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Not All Wages Ordinary, Seoul Central District Court Finds
Ordinary Wages
Not All Wages Ordinary, Seoul Central District Court Finds
  • By Jack H. Park
  • January 16, 2015, 07:48
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The Seoul Central District Court building.
The Seoul Central District Court building.

 

Today the Seoul Central District Court rendered a judgment denying back pay claims to the employees of Hyundai Motor Group. The Court based their decision on the assertion that regular bonuses fall under ordinary wages for purposes of assessing statutory allowances.

Under Hyundai Motor's company rules, no regular bonus is paid to an employee who works less than 15 days in a given period. In denying the back pay claim, the Seoul Central District Court found that the regular bonus does not fall under the definition of an ordinary wage because the payment is not fixed. Fixedness and regularity are two of the legal properties required for a wage to be defined as an ordinary wage. Since Hyundai's regular bonuses are only paid if an employee satisfies the conditions for payment, i.e., completing a minimum of 15 days of work, they do not count as the legal definition of ordinary wages, according to the court.

The Court reasoned that even if the minimum days of work are not expressly stated as a condition for payment in the collective bargaining agreement, the fact that it is stipulated in the company payment rules, which supplements the collective bargaining agreement, and the fact that the company customarily has been paying regular bonus in accordance with the company payment rules must be taken into account.

The Seoul Central District Court affirmed the Supreme Court ruling, in the Kabul Autotech cases, that imposing a condition of working a certain number of days as a condition for payment negates the fixed element.

The Seoul Central District Court judgment is expected to have a significant impact in the automobile and related industries.