paid uniformly to all employees |
| Fixed commuting allowance | ✅ Yes | When paid uniformly to all employees |
| Performance bonus (KPI-linked) | ❌ No | Varies with individual results |
| Expense-reimbursement allowances | ❌ No | Welfare/benefit in nature |
Note for foreign workers: Your employment contract or collective agreement may specify different conditions. Always compare contractual terms against these statutory standards.
How to Calculate the Hourly Ordinary Wage
For monthly-salaried workers, the hourly ordinary wage is calculated as follows:
Hourly ordinary wage = Total monthly ordinary wage ÷ Monthly ordinary wage base hours
The monthly base hours are generally calculated as 40 hours of scheduled work + 8 hours of weekly holiday = 48 hours per week, multiplied by the average number of weeks per month (4.345 weeks), giving approximately 209 hours.
For example, if a worker receives a monthly base salary of KRW 2,500,000, a fixed meal allowance of KRW 200,000, and a regular bonus converted to a monthly figure of KRW 300,000, the hourly ordinary wage is (2,500,000 + 200,000 + 300,000) ÷ 209 ≒ KRW 14,354.
Practical Points to Watch
- Review employment rules and collective agreements: Even if a bonus clause states "payable only to current employees," that bonus may now be included in ordinary wage. The entire wage structure should be re-examined.
- Possibility of retroactive claims: If ordinary wage was understated and overtime allowances were underpaid as a result, workers may claim the wage difference for up to 3 years under Article 49 of the Labor Standards Act (근로기준법 제49조).
- Narrowed scope of the good-faith defense: The employer's good-faith (신의칙) defense, which courts previously recognized, has been significantly restricted following the 2024 ruling.
Check Your Pay Quickly with Bylaw
If you want to see how the ordinary wage changes affect your net annual salary or severance pay, try the Bylaw (바이로) net salary calculator at workbylaw.com. Enter each allowance item to instantly see your after-tax take-home pay. If you suspect the allowance structure in your pay slip or employment contract may not be lawful, you can also use the AI contract review feature for a quick check.
This article is for informational purposes only and does not constitute legal advice. For specific cases, consult a certified labor attorney (노무사) or lawyer.