I. Legal Basis

Under the 2019 Labor Code, any reduction in an employee’s wages must strictly comply with legal provisions. Specifically, employers are permitted to reduce wages only in certain cases, such as compensating for damages caused by the employee’s fault or in disciplinary actions for labor violations.

Wage reduction for compensation of damages: If an employee causes damage to the employer’s property due to their fault, the employer has the right to request compensation. This compensation may be deducted directly from the employee’s wages but must not exceed 30% of the monthly wage after deducting other amounts as prescribed by law.

Disciplinary measures related to labor violations: In cases where an employee violates workplace rules and is subjected to disciplinary action, wage reduction may be applied as a disciplinary measure. However, this must follow the established disciplinary procedures and must not infringe on the employee’s fundamental rights.

II. Definition of Labor Relations

Labor relations are a common and essential part of societal life, built upon the employment and remuneration agreement between employers and employees. Employers are obligated to pay employees the full agreed-upon wages.

Currently, there are no legal provisions allowing employers to unilaterally reduce employees’ wages. Wage reductions can only occur in specific cases:

1. Agreement to Amend Wage Provisions in Employment Contracts

When employers intend to reduce wages, they must notify employees at least three days in advance. If the employee agrees, the parties may adjust the wage through a supplementary labor contract or a new contract. If the employee does not agree, the employer is prohibited from reducing their wages.

2. Wage Reduction Due to Temporary Job Reassignment

If an employer temporarily reassigns an employee to a job different from their contracted position, the employee’s wage may be adjusted according to the new job. However, during the first 30 working days, if the new job’s wage is lower, the employee must still receive their original wage. After this period, the new wage must be at least 85% of the original wage but not less than the statutory minimum wage. This means employers can reduce wages by up to 15% from the original wage.

III. Procedures and Conditions for Wage Reduction

The law not only stipulates the cases in which salary deductions can occur but also requires employers to adhere to specific procedures and conditions when implementing such measures. First and foremost, salary reductions must be pre-notified to employees, clearly stating the reasons and the specific amount to be deducted. Additionally, employees have the right to respond or request clarification if they disagree with the salary reduction decision.

The process for handling labor discipline, as outlined in Article 122 of the Labor Code, must ensure transparency and fairness. Employers are required to hold a meeting with the participation of the employee, representatives from the trade union, and other relevant parties to discuss and decide on the disciplinary measures. Failure to comply with this process may render the salary reduction unlawful, giving the employee the right to file a complaint or initiate legal action.

This demonstrates that while employers have the right to impose disciplinary measures and reduce salaries, they must strictly comply with legal regulations designed to protect employees’ rights. Any salary deduction that fails to follow proper procedures or violates regulations on allowable deduction levels may be subject to penalties under the law.

IV. About Us, Hankuk Law Firm

■ Hankuk Law Firm – Introduction

The goal of the legal services provided by HANKUK LAW FIRM is to support businesses, investors, and people. Our organization employs skilled Korean lawyers, partners, and professionals to provide legal services to businesses related to corporations and litigation.

To support the startup process, our lawyers and staff provide a wide range of services, including business law consulting, tax and immigration law consulting, real estate services, business consulting, marketing and communications, human resources, product distribution, franchise options, etc. We provide expert advice on every aspect of your business needs.

To protect the legitimate rights and interests of our clients and achieve the best results, we provide legal advice and participate in civil lawsuits related to business, labor, marriage, family, and inheritance.

■ Contact us now

For reliable and effective legal advice, please contact HANKUK LAW FIRM now. We are committed to providing you with the best possible answers and our team of experienced lawyers has extensive knowledge in many legal fields. We are always here to provide the most competent and dedicated support, whether you are dealing with contractual issues, commercial disputes or need guidance on foreign investment. HANKUK LAW FIRM is honored to have assisted hundreds of domestic and international clients in skillfully resolving complex legal issues as their trusted legal partner. Do not let legal issues hinder your success. Let us accompany you towards legal achievement and comfort. For prompt guidance and support to ensure your rights are always maintained at the highest standards, contact HANKUK LAW FIRM now.

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