5 Key Issues You Must Know to Win an Ordinary Wage (통상임금) Lawsuit in Korea
What Is an Ordinary Wage Lawsuit?
An ordinary wage (통상임금) lawsuit is a claim by a worker for the difference in pay when an employer excluded certain allowances from ordinary wage and therefore underpaid overtime, night-shift, and holiday work allowances, severance pay (퇴직금), and other statutory entitlements. Ordinary wage is defined under Article 6 of the Enforcement Decree of the Labor Standards Act (근로기준법 시행령 제6조) as "wages set to be paid regularly and uniformly as consideration for contracted work (소정근로)," and it serves as the calculation base for various statutory allowances.
Note for foreign workers: Your employment contract may specify allowance amounts, but statutory minimums based on ordinary wage apply regardless — contractual terms cannot fall below the statutory floor.
Key Issue 1 — Whether a Payment Qualifies as Ordinary Wage
The 2024 Supreme Court en banc ruling (2020da247190) abolished the existing "fixedness" (고정성) requirement and changed the legal standard so that whether a payment is consideration for contracted work is the central question. As a result, bonuses conditioned on being employed at a specific point in time are now more likely to be recognized as ordinary wage if they are consideration for contracted work. When preparing a lawsuit, carefully review the payment rules, collective agreement (단체협약), and work rules (취업규칙) to first confirm whether the allowance in question is consideration for contracted work.
Key Issue 2 — The Good-Faith (신의칙) Defense
An employer may raise a good-faith defense, arguing that recalculating ordinary wage would cause "serious managerial difficulties" (대법원 2013다11226). However, courts scrutinize this defense very strictly. The mere fact that the additional payment amount is large is not sufficient; the court considers the company's financial condition, ability to pay, and the history of labor-management negotiations comprehensively. Workers should obtain the company's financial statements and operating profit data to prepare counter-arguments.
Key Issue 3 — Statute of Limitations
Wage claims are subject to a 3-year statute of limitations under Article 49 of the Labor Standards Act (근로기준법 제49조). Only unpaid wages within 3 years counted back from the date the lawsuit is filed can be claimed, so it is advantageous to file without delay even after leaving the company. Sending a certified letter (내용증명) or filing a complaint with the Labor Office (노동청 진정) may constitute grounds for interrupting the statute of limitations, so consult a professional to determine the right timing.
Key Issue 4 — Recalculation of Severance Pay and Other Allowances
When ordinary wage increases, not only overtime, night-shift, and holiday work allowances but also severance pay may increase. If ordinary wage exceeds average wage (평균임금), ordinary wage is used as the basis for calculating severance pay pursuant to Article 2(2) of the Labor Standards Act (근로기준법 제2조 제2항). Workers with longer tenures and more overtime hours stand to claim larger amounts.
Key Issue 5 — Evidence Collection and Litigation Strategy
The most important items in litigation are pay stubs (급여명세서), work rules (취업규칙), collective agreements (단체협약), and employment contracts (근로계약서). These documents are the key evidence proving the ordinary wage calculation standard and payment practices. If you are still employed, it is advisable to secure the relevant documents before leaving the company. Filing a collective lawsuit with fellow workers can also help share litigation costs and strengthen the evidentiary record.
Calculate Your Severance Pay Difference in Advance at Byro
If you are curious about how much your severance pay would change if ordinary wage is recalculated, try the Byro (workbylaw.com) severance pay calculator. You can calculate severance pay directly based on ordinary wage, and the AI search function lets you quickly check related court rulings and administrative interpretations.
This article is for informational purposes only and does not constitute legal advice. For specific cases, consult a certified labor attorney (노무사) or lawyer.
Frequently Asked Questions
Are bonuses included in ordinary wage?
Under the Supreme Court en banc ruling 2013da11226, a bonus qualifies as ordinary wage if it meets the criteria of regularity, uniformity, and fixedness. However, bonuses conditioned on being employed at a specific point in time could be excluded for lacking fixedness. The 2024 Supreme Court en banc ruling 2020da247190 abolished the fixedness requirement and shifted the analysis to whether the payment is consideration for contracted work 소정근로의 대가성 , so it is important to check the latest case-law standard.
What is the statute of limitations for an ordinary wage lawsuit?
The statute of limitations for wage claims is 3 years under Article 49 of the Labor Standards Act 근로기준법 제49조 . Only unpaid wages within 3 years counted back from the date the lawsuit is filed can be claimed, so it is advantageous to file as soon as possible even after leaving the company.
Does the employer's good-faith (신의칙) defense put me at a disadvantage in litigation?
The good-faith defense requires the employer to prove that recalculating ordinary wage would cause serious managerial difficulties. The Supreme Court applies this standard strictly, so a mere claim that the additional payment is large will not be accepted. From the worker's perspective, it is important to prepare materials that rebut the employer's financial condition and ability to pay.
If ordinary wage increases, does severance pay also need to be recalculated?
Severance pay is calculated based on average wage, but if ordinary wage exceeds average wage, severance pay is calculated using ordinary wage pursuant to Article 2 2 of the Labor Standards Act 근로기준법 제2조 제2항 . Therefore, an increase in ordinary wage can lead to a corresponding increase in severance pay.