Starting January 1, 2025, South Korea’s minimum wage will be set at KRW 10,030 per hour. This is equivalent to USD 7.21. This is a 1.7% increase from the previous year. However, this standard does not apply to every worker equally. Apprentices who have been employed for less than three months are exempt from the minimum wage requirement.
Employers should also be aware of South Korea’s overtime regulations and night shift policies, which impact additional compensation requirements for workers in these categories, ensuring compliance across varying work schedules.
Minimum Wage Determination Process in South Korea
South Korea’s Minimum Wage Act initially covered only employers subject to the Labor Standards Act (LSA). However, since 2000, the MWA has expanded its coverage, now applying to all employers in South Korea.
Every year, South Korea evaluates its minimum wage based on several factors, including the cost of living, wage levels for similar roles, labor productivity, income distribution, and industry types. This comprehensive approach ensures the minimum wage aligns with both the needs of workers and the business environment.
The process begins each year by March 31, when the Labor Minister formally requests the Minimum Wage Commission to review the minimum wage. The Commission, composed of representatives from labor, management, and the public, is tasked with deliberating and reaching a consensus by June 29. Following their recommendation, the Labor Minister announces the final rate by August 5.
Payroll Frequency Requirements
In addition to setting minimum wage standards, South Korea’s Labor Standards Act (LSA) mandates that employers pay wages at least once a month on a predetermined day. This standard applies to regular wages, but extraordinary payments like bonuses or allowances may follow different payment schedules.
Implications for South Korean Employers
Employers will need to adjust their payrolls to reflect the new minimum wage of KRW 10,030 per hour starting January 1, 2025.
Employers will need to implement robust payroll systems to track and document wage payments accurately.