Work and Wages

Minimum Wage

Minimum wage act provides minimum wage rate for the workers to stabilize workers' life and improve the quality of the labour force.

The national minimum wage is determined by the Minister of Employment and Labour by 5th August each year, in accordance with a minimum wage proposal deliberated and decided by a Minimum Wage Commission.  The Commission is composed of representatives of workers, employers and public interest groups (9 commissioners each from the groups). The Commission performs the following functions:  

  1. deliberate/re-deliberate and make a resolution on minimum wage;
  2. Deliberate the by-category classification of the businesses to which the minimum wage is applicable;
  3. Conduct research and making suggestions for development of the minimum wage system; and
  4. Deliberate other important matters related to the minimum wage that are submitted for consideration by the Minister of Employment and Labour.

The Minister, after determining the minimum wage, publicly announces its contents without delay and it comes into force on January 1 of the following year.

Minimum wage is determined by considering the cost of living of workers, the wages of kindred workers, labour productivity and the ratio of workers' compensation to national income, etc. Different wage rates are set for trainees, contractors, piece-rate workers and for different type of business. It is determined on an hourly, weekly, daily or monthly basis.

During the first three months of employment, i.e., the probationary period (except for fixed-term contract workers with less than one year of contract duration), the employer may pay only 90% of the hourly minimum wage. For workers with disabilities, a lower wage level may be set after necessary approval from the Minister for Employment and Labour. Similarly, for piece rate work, wages are set as prescribed under the Presidential Decree on minimum wage.  Similarly, workers who are engaged in surveillance or intermittent work and for whom the employer has obtained approval from the Minister of Employment and Labour under article 63 of the Labour Standards Act may also be paid a wage lower than the minimum wage rate.

Where an employment contract specifies less than the statutory minimum wage, that part of employment contract is not enforceable and a worker may file a complaint with the labour inspector. Administration of enforcement of the Act is the responsibility of labour inspectors, who may perform the duties of a judicial police officer in relation to any offence committed in violation of the Minimum Wage Act. An employer who fails to comply with the obligation to pay at least minimum wage is punished by imprisonment of up to 3 years or a fine not exceeding 20 million won, or both. If an employer fails to inform employees of the minimum wage, he is punished by a fine not exceeding 1 million won.

Sources: § 4-11 of the Minimum Wage Act No. 3927, 1986; §7-10 of the Enforcement Decree of the Minimum Wage Act, 1987

Regular Pay

Wage means wages, salaries and any other money and valuable goods an employer pays to a worker for his/her work, regardless of how such payments are termed.

Payment of wages is made in legal tender, directly to the worker. Wages may be paid in forms other than cash if otherwise stipulated by Acts and subordinate statutes or by a collective agreement. Wages may also partially be deducted or paid in kind.

Wages are paid at least once per month on a fixed day. However, this requirement does not apply to extraordinary wages; allowances; allowances for good attendance paid on the basis of an attendance record for a period exceeding one month; seniority allowances paid for consecutive service for a fixed period exceeding one month; bounties, proficiency allowances, or bonuses calculated for any reason existing for a period exceeding one month; or other various allowances not paid on a regular basis.

Where a worker requests wage payment in order to meet the expenses incurred from childbirth, disease, disasters or other cases of emergency prescribed in the law, the employer has to pay wages for the work already performed even prior to the payday.

In case of non-compliance with the regulations related to payment of wages, the employer is liable to punishment by a fine of up to 20 million won or by imprisonment of up to 3 years.

Source: §02, 08, 10, 28 & 31 of the Minimum Wage Act, 1986; §7 of the Enforcement Decree of the Minimum Wage Act, 1987; §2(1), 43(1 & 2) & 45 of the Labour Standards Act, 1997; §23 of the Enforcement Decree of the Labour Standards Act, 1997