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  • Application of Minimum Wage Laws
    • 담당부서 : 외투기업고충처리실(고상원)
    • 조회수 : 5,278
  • Organization : self - disposal
  • Regulation : the Labor Standards Act[Law]
The filing firm is a foreign invested firm that manufacturers car parts The inquiry was regarding payment of staff members working for hourly wages and whether they qualified for 100% bonuses every 2 months and 2 holiday bonuses at 60% of their wage, which would equal 660% of their salary.

If the bonuses are included in the minimum wage, it presents not problem. However, there are cases where that amount is not included in the minimum wage. In light of the fact that minimum wage has risen rapidly and some employers are not paying the government set wage, Company E’s query was in regards to the consequences of not paying minimum wage and whether there were any alternatives to paying the established wage.

Resoultion and Results
Resolution and Results
Minimum Wage Laws
All employers are required to pay employees a minimum of 3,100 KRW per hour or daily wage of 27,840 KRW (valid until Dec 31, 2006).
Management should alert employees as to what, other than the pure wage, was included in compensation, to which employees the law did not apply and when the law effective.

When calculating minimum wage, bonuses, payment for evening or overtime work; family, transportation, and meal allowances are excluded.
Even with the reduction of work hours from 44 to 40 hours per week, employers must continue to pay the minimum wage.
Should an employer fail to pay the minimum wage, they will be subject to fines of up to 200million KRW or 3 year jail sentence.

Report Contents:
According to the previously mentioned regulations, special bonuses may be distributed in a single payment or labor costs calculated to include the bonus as part of a lump-sum payment in addition to the hourly wage.
Since some small and medium businesses operating a similar salary system later adopted a monthly salary wage payment system the office of the Ombudsman advised them to consider adopting one salary system in order to avoid possible legal problems.
Since the bulk of the bonus is included in the hourly wage, it may be advisable to consider changing the criterion applied to calculating payment of hourly wages. If the new system were to go into effect, in such a case that an employee works overtime, the company would have to deal with the additional cost incurred as a result.

Meanwhile, with a comprehensive wage calculation system (the amount of compensation depends partially on the degree of experience. If a certain amount is earmarked for overtime pay, that amount should be used for such) there is a different calculation.
Whatever method is chosen, the purports of changes to the system should be thoroughly explained and agreed upon by labor unions and employees.