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Labor and Capital | What is Wage? What are the Standards for Determining Wages?
In today's society, where the minimum wage is constantly being adjusted and inflation pressures are rising, wage issues have become a focal point of social discussion. Especially in the post-COVID-19 pandemic period, many workers have faced wage freezes, layoffs, or reduced working hours. In such circumstances, how should wages be calculated? This is often a major point of contention in labor disputes, and if the definition of wages is unclear, it may hinder workers from claiming their rightful benefits. On the other hand, for companies, the growing public concern over workers' rights means that employers must handle wage-related issues more cautiously to avoid public criticism and damage to their brand reputation.
What is Wage?
According to the Labor Standards Act and its related regulations, wages are defined as "the compensation that workers receive for their work," which includes wages, allowances, bonuses paid in cash or kind based on hourly, daily, monthly, or piece-rate calculations, and any other regular payments under any name. In other words, any compensation related to labor in exchange for services, regardless of its name, as long as it is paid regularly, is considered part of the wage.
Elements of Wage Composition
According to the relevant regulations in our country regarding the definition of wages, wages must meet two requirements: first, they must be directly related to the worker's performance or job duties; second, they must be regularly paid. The following will explain these two requirements in detail:
Directly Related to the Worker’s Performance or Job Duties
Wages must be directly related to an individual's work performance or the duties they perform. This means that wages are the compensation workers receive for providing their labor, forming the consideration in the labor contract.
Regular Payments
Wages must be paid on a fixed schedule, whether monthly, weekly, or based on working hours, and all are considered regular payments. This payment structure is designed to ensure the continuity and stability of workers' income, serving as part of their livelihood security.
As for the name of the wage, it often varies based on the company's customary terms, the nature of the occupation, or internal systems. However, this does not limit the court’s ability to make a substantial judgment regarding the content of the compensation.
Common Types of Wages
The scope of wages is quite broad, covering all forms of compensation related to labor, including basic wages, overtime pay, and various allowances. Below are some common types of wages:
Basic Wage
The basic wage is the fixed salary paid regularly. The Ministry of Labor adjusts the minimum wage annually based on factors such as the economic situation, prices, and the employment market. Regardless of whether it is calculated monthly or hourly, there is a minimum compensation limit.
Overtime Pay
Overtime pay is the additional compensation that workers are entitled to receive for extending their working hours or working on holidays. The law sets different payment standards for these situations. If a worker works during specific times, such as late at night, the employer may also be required to provide additional compensation.
Allowances
Allowances are additional compensation paid by companies to cover workers' extra expenses or special needs related to their work. These are usually compensatory in nature and include meal allowances, transportation allowances, and job-related bonuses. Below are some common types of allowances:
| Name | Content | Is it Considered Wage? |
|---|---|---|
| Meal Allowance | Compensation for employees' meal expenses while working, regardless of actual expenditure, typically provided on a fixed monthly basis. | ✓ |
| Transportation Allowance | Compensation for employees' commuting expenses, typically provided in cases of high transportation costs or remote work locations. | ✓ |
| Position Allowance | An additional subsidy provided by the company for employees holding specific positions or taking on extra responsibilities, such as managerial roles or technical levels. | ✓ |
| Hazard Allowance | Additional compensation provided by the company for jobs that involve a certain level of risk or work environments that may impact employees' health. | ✓ |
| Travel Allowance | Expenses covered by the company for employees during business trips, including transportation and accommodation costs. (If a fixed amount is provided monthly as a transportation subsidy, it may be considered a regular payment and classified as wages.) | ✗ |
| Wedding and Funeral Allowance | A subsidy or financial assistance provided by the company to employees for weddings or funerals. | ✗ |
Bonus
A bonus is an additional reward paid by a company to employees for achieving specific goals or outstanding performance. It is often linked to employees' work performance or the company's overall success. Below are some common types of bonuses:
| Name | Content | Is it Considered Wage? |
|---|---|---|
| Performance Bonus | If it is granted on a fixed monthly or quarterly basis based on an employee's work performance or achievement of performance targets, it is considered part of wages. | ✓ |
| Attendance Bonus | A reward granted by the company based on an employee's attendance, directly related to their work performance. It is usually calculated monthly and serves as an incentive. | ✓ |
| Year-End Bonus | A bonus granted by the company at the end of the year based on overall business performance rather than an employee's individual daily work performance. | ✗ |
| Project Bonus | A one-time reward given for outstanding performance in a specific project. | ✗ |
| Festival Bonus | Typically not linked to employee performance, this bonus is given on specific holidays, such as cash or gifts provided by the company during Lunar New Year, Dragon Boat Festival, or Mid-Autumn Festival. | ✗ |
Remember! The contents of the above table are for reference only. Whether it is considered wages depends on the constituent elements mentioned earlier.
Protect the rights and interests of both parties and avoid labor disputes.
After today’s introduction, do you have a deeper understanding of the definition and calculation of wages? Understanding wage definitions and calculation methods not only protects workers' legal rights but also ensures that employers operate legally and compliantly. To avoid wage-related legal disputes, employees should familiarize themselves with their labor contracts and salary calculation methods, while employers must comply with the provisions of the Labor Standards Act, maintaining transparency to ensure that all wage items meet legal requirements. Additionally, establishing a clear wage payment system and records, as well as regularly communicating with employees about salary structures, can help maintain a good labor-management relationship and prevent potential disputes in the future.
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