Unfair dismissal back pay in Korea: all wages you would have earned

This guide is for employees in Korea who have been dismissed and for HR staff who must calculate back pay after a dismissal is found unfair. It covers the remedy procedure at the Labor Relations Commission (노동위원회) and what back pay (임금 상당액) includes, based on the Labor Standards Act (근로기준법) and Supreme Court (대법원) rulings as of October 23, 2026.

Who can apply and the deadlines

An employer may not dismiss a worker without a justifiable reason (Article 23(1)). If you think your dismissal was unfair, you can apply to the regional Labor Relations Commission (지방노동위원회) within 3 months of the dismissal (Article 28). These remedy rules do not apply to workplaces that regularly employ 4 or fewer people (Enforcement Decree, Article 7 and Annex 1), so workers there cannot apply to the commission.

A remedy order stays in force while it is under review or in court (Article 32). If you do not want your job back, the commission can order the employer to pay at least the wages you would have earned during the dismissal period instead (Article 30(3)). If reinstatement has become impossible, for example because your contract has ended or you have reached retirement age, the commission still decides the case and can order that payment (Article 30(4)).

How the order is enforced

• Compliance charge (이행강제금): an employer that misses the deadline in a remedy order can be charged up to ₩30,000,000 each time, up to twice a year, for up to 2 years (Article 33). You can tell the commission within 15 days after the deadline that the employer has not complied.
• Criminal penalty: failing to follow a final remedy order is punishable by up to 1 year in prison or a fine of up to ₩10,000,000 (Article 111), but prosecution needs a complaint from the commission (Article 112).
• Court: a remedy order puts a duty on the employer under public law. It does not by itself create or change private rights between you and the employer (Supreme Court 95다53102, April 23, 1996). To seize the employer's assets for unpaid money, you need a court judgment.

What back pay covers

When a dismissal is invalid, you are treated as having stayed an employee. Because you could not work through the employer's fault, you can claim all the wages you would have received (Civil Act, Article 538(1); Supreme Court 81다626, December 22, 1981).

"Wages" here means wages as defined in the Labor Standards Act: anything paid continuously and regularly in return for work that the employer must pay under a collective agreement, work rules, pay rules, the contract or established practice, whatever it is called. It is not limited to ordinary wages (Supreme Court 2011다20034, February 9, 2012). In practice:

• base pay and regular allowances are included;
• bonuses paid every year are included, spread over the months;
• if pay rises were set every year through collective bargaining, back pay follows the raised rates (Supreme Court 93다21736, September 24, 1993);
• money that only reimburses work expenses is not pay for work, so it is left out; judge each item by what it really is, not by its name;
• if the employer had a settled practice of rehiring retirees on fixed-term contracts, back pay can run past the retirement age (Supreme Court 2018다275925, June 1, 2023).

Example calculation

Multiply the monthly figure by the length of the dismissal period. If wages rose during that period, use the new rates from the date they changed.

Pay from another job during the dismissal

Income you earned elsewhere during the dismissal period (중간수입) counts as a benefit from being freed from your duty to work, so the employer may deduct it (Civil Act, Article 538(2)). The Supreme Court limits the deduction (90다카25277, June 28, 1991; 2021다279903, August 19, 2022):

• the employer can never deduct from the amount of the shutdown allowance (휴업수당), which is at least 70% of your average wage (Article 46);
• it can deduct only from back pay above that amount;
• the other income must come from the same period as the back pay it is deducted from.

Put simply, the employer pays the larger of two amounts: back pay minus the other income, or the shutdown allowance. If one month's back pay is ₩1,000,000, the shutdown allowance for that month is ₩700,000 and you earned ₩900,000 elsewhere, the employer still owes ₩700,000.

Tax, social insurance and interest

• No advance deductions: the employer cannot withhold income tax before it actually pays, and the same applies to National Pension, health insurance and employment insurance contributions. Courts order the full amount; tax is withheld when the money is paid (Supreme Court 91다38075, May 26, 1992; 2021다279903).
• Tax: back pay received after a reinstatement order is employment income under the Income Tax Act (Ministry of Government Legislation interpretation 10-0075, April 23, 2010).
• Interest: Article 37 of the Labor Standards Act sets 20% a year on money due when a worker leaves (Article 36) and, since October 23, 2025, on regular wages under Article 43. A 2021 interpretation (법제처-21-0020) found that money ordered instead of reinstatement is not "money due on leaving" under Article 36. Whether the 20% rate covers back pay is not settled. The general statutory rates are 5% a year (Civil Act) or 6% for debts from commercial activity (Commercial Act). If a court orders payment, 12% a year runs from the day after the complaint was served.

Time limits

Wage claims expire after 3 years (Article 49). Taking part in the administrative lawsuit over a remedy order counts as a claim in court and interrupts this period (Supreme Court 2011다20034). A claim confirmed by a court judgment expires after 10 years (Civil Act, Article 165(1)).

Checklist

1. Check that the workplace regularly employs 5 or more people.
2. Apply to the regional commission within 3 months of the dismissal.
3. Keep payslips, the contract, work rules, collective agreements and pay-raise records.
4. List every pay item and decide whether it is a wage or an expense refund.
5. Record any income from other work, month by month.
6. If the employer does not comply, tell the commission within 15 days after the deadline.
7. Watch the 3-year limit on wage claims.