Useful Info

Under the traditional seniority-based wage system, regular annual promotions occurred every year, resulting in automatic wage increases regardless of performance. However, the annual salary system is a performance-oriented wage payment method that determines the total annual salary based on evaluations and contracts of individual contributions, such as achievements, performance, abilities, etc., from the previous year on a one-year unit basis. In our country, the implementation methods of the annual salary system vary by company, and since the Labor Standards Act is based on the hourly wage system and regulates separate payments for statutory allowances such as annual leave or allowances, retirement pay, etc., these statutory allowances are operated separately from the annual salary as wages outside of it. However, while not completely excluding existing seniority or ability factors, it evaluates the performance of individual workers on a one-year unit basis, manages wages based on the total amount level, and simplifies the complex wage composition ratios of the existing system by absorbing them into the base annual salary. In this way, since our country's labor laws legally mandate payments for annual/monthly leave allowances, retirement pay, etc., even under the annual salary system, these statutory allowances must be paid separately. Therefore, the annual salary total can be subdivided into base pay, regular wages, bonuses, etc., with payment dates set to be paid in installments. Even in this case, overtime work exceeding the standard hours, annual/monthly leave, and retirement pay must be provided separately. However, for corporate directors and similar positions, a pure annual salary system can be introduced without such distinctions.