1. Wage Requisites and Judgment Standards

(1) Concept of wage

(2) Wage requisites
1) Paid by the employer
Given that wages are what the employer pays to the employee, the service charge that a worker receives from customers in a hotel or restaurant cannot be considered as wages in principle.
2) Remuneration for work
As wages are paid as remuneration for work, they cannot be deemed to be wages if the employer renders payment under friendly and favorable terms outside of work, or if the employer provides pay as part of welfare, or if the employee receives reimbursement for actual expenses.
3) Any payment regardless of label
Wages are paid in forms of salary or allowance in general. If the employer is paying remuneration for work to the subordinate employee, it is considered wages, regardless of what label the payment is given. Accordingly, we shall not estimate information allowance and welfare fees as wages just by their titles, because wages are differentiated by payment conditions.

(3) Concrete criteria of wages
1)Money paid under friendly and favorable terms is not considered to be wages
Money is not considered to be wages if paid for optional, courteous, and friendly reasons including congratulatory and consolation allowance, award for quality control activities, or money paid favorably to celebrate special occasions such as the Company's foundation day.
2)Money paid for actual expenses is not considered to be wages
Money paid to reimburse actual expenses for the purchase of production instruments such as security equipment is not wages. Reimbursements for purchase of work uniforms, tools and materials, business trip expenses, travelling expenses, account expenses, confidential expenses, and information fees are also not considered to be wages.
3)Welfare fees are not considered to be wages (in principle).
The welfare fee in its true meaning is not a wage because it cannot be treated as remuneration for work. However, if paid regularly to all workers in accordance with the Collective Agreement, Rules of Employment, or a repeated precedent, it is considered to be wages under the Labor Standards Act.



2. Ordinary Wages

(1) Concept of ordinary wages
According to Article 6(1) of the Enforcement Decree of the Labor Standards Act, the term “ordinary wages” means hourly wages, daily wages, weekly wages, monthly wages, or subcontract wages determined to be paid in periodical or lump sums to the worker for a prescribed or whole labor. That is, “ordinary wages” means the wages determined to be paid periodically and uniformly within a specific period, regardless of the number of actual work provisions or the amount received as the remuneration for quality or quantity of the labor.

(2) Reasons for calculating ordinary wages
Ordinary wages apply in the case of ①dismissal allowances replacing advance notices of dismissal, ② wages added for overtime, night, or off-day work, ③ ordinary wages stipulated in the Rules of Employment to calculate annual paid leave, and ④ in cases where the pay is under ‘paid allowance,’ not under average wage according to the Labor Standards Act.

(3) Methods of calculating ordinary wages
When calculating ordinary wages, the hourly wage rate is applied in principle. Daily wages, weekly wages, monthly wages, or subcontract wages can be calculated at the hourly wage rate as in the following:
1) Hourly wage rate of daily wages
With respect to wages determined by the daily wage rate, the amount is calculated by dividing the daily wage rate by the contractual working hours per day. Contractual working hours represent those working hours which the workers and employers have agreed upon within the limit of the legal standard working hours(Article 2 (7) of the LSA).
2) Hourly wage rate of weekly wages
With respect to wages determined by the weekly wage rate, the amount is calculated by dividing the weekly wage rate by the contractual working hours per week.
3) Hourly wage rate of monthly wages
With respect to wages determined by the monthly wage rate, the amount is calculated by dividing the monthly wage rate by the contractual working hours per month. Monthly wage refers to ordinary wages that are to be paid on a monthly basis.
In cases where legal standard hours are regulated to the same as contractual working hours, the calculation is as follows:
⇒Where legal standard hours mean 40 hours weekly, excluding rest hours

4) Hourly wage rate of subcontract wages
With respect to wages determined by the subcontract wage system, the amount is calculated by dividing the total sum of wages under the subcontract wage system for the period of wage calculation by the whole number of working hours during that period.
Labor Ministry Guidelines
As long as the welfare allowance is paid periodically and uniformly, it shall be considered to be included in the realm of ordinary wages.⁷⁸⁾
In cases where the welfare allowance has been paid to all employees periodically and uniformly within a period of wage calculation for the contractual working hours or legal standard working hours for the purpose of supplementing the low wage level of employees working in the social welfare facilities, this allowance shall be considered to be included in the realm of ordinary wages. Here, the term “periodic” means that the employer shall pay wages for contractual working hours or legal standard working hours within the period of wage calculation. The term “uniform” means that the employer shall not only pay all employees, but also pay all employees who meet a certain condition or reach a certain level of working conditions. The term “a certain condition” means a fixed condition.
Even though the company and the labor union agreed in the Collective Bargaining Agreement to include into ordinary wages those wages and valuables which are exclusive in the realm of ordinary wages according to the LSA guidelines, it is not possible to deem that they are converted ordinary wages by the law.⁷⁹⁾
If the company decided by the Collective Bargaining Agreement (CBA) and the Rules of Employment to include into the realm of ordinary wages valuables which are not included in the realm of ordinary wages according to the regulation of the LSA, the company shall follow the promised rules. However, even though the company and the Labor Union agreed in the CBA and the Rules of Employment to include into ordinary wages those wages and valuables which are exclusive in the realm of ordinary wages according to the LSA guidelines, it is not possible to deem that they are converted to ordinary wages according to Article 6 of Enforcement Decree of the LSA.


3. Average Wages

(1) Concept of average wages


(2) Methods for calculating average wages
Average wages mean the actual wages paid for the actual work served and calculated into the daily wage rate. Average wages are the amount calculated by dividing the total amount of wages paid to the relevant worker during three calendar months prior to the date of calculation by the total number of calendar days during those three calendar months.
average wage = Total amount of wages paid for the last three calendar months /
Total number of calendar days in the last three calendar months
1)The total amount of wages paid for the last three calendar months
The total amount of wages includes all wages of the Labor Standards Act excluding other forms of payment(see table below, Classification of wages by characteristics). In determining whether individual items of pay may be identified as wages reflected into the calculation of average wages, the following criteria shall be considered: 1) the i