Korea’s minimum wage as per the Korean Minimum Wage Act in 2019 is determined by the Minister of Employment & Labor as KRW 8,350 per hour. The latest decisions of the Supreme Court developed a calculation standard/method for determining an hourly wage rate that is not in line with the opinion of the Ministry of Employment & Labor. In many such cases, a Ministry, simply, pushes to amend the law.
This matter is important, since the standard hourly wage rate is a necessary mathematical component to calculate the monthly salary of employees.
Korean Minimum Wage Act
The Korean Minimum Wage Act’s main purpose is to provide a minimum sum per hour to employees that employers must, at least, pay to employees. The fear, in short, is that without a minimum wage, employers may be able to exploit vulnerable workers.
The appropriate hourly minimum wage under the Korean Minimum Wage Act requires the consideration of “…the cost of living of employees, the wages of similar employees, the labor productivity and the distribution of income.” Art 4 (1) Minimum Wage Act.
In order to calculate monthly salary it is necessary to calculate a so-called “reference wage.” A reference wage is calculated by dividing the sum of wages or allowances paid periodically by working hours. The number of working hours is an issue of contention when it comes to holidays.
Supreme Court vs. Ministry of Employment & Labor: Differing Positions on how to Calculate Hourly Wages in Korea
In general, the Supreme Court of Korea and the Korean Ministry of Employment & Labor agree that the actual working hours shall be considered when calculating the hourly wage by dividing the monthly reference wage. Nevertheless, their decisions differ, with regard to holidays. For an article on Korean Contractual Hours versus Statutory Holidays please see: Korean Paid Holidays.
The Supreme Court repeatedly declared in its decisions that for the calculation of the hourly wage rate only mandatory working hours shall be taken into account, thus, excluding holidays. However, the Korean Ministry of Employment & Labor frequently announced that for the aforementioned calculation the weekly holiday hours shall be considered additionally. Recently, the Ministry submitted an amendment to the Enforcement Decree of the Minimum Wage Act, which restricts the consideration of weekly holiday hours by only including statutory paid holidays. We shall update the reader when more information is known.
Korean Labor Law changes often. We advise, at least, after the election of each new administration in Korea to conduct a complete employment audit by an experienced attorney in labor law and practice. For a consultation with a employment & law attorney please: Schedule a Call with a Lawyer in Korea.
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