In January 2014, the minimum wage was raised from W4,869 to W5,210 per hour. In 2015, it became 5,580 and, as I write this in 2016, the minimum hourly wage is W6,030.
By 2017, it will become W6,470.
So, what happens when an employer pays less than the minimum wage in Korea? They don’t. I’ve never heard of any employer being charged with a penalty for this, have you?
Employers should take this increased wage into account when calculating the early 2016 salaries of their staff. This will also come into play when considering extended or special working hours.
An employee should be paid 1.5 times their salary for extended work hours (more than 8 hours a day), any time over 40 hours a week, mid-night hours (10PM~6AM) or holiday work (anytime an employee has to work on the one day per week that he/she is legally allowed to allot as his/her vacation day).
However, this is only the case, if the employer has over 5 regular employees. This stipulation is very important, as without 5 regular employees, employees are exempt from many of the aspects of Korean labor laws. If you, as an employer, maintain fewer than 5 employees, then:
- You can fire any employee at any time.
- There is no restriction to the working hours (8 hours a day, 40 hours a week) of your employees.
- You are not obligated to inform your employees of the stipulations of Korean labor laws.
- You do not need to allow your employees their yearly 15 paid vacation days.
- You do not need to consider special or extended working hours when calculating salaries.
These employers must still, however, give severance pay to former staff, regardless of the number of employees.
The raising of the minimum wage can and will cause major changes for companies who have more than 5 employees. For example, if you have more than 5 employees, and some of them are working 12-hour days at minimum wage, you will now need to pay them W7,815 per hour. Make sure you are taking these developments into account when creating and modifying your annual wage budget.
For further details on Korean labor laws, you can speak with a lawyer by contacting us at www.IPGLegal.com.