Weekly Contributions

Is Paying a Higher Salary Enough?
Understanding Korea’s Minimum Wage Law in 2026

Bongsoo Jung, Labor Attorney at KangNam Labor Law Firm

At a small restaurant in Seoul, Mr. Kim, who employs three workers, reviews his payroll for 2026. “Even if the basic salary is low, surely meal allowances and bonuses will bring it above the minimum wage?” A newly hired employee, Ms. Lee, has a different question: “Does my salary include paid weekly holiday time?” Both are looking at the same payslip, yet reach different conclusions. The answer depends not simply on the amount transferred to the worker’s account but on the legal characterization of each payment and the relevant working hours.

I. Understanding the Minimum Wage

Korea’s minimum wage system requires employers to pay at least the statutory minimum for covered work. The Minimum Wage Commission deliberates on the annual rate, and the Minister of Employment and Labor determines and publicly announces it. In general, the rate applies from January 1 through December 31 of the following year. For 2026, the hourly minimum wage is KRW 10,320, up KRW 290 (2.9%) from KRW 10,030 in 2025.

For an eight-hour day, the minimum daily amount is KRW 82,560. For the standard 40-hour workweek with eight hours of paid weekly holiday time, the monthly conversion uses 209 hours, producing KRW 2,156,880. This monthly illustration must not be mechanically applied to every part-time employee: contractual working hours and qualifying paid holiday hours must be checked.

Whether someone is described as a part-timer, a fixed-term employee, a permanent employee or a foreign worker does not, by itself, determine minimum-wage coverage. Both parties should examine the wage components included in the statutory comparison and the applicable working-time denominator.

II. Coverage and Exceptions

Mr. Kim asks if he can automatically pay a probationary worker 90% of the minimum wage for the first three months. He cannot. Generally, the 10% reduction is available only during the first three months of probation under a contract lasting at least one year. Workers in designated elementary occupations are excluded from this reduction. Where the reduction is lawfully available in 2026, the hourly floor is KRW 9,288.

An exemption for a worker whose capacity to work is substantially reduced because of a mental or physical disability requires the legally prescribed approval from the Ministry of Employment and Labor; disability itself does not create an automatic exemption. Businesses employing only cohabiting relatives, domestic workers and seafarers governed by separate legislation also require specific statutory analysis.

III. Employers’ Legal Obligations

1. Duty to Inform Employees

Mr. Kim posts the current notice in an accessible location. Employers must inform workers of the minimum wage, excluded wage components, relevant exemptions and effective date before the rate takes effect. A failure to comply may result in an administrative fine of up to KRW 1 million.

2. Duty to Pay the Minimum Wage

A contractual term providing less than the statutory minimum is invalid to that extent and is replaced by the statutory amount. An employee’s signature does not waive that protection. Suppose the amount included in the statutory monthly comparison is KRW 2,100,000 for an employee to whom the 209-hour monthly benchmark applies. The difference from KRW 2,156,880 is KRW 56,880, subject to verification of covered pay elements and working hours.

3. Joint Liability in Subcontracting

A cleaning contractor may be unable to meet the legal wage floor because the principal has set an unlawfully low labor-cost unit price. If the statutory conditions relating to the principal’s responsibility are satisfied, the principal may be jointly liable with the contractor. Contracting parties should therefore review wage rates when setting or revising labor-cost assumptions.

4. Penalties for Violations

Failure to pay the minimum wage may be punishable by imprisonment for up to three years or a fine of up to KRW 20 million. Separate administrative penalties apply to failures to inform workers. Other prohibited conduct, including unlawful wage reductions motivated by the new minimum wage, must be assessed under the relevant statutory provisions.

IV. Applying the Minimum Wage

1. Minimum Wage Versus Ordinary Wage

Ms. Lee asks about overtime. Mr. Kim initially assumes that the minimum wage and ordinary wage are identical concepts, but they serve different purposes. The former tests compliance with a statutory pay floor. The latter forms the basis of statutory premiums for overtime, night work and holiday work. The applicable wage components and legal tests may differ, and recent Supreme Court developments regarding ordinary wage require separate consideration.

2. Wages Included in the Minimum-Wage Calculation

Since 2024, regularly paid monthly bonuses and cash welfare payments?such as meal, lodging and transportation allowances?are generally included in full when the statutory conditions are satisfied. The original article’s broad treatment of these items as excluded payments no longer accurately describes current law. The substance, payment schedule and legal exclusions still matter.

For example, assume a standard 40-hour worker receives KRW 2,000,000 in basic pay plus KRW 200,000 as a cash meal allowance each month. If both qualify as included wages and there are no other relevant complications, the total of KRW 2,200,000 exceeds the 2026 monthly benchmark of KRW 2,156,880. This is a simplified illustration, not an individualized payroll determination.

3. Wages Excluded from the Minimum-Wage Calculation

Payments for work outside prescribed working hours or workdays?including statutory premiums for overtime, night work and holiday work?are generally excluded, as are wages paid in kind. Irregular or non-monthly payments require assessment under the relevant statutory rules. The label “bonus” or “allowance” is less informative than the nature of the work compensated, payment conditions and frequency.

V. What the Payslip Teaches Us

Mr. Kim separates basic pay, cash meal allowances and overtime premiums in his payroll records. He reviews the employment contracts, contractual hours, paid weekly holidays and probationary arrangements. Ms. Lee is then able to check the same figures instead of relying solely on her bank deposit. The decisive question is whether the hourly rate produced by dividing included wages by the legally applicable comparison hours reaches the minimum wage.

In 2026 that benchmark is KRW 10,320 per hour. Employers should update pay tables annually and audit probationary rates, part-time arrangements, foreign workers’ coverage, regularly paid bonuses, welfare allowances and paid weekly holiday hours. Employees should compare their payslips with their contracts and actual schedules. Accurate classification and calculation?not a general impression that a salary is generous?are the best starting point for preventing disputes.

References

Ministry of Employment and Labor, “2026 Minimum Wage Set at KRW 10,320 per Hour” (Aug. 5, 2025); Minimum Wage Commission, 2026 Minimum Wage Guidance; Ministry of Employment and Labor, “Changes Taking Effect in 2026”; Easy Law Information Service, “Minimum Wage.” Updated October 2026. All persons, situations and illustrative pay figures in this article are fictional.