1. Understanding ordinary wage Jung, Bongsoo, ｢Korean Labor Law Bible｣ 6th Ed., Joongang, 2021, pp. 73-75.

(1) Concept of Ordinary Wages
Recent judicial rulings concerning rules for calculation and scope of ordinary wages have differed from Ministry of Employment and Labor Guidelines, something which has caused much confusion for corporate management. However, the Supreme Court, with all judges in attendance, offered clarification on December 18, 2013: 'Ordinary wages' means wages which are determined to be paid periodically or in a lump sum to an employee for their prescribed work or whole work. This ordinary wage is used as the standard wage to calculate added allowance for overtime, night and holiday work, annual paid leave allowance, dismissal pay, and for paid leaves that employers have to provide under the Labor Standards Act. If this ordinary wage has not been calculated properly, it is not as simple as re-calculating and paying the correct amount from now on, but the employer shall recalculate all kinds of allowances such as overtime, night and holiday work, and other allowances that were paid over the past three years. Furthermore, the employer shall recalculate the severance pay for resigned or dismissed employees and pay the difference. Supreme Court ruling on Dec. 19, 2013: 2012Da89399.

The term ‘ordinary wages’ means hourly wages, daily wages, weekly wages, monthly wages, or subcontract wages determined to be paid in periodic or lump sums to the worker for prescribed or whole labor. Article 6(1) of the Enforcement Decree to the Labor Standards Act
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 remuneration for quality or quantity of the labor.

(2) Reasons for calculating Ordinary Wages
Ordinary wages apply for ① dismissal 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 wages 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. Weekly wage refers to ordinary wages that are to be paid on a weekly basis.
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


Standard hours calculated for monthly ordinary wages
= (40 hours + 8 hours) x 4.345 weeks ≒ 209 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.


1) As long as the welfare allowance is paid periodically and uniformly, it shall be included in the realm of ordinary wages. MOEL Guidelines: on Oct. 4, 2002, Wage 68207-730

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 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.
2) Even though the company and the labor union agree in a 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. MOEL Guidelines: on Oct. 8, 2002, Wage 68207-735

If a company decides by 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 LSA regulation, the company shall follow the promised rules. However, even though the company and the labor union agreed in the CBA and rules of employment to include into ordinary wages those wages and valuables which are exclusive in the realm of ordinary wages according to LSA guidelines, it is not possible to deem that they are converted to ordinary wages according to Article 6 of the Enforcement Decree to the LSA.

2. Substantial criteria for Ordinary Wages

(1) Legal criteria for determining ordinary wages
1) Ordinary wages means wages that an employer pays to an employee as remuneration for their prescribed work or whole work, and those which are paid regularly and uniformly are considered ordinary wages in principle. For legislating the Labor Standards Act and the function and necessity of ordinary wages, what should be included as ordinary wages shall be fixed wages paid regularly and uniformly. This means non-fixed wages are not ordinary wages, as they are not paid regularly and uniformly and may or may not be paid. Here, being paid 'uniformly' not only means that payment is made to all employees, but also to all employees qualified according to certain conditions or criteria. Here, 'certain criteria' refers to 'fixed conditions' in considering the concept of ordinary wage, because the ordinary wage is used to calculate 'fixed and generally accepted ordinary wage.' Supreme Court ruling on Jan. 29, 2010:2009Da74144

2) Even though a particular allowance or bonus, etc., may be paid for a period exceeding one month, if these are paid regularly and uniformly, these components can be included in ordinary wages. Supreme Court ruling on Feb. 9, 1996: 94Da19501; Supreme Court ruling on Jun. 13, 2003: 2002Da74282

3) Mutual agreements between employer and employees that exclude a particular allowance considered ordinary wages according to the Labor Standards Act are null and void because such an agreement sets conditions lower than that of the Labor Standards Act. Supreme Court ruling on Nov. 29, 2007: 2006Da81523


(3) Application of ordinary wage
1) Bonuses
Bonuses are included into the realm of ordinary wages even if they are not paid regularly every month. Rules for calculating ordinary wages explain the bonus as follows MOEL Regulation 476, Jan. 22, 2002; Supreme Court ruling
(revised after the Supreme Court ruling on December 18, 2013):
① As the regular bonus is paid regularly and uniformly (e.g. 100% paid every even month) as fixed wages for labor service, it shall be considered ordinary wages as stipulated in the Labor Standards Act. Incheon District Court ruling on Feb. 23, 2012: 2011Gahap6096; Seoul Appellate Court ruling on Oct. 1, 2010: 2010na34618

② The bonus in this case is only applicable to employees working for six months or more with a certain amount paid quarterly, and calculated according to the number of years of service. This bonus is paid every quarter, distinguishing it from annual salary divided into monthly payments, but this difference in payment time does not preclude it from being considered as ordinary wage. As the bonus in this case has been previously fixed, it shall be considered ordinary wage as it is a fixed wage paid regularly and uniformly. Supreme Court ruling on Mar. 29, 2012: 2010Da91046


Name of payment made to employees : Bonuses

A. In cases where payment conditions, amounts, and payment rates are regulated in the rules of employment, or where employees are paid habitually and naturally expect to get paid: regular bonuses, exercise subsidies, etc.
-> Ord.Wage ○, Avg.Wage ○, Other Paymt X

B. In cases where payment is not made habitually, but paid temporarily or definitely in accordance with company profits according to the employer's discretion and favor
-> Ord.Wage X, Avg.Wage X, Other Paymt ○

2) Payments made for an employee's living costs or welfare, regardless of working hours
① The company has paid all cleaning workers a fixed meal allowance, household subsidy, transportation subsidy, morning meal costs, sanitation allowance, and snack allowances as fixed amounts every month, all of which shall be considered ordinary wages to be paid regularly and uniformly as reward for labor service. Ulsan District Court ruling on Feb. 3, 2006: 2005Gadan8384.

② If a welfare allowance has been paid uniformly, regularly, and at a fixed rate to all employees of the same business according to the collective wage agreement, this is not money paid temporarily and according to favor for welfare, but wages paid as remuneration for labor service according to employment relations. In addition, this is not wages paid individually or at a variable rate, but fixed wages for ordinary working days and working hours, so shall be considered ordinary wage. Busan Appellate Court ruling on Sep. 25, 1996: 96Gu2583.

③ Even though some employees with lower work attendance rates have been paid transportation and meal allowances differently than other workers, these allowances have been paid to all employees and shall be considered ordinary wages. Seoul District Court ruling on May 18, 2006: 2005Gahap57290.

④ Even though a company enters into an agreement with employees that it will not calculate into ordinary wage the meal allowances that have been paid at a fixed rate to all employees, this shall be considered an illegal employment contract. Supreme Court ruling on Feb. 22, 1994: 93Da9620.

⑤ Service allowances have accumulated according to the length of service for all cleaning workers employed for at least one year; meal, transportation, sanitation, and hazard allowances have been paid at a fixed rate every month to all cleaning workers. Quarterly, attendance, exercise, and traditional holiday allowances have been paid to all cleaning workers regularly and at a fixed rate if they meet certain criteria. As these allowances are fixed wages paid regularly and uniformly as reward for labor service, they shall be considered ordinary wages. Supreme Court ruling on Sep. 8, 2011: 2011Da22061.



Name of payment made to employees :

① Commuting allowances, vehicle maintenance subsidies
A. If rendered periodically and uniformly to all employees
-> Ord.Wage ○, Avg.Wage ○, Other Paymt X
B. If rendered variably according to the number of days in attendance or to a few employees
-> Ord.Wage X, Avg.Wage X, Other Paymt ○

② Company housing allowances, winter fuel allowances, kimchi allowances
A. If rendered periodically and uniformly to all employees
-> Ord.Wage ○, Avg.Wage ○, Other Paymt X
B. If rendered temporarily or to a few employees
-> Ord.Wage X, Avg.Wage X, Other Paymt ○

③ Family allowances, education allowances
A. If rendered uniformly to all employees regardless of marital status
-> Ord.Wage ○, Avg.Wage ○, Other Paymt X
B. If rendered only according to the number of family members or to a few employees (paid as child education allowances, employee training allowances, etc.)
-> Ord.Wage X, Avg.Wage X, Other Paymt ○

④ Meals or meal allowances
A. If rendered uniformly to all employees by means of a labor contract, Ministry of Employment and Labor, or etc.
-> Ord.Wage ○, Avg.Wage ○, Other Paymt X
B. Actual meals paid in accordance with the number of days in attendance
-> Ord.Wage X, Avg.Wage X, Other Paymt ○