Legal information

Korean labor law uses two different "wages" for calculations, and they give different numbers. Your average wage (평균임금) is the money actually paid to you over the most recent three-month window, spread across every day of that window; it feeds severance pay and the wage replacement paid during accident treatment. Your ordinary wage (통상임금) is the fixed pay promised for your normal hours, usually turned into an hourly rate; the premiums for overtime, night shifts and holiday shifts are built on it. If you read a payslip and see 통상시급 or 평균임금 and do not know which one applies to your claim, this article is the map.

What is the average wage?

Add up every wage payment received during the three-month window that ends on the day of the event (the day you quit, or the day of the accident). Then divide that sum by how many days the window contains, which is somewhere between 89 and 92 depending on the months. Base pay, overtime actually paid, fixed allowances and any bonus landing inside the window all go into the sum. The answer is a daily amount.

Since it tracks real payments, a heavy overtime period pushes it up and a quiet one pulls it down. For a worker employed under three months, the same method is applied to the shorter period.

One safety rule: if the daily average comes out lower than your daily ordinary wage, the ordinary wage is used instead. This protects workers whose last three months were thin.

What is the ordinary wage?

The ordinary wage is the pay the contract fixes for your normal scheduled hours, before any overtime. For most full-time foreign workers it is the monthly base pay plus fixed monthly allowances that everyone receives, divided by 209 hours. The result is an hourly rate (통상시급). Overtime actually worked is not inside it; the ordinary wage is what the overtime premium is multiplied by.

Which allowances go in is a frequent dispute. A fixed meal allowance paid to everyone every month usually goes in. A bonus paid only to people still employed on a certain date was long treated as outside, but Korean courts have moved towards counting regular bonuses as well. If your payslip has several allowance lines, the exact composition is worth checking with a professional rather than guessing.

Where is each one used?

A worked example

The figures below are invented for illustration only. Assume a factory worker whose three-month window is July to September (92 days).

Average wage per day: 8,850,000 / 92 = about 96,196 won.

Ordinary wage per hour: (2,300,000 + 100,000) / 209 = about 11,483 won. For 8 hours that is about 91,866 won, which is lower than the daily average wage here, so the average wage stands.

Now the three claims:

Notice that the overtime line ignores the bonus and the past overtime, while the severance and accident lines include them. The same person, two different wages.

Why does this matter for a foreign worker?

• Departure insurance (출국만기보험) for E-9 workers is calculated on the insured monthly pay, which is often only the base pay. Statutory severance uses the average wage including overtime. The gap between the two is a separate claim you can make.
• Employers who leave overtime out of the three-month total lower your severance. Check the total against your bank deposits, not only the base salary in the contract.
• Accident claims also depend on the average wage. If your employer under-reported your pay, the insurance body may calculate on the wrong base; you can submit payslips and bank records to correct it.
• The ordinary wage is the floor for every overtime hour. If your employer pays 1.5 times the base hourly rate but leaves fixed allowances out, each overtime hour is slightly underpaid, and that adds up over years.

What should I check on my payslip?

1. Find the base pay and every allowance that appears every month at the same amount. 2. Divide the sum by 209 and compare with the 통상시급 printed on the payslip, if any. 3. Add up everything paid in the last three months from bank records and divide by the days. 4. Compare the result with the 평균임금 figure in any severance or accident paperwork you receive.

Even a few thousand won of difference per day grows large once it is multiplied by 30 and by your years of service.

Next step

If a severance or accident calculation looks low, send us the last three payslips and bank records, and we can tell you which wage was used and whether the number is defensible. Consultations are paid; a staff member will call you back and explain the fee.

법무법인 대한중앙
1533-7377

Rules applied

Labor Standards Act (근로기준법) Article 2(1)6 (average wage: total wages in the previous 3 months divided by total days), Article 2(2) (ordinary wage used if higher), Article 56(1) to (3) (overtime, holiday and night premiums on ordinary wage), Article 26 (30 days' ordinary wage in lieu of notice), Article 60(5) (annual leave pay by ordinary or average wage). Employee Retirement Benefit Security Act (근로자퇴직급여 보장법) Article 8(1) (30 days of average wage per year). Industrial Accident Compensation Insurance Act (산업재해보상보험법) Article 5(2) (same definitions as the Labor Standards Act), Article 52 (wage replacement at 70% of average wage).

This is general information, not legal advice. Every case is different.