Hello, this is attorney Choi Jong-ha of Cheongchul Law Firm.

The duty to issue a wage statement is now an obligation borne by every employer. Article 48(2) of the Labor Standards Act (근로기준법 제48조 제2항) requires an employer, when paying wages, to give the worker a wage statement setting out the components and calculation methods of the wages, and Article 116(2) of the same Act imposes an administrative fine of up to KRW 5 million for a violation.

So what must a wage statement contain under the Labor Standards Act? According to the Act, it must include not only (1) information identifying the worker (name, date of birth, employee number, etc.), (2) the wage payment date, (3) the total wage amount, and (4) the amount of each wage component (base pay, various allowances, bonuses, incentive pay, etc.), but also (5) the formula or method used to calculate the amount of each wage component, and (6) the amount of each deduction such as income tax and the four major insurances, together with the net amount actually paid.

The requirement most often overlooked in practice is the fifth one, the statement of the calculation formula or method. Absent special circumstances, it is generally rare for such a violation alone to lead directly to an administrative disposition such as a fine. Even so, as a matter of principle a statement showing only the resulting figures can hardly be regarded as meeting the requirements, which is a point worth keeping in mind.

A wage statement is, in itself, a document that adds to a company's administrative burden, yet it is also a document that gives the worker the right to understand their own wages and gives the company a basis to later prove the legitimacy of its wage calculations. Beyond the risk of fines from non-issuance or incomplete issuance, providing an accurate wage statement can be regarded as one preventive measure for reducing wage-related disputes themselves.