Not in itself, but it can be void where hours are measurable and the worker is disadvantaged.

Can I claim more for extra overtime?

Under a fixed-OT structure, yes, for the amount by which statutory premiums exceed the allowance.

Inclusive wage system (Korea)

⚖️ Law By CampusDown Wiki Editorial Team Last updated October 26, 2026

The inclusive wage system (pogwal imgeum-je) is a Korean pay arrangement that bundles overtime, night, and holiday premiums into base pay or a fixed allowance regardless of actual hours. It rests on court precedent rather than statute.

Contents

1. History and case law
2. Fixed overtime versus inclusive pay
3. What to check
4. FAQ
5. References

History and case law

Korea's Labor Standards Act requires a 50% premium on ordinary wages for overtime, night, and holiday work, but says nothing about paying those premiums as a lump sum. Courts began accepting inclusive arrangements in the 1980s for jobs where hours were hard to track, such as guard work. The practice later spread to office jobs. In 2010 (case 2008da6052), the Supreme Court held that where hours can be measured, the statutory rules apply, and an inclusive agreement is void to the extent it disadvantages the worker.

Fixed overtime versus inclusive pay

The common "fixed OT" arrangement separates base pay from a fixed overtime allowance. If statutory premiums for actual overtime exceed that allowance, the employer owes the difference. Classic inclusive pay doesn't separate base pay from premiums at all. It obscures minimum-wage compliance and has been blamed for "free overtime."

What to check

Read your employment contract to see how many overtime hours the fixed allowance covers, and keep records of your hours. The government issued enforcement guidelines in 2017, and legislation to ban the system has been debated.

FAQ

Is it illegal?: Not in itself, but it can be void where hours are measurable and the worker is disadvantaged.
Can I claim more for extra overtime?: Under a fixed-OT structure, yes, for the amount by which statutory premiums exceed the allowance.

Sources reviewed: 2026-10-26

References

근로기준법 (법률), 국가법령정보센터. https://www.law.go.kr
고용노동부. 근로기준법 해설 및 질의회시.
최저임금법 (법률), 국가법령정보센터.
대법원 2010. 5. 13. 선고 2008다6052 판결.
고용노동부. (2017). 포괄임금제 사업장 지도지침.

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This article was last updated on October 26, 2026. It is based on widely recognized original works and textbooks; when citing it in a paper, please check the original sources listed in the references.