Your Employer Can't Freely Take Lateness Fines or Damages Out of Your Pay -- The Full-Payment Rule and the 1/2 and 1/10 Pay-Cut Caps
If your payslip shows money taken out for a "lateness fine" or the "price of something you broke," it is worth asking whether that is allowed. Korea's Labor Standards Act requires wages to be paid in full, and the money an employer can take out on its own is narrowly limited by law. Using only the statute text and Supreme Court rulings, this post explains what can and cannot be deducted from pay, the cap on disciplinary pay cuts, and what to do if money is deducted.
Wages must be paid in full
Article 43(1) of the Labor Standards Act says wages must be paid in currency, directly to the worker, and in full. The only exception is where "a law or a collective agreement has a special provision." An employer's internal rule or a verbal promise does not fall under that exception. The principle is read to mean that even if an employer claims a worker owes it money, it cannot settle that by unilaterally taking the amount out of wages.
What can be deducted: items with a legal basis
The typical deductions with a legal basis are income tax and the employee's share of the four social insurances. Seeing these on a wage statement is normal. By contrast, if the statement has items such as "lateness fine," "accident compensation" or "equipment damage deduction" and you cannot tell the legal basis, it is reasonable to ask for it. If you never received a statement at all, read the post on the fine employers face for not issuing a wage statement first.
Lateness or absence is a different matter from a "fine"
Not being paid for time you did not work is distinct from having money cut as a punishment for being late. The former is simply that no wage arises for time not worked; the latter is a disciplinary pay cut. For example, if you were 30 minutes late but an hour's pay is removed, or a 5-minute delay costs a full day's pay, the part beyond the time actually not worked may amount to a pay cut, so the cap rules need to be checked. Where the line falls differs by case and is hard to state flatly.
Disciplinary pay cuts have a cap too
Article 95 of the Act says that even where work rules provide for a pay cut as a sanction, a single cut may not exceed half of one day's average wage, and the total may not exceed one-tenth of the total wages for one pay period. If one day's average wage is 100,000 won, the limit per disciplinary matter is 50,000 won, and if monthly pay is 3 million won, the total cannot exceed 300,000 won even with several matters in a month. These caps apply on the premise that the work rules contain a pay-cut provision. Without such a provision, the basis for the deduction itself is in question.
Pre-set damages are prohibited
Article 20 of the Act prohibits contracts that fix in advance a penalty or an amount of damages for breach of the employment contract. Examples are "if you quit you pay 3 million won" or "10 prepared deductions of 100,000 won per customer complaint." Article 21 prohibits offsetting wages against advance loans or similar claims. Even if a worker's fault really did cause a loss, taking a fixed amount from pay immediately is separate from claiming damages.
When you were paid too much and it is taken back
Settling an overpayment caused by the employer's calculation mistake against the next month's wages is handled separately by case law. The Supreme Court en banc decision of December 21, 1995 (94da26721) allows such settlement only where the overpayment and the deduction are close enough in time to count as a wage adjustment, and the amount and method of deduction were announced in advance so that the worker's economic life is not at risk. If a large sum is suddenly taken months later, it can be checked against this standard.
If money was deducted, respond like this
First, gather your bank statements, wage statements, and any messages announcing the deduction. Second, ask the company in writing for the legal basis and the calculation method. Third, if that does not resolve it, you can file a complaint about unpaid wages with the local Ministry of Employment and Labor office. Violating the full-payment principle (Article 43) carries up to 3 years in prison or a fine of up to 30 million won under Article 109, and prosecution cannot proceed against the victim's express wishes. Read the complaint process together with the change that lets labor inspectors investigate wage arrears directly; if the wages themselves are delayed because of the company's finances, also see substitute payment of unpaid wages. If you lack a written contract, how to claim wages even without a contract helps.
Summary
Except where a law or collective agreement provides a basis, wages must be paid in full, and even a disciplinary pay cut cannot exceed half of one day's average wage per matter or one-tenth of the period's wages in total. Pre-set damages are prohibited, and settling an overpayment also requires advance notice and close timing. This post is general information, not legal advice. For your own case, check with the Ministry of Employment and Labor consultation center or a labor attorney.
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