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Newsletter | April 2015, Issue 1
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Labor & Employment
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The Hyundai Motor Group’s win in its ordinary wage case
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On January 16, 2015, the Seoul Central District Court rendered a decision denying a back pay claim brought by the employees of Hyundai Motor Group, dismissing the employees’ argument that “regular bonuses” should be classified as ordinary wages for purposes of assessing statutory allowances.
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In dismissing the employee’s argument, the Seoul Central District Court noted that under Hyundai Motor's company rules, "regular bonus" is paid to an employee only if such employee has worked for 15 days or more in a given period for paying regular bonus (two months) . The Seoul Central District Court found that this meant the payment of regular bonus was not "fixed," which is one of the elements of ordinary wage, and on such basis, ruled that regular bonus is not ordinary wage.
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The Court further reasoned that even if the minimum days of work is not expressly stated as a condition for payment in the collective bargaining agreement, the fact that it is stipulated in the company compensation rules which supplement the collective bargaining agreement, and the fact that the company customarily has been paying regular bonus in accordance with the company’s compensation rules must be taken into account.
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The Seoul Central District Court decision followed the Supreme Court’s decision in the Kabul Autotech cases, where the Supreme Court had ruled that imposing a condition of working a certain number of days as a condition for payment negates the "fixed" element.
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The Seoul Central District Court decision is expected to have a significant impact in the automobile and related industries.
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