The debate over ordinary wage is embroiled in controversy. The Supreme Court ruled in March 2012 that periodical bonuses can constitute part of ordinary wage(2010da91046). After the ruling, there has been a heated controversy over the issue of what constitutes the ordinary wage.
To resolve the continuing dispute on the scope of ordinary wage, "the basic principle of ordinary wage" should be comprehended first. Labor Standards Act in Korea stipulated that the ordinary wage is the lower limit of "Average Wage" {§2.(2)} and the basis in calculating various wages for overtime, night work, holiday work, etc. (§56). Taking into consideration the purpose of legislation of these two provisions, the Supreme Court interpreted ordinary wage as a “fixed, average basic wages”, paid regardless of “actual work performance,” which is, in principle, decided within the scope of the legal standard working hours. According to the Supreme Court’s interpretation, the basic principle of ordinary wage can be considered to be “the wage that is expected to be given when an employee regularly serves for the prescribed normal working hours."
The Supreme Court has determined the scope of ordinary wage by acknowledging certain remuneration as the ordinary wage, as long as qualifications, including "reward for prescribed work" and natures of "regularity" and "uniformity", are satisfied, while eliminating "non-fixed wage" of which payment itself or payment amount varies depending on the actual work performance. The Supreme Court has eliminated the aforementioned "non-fixed wage" from the scope of ordinary wage, because it considered the legislative intention of Labor Standard Act and function and necessity of ordinary wage. The nature of "fixity" is an essential element by which the scope of ordinary wage is determined, and the fixed wage among the amounts paid in consideration of prescribed work is determined to be the ordinary wage in consideration of all related issues, such as collective bargaining agreement, employment rule, employment contract, general business practices, etc.
In some cases of lower courts declared in 2013, they ruled that most of the bonuses or certain allowances did not qualify as part of ordinary wages due to lack of the "fixity" requirement. In particular, the lower courts have a tendency to regard as non-fixed a wage of which amount is variable depending on actual working days or which is provided only when the employee is in service as of the payment date. However, the condition of "period of service" is a matter of whether it can be regarded as an element of "uniformity". In addition, whether the "actual working days" fall under the "work performance result" should be individually decided by case by case based on the nature of workplace as well as the parties’ intention under each employment contract. Since the scope of ordinary wage is determined by the norms in accordance with the legal principle of judgments and Labor Standard Act, one must establish a more solid precedential standard by which "fixity" is determined.