Korea's Ordinary Wage: The Base Hourly Rate for Pay Add-Ons

To measure length, you need a ruler first. Without one, people can only say "about this much" and can't give an exact number. In the world of wages, the ruler used to measure many kinds of pay add-ons is the ordinary wage.

Here is how the ruler is made. Add up the pay promised for each month, then divide it by that month's scheduled working hours, and you get an hourly amount. For someone who works eight hours a day, five days a week, many cases use 209 hours a month once paid weekly rest hours are added.

The hourly rate you get this way becomes the starting point for calculating add-on pay. When someone works beyond the statutory working hours (8 hours a day, 40 hours a week) as overtime, the pay is this hourly rate multiplied by 1.5 (this is for workplaces that regularly have 5 or more employees). Work between 10 p.m. and 6 a.m. gets a separate night premium of 0.5 more, so overtime in that window comes to 2 times.

That's why a shorter ruler makes every add-on stacked on top of it smaller too. It's also why disputes over the scope of the ordinary wage come up so often.

Two tests decide which pay goes onto the ruler: was it promised at set intervals, and was it promised equally to everyone who meets the same conditions.

Base pay clearly goes in. So does pay that goes out as the same amount whenever the conditions are met, like a position allowance for holding a certain role or a certification allowance for earning a license. Regular bonuses paid at set times have also come to be counted in, following the Supreme Court of Korea's recent rulings.

On the other hand, performance bonuses that vary with that year's results are hard to include. Whether the amount was promised in advance is the dividing line.

Some pay is harder to classify, like meal allowances or vehicle maintenance pay. For these, the answer depends on how they were actually paid, which makes them frequent subjects of disputes. What matters is the actual promise behind the payment, not the label on the pay slip.

There is more than one ruler for wages. Next to the ordinary wage sits another one, the average wage. Mixing the two throws the calculation off.

The average wage is the wages actually received in the three months right before leaving a job, divided by the number of days in that period. It is a ruler that looks back at money actually received, so a month packed with overtime pushes the value up. Severance pay is, as a rule, calculated on this average wage. Overtime pay, on the other hand, uses the ordinary-wage ruler. Annual-leave pay uses either the ordinary wage or the average wage, depending on what the work rules and similar documents set, and many workplaces use the ordinary wage.

The two rulers are linked, though. If the calculated average wage comes out lower than the ordinary wage, the law says to treat the ordinary wage as the average wage. A ruler promised in advance and a ruler that looks back: remembering them this way keeps them straight.