"Ordinary wage" refers to money and valuables such as hourly wages that are set to be paid regularly and uniformly in return for work, and serves as a basis for calculating dismissal notice allowances, etc.
What is “ordinary wage”?
- "Ordinary wage" means hourly wage, daily wage, weekly wage, monthly wage, or contract amount to be paid to an employee for a specifically agreed work or entire work on a regular and flat basis. (Article 6(1), 「Enforcement decree of the Labor Standards Act」)
Wages and allowances, etc. to which ordinary wages are applied
- Ordinary wages are the basis for calculating the following allowances or salaries.
· Advance notice of dismissal (Article 26, 「Labor Standards Act」)
· Overtime/nighttime/holiday work allowance (Article 56, 「Labor Standards Act」)
· Annual paid leave allowance (Article 60(5), 「Labor Standards Act」)
· Parental leave benefits (Article 70, 「Labor Standards Act」)
· Maternity leave benefits (Article 76, 「Employment Insurance Act」)
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Ordinary wages that are the basis for calculating maternity leave benefits
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Q: If working hours are shortened at the request of a pregnant worker, should the ordinary wage that is the basis of maternity leave pay be based on the ordinary wage before the reduction in working hours? Or should it be based on the normal wage at the time the working hours were shortened, that is, at the time of application for maternity leave? A: Since Article 76(1), 「Employment Insurance Act」 stipulates that the ‘maternity leave benefits, etc. Are paid in an amount equivalent to the ordinary wage of the 「Labor Standards Act」(calculated on the basis of the start date of leave) for the period of maternity leave’, the ordinary wage, which is the basis for calculating the maternity leave pay, should be calculated based on the day the leave started.
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Standards for determining ordinary wages
- Whether a wage belongs to the ordinary wage shall be judged according to its objective nature based on whether the wage is paid regularly, uniformly, or fixedly as money and valuables paid to workers in return for prescribed work, and it is not determined by formal standards such as the name of the wage or the length of the payment cycle (Supreme Court Decision 2012Da89399 on 2013.12.18.).
How to calculate ordinary wage
- Where the ordinary wageis calculated on an hourly basis, the following formula shall apply to such calculation.(Article 6(2), 「Enforcement decree of the Labor Standards Act」)
1. The wage determined by the hourly wage is the amount
2. The wage determined as a daily wage is the amount divided by the number of prescribed working hours per day.
3. The wage determined as the weekly wage is the amount divided by the number of standard hours for calculating the ordinary wage in one week (the sum of the prescribed working hours in one week and the hours treated as paid in addition to the prescribed working hours)
4. The wage determined as a monthly wage is the amount obtained by dividing the amount by the number of standard hours for calculating the ordinary wage in a month (the number of hours obtained by multiplying the standard number of hours for calculating the ordinary wage in a week by the average number of weeks in a year divided by 12)
5. Wages determined for a fixed period other than daily, weekly, and monthly are calculated in accordance with paragraphs 2 to 4 above
6. The wage determined by the contract amount is the amount obtained by dividing the total amount of wages calculated according to the contract system during the wage calculation period by the total number of working hours during the wage calculation period (if there is a wage deadline, the wage closing period)
7. If the wage received by a worker consists of two or more wages determined in paragraphs 1 to 6 above, the sum of the amounts calculated in accordance with paragraphs 1 to 6
- Where the ordinary wage is calculated on a daily basis, such ordinary wage shall be calculated by multiplying an hourly wageby the contractual working hours per day. (Article 6(3), 「Enforcement decree of the Labor Standards Act」)