Korean Supreme Court Redefines Ordinary Wage: Implications for Overtime Pay and Other Statutory Allowances
2024.12.23.
On December 19, 2024, a unanimous Korean Supreme Court partially overturned its 2013 “ordinary wage” precedents, which may require many employers to revise their compensation practices. These decisions primarily affect employers that pay fixed regular bonuses but exclude those amounts when calculating the base rate for overtime pay and other statutory entitlements. This is a more common practice at Korean companies, but may be less common among foreign companies. Employers should review their compensation practices in Korea to ensure compliance or readiness to adhere to the new standard. Employers should also look out for additional decisions expected from the Supreme Court soon, dealing with which kinds of incentive pay must be included when calculating the base rate for employees’ statutory severance benefits: “average wage.” Our Korean newsletter, which includes a link to a webinar on January 3, 2025, is available at this link.
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