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Newsletter | November 2015, Issue 3
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LABOR & EMPLOYMENT
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The Seoul High Court Rules in Favor of KB AutoTech in Two Ordinary Wage Cases
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Despite the employees’ (Appellants) adjustments to their prior claims (including abandoning some claims), the Seoul High Court recently affirmed the Supreme Court’s en banc decisions for KB AutoTech, Korea’s pioneer automotive climate control system maker, and the standard regarding the principle of good faith. The High Court also confirmed that the principle of “minimum standards” is effective.
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To provide context, below is a summary of the Supreme Court's December 2013 ruling, as recently affirmed by the Seoul High Court:
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Category
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Issue
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Supreme Court’s Decision
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Production Employees
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Whether the Appellants' Lunar New Year and
Chuseok1 holiday bonuses comprise part of their ordinary wage.
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These bonuses do not comprise part of ordinary wage, because they are only given to those employed on the payment dates.
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Thus, they are not fixed payments.
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Office Employees
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Whether the Appellants' regular bonuses comprise part of their ordinary wage.
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Regular bonuses do comprise part of ordinary wage.
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However, Appellants may not claim back wages that arose from the bonuses that should have been (but were not) included in ordinary wage, because this would violate the principle of good faith.
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(1) Production Employees
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In the High Court proceedings, the Appellants changed their argument, and additionally claimed that, separate from the issue of the Lunar New Year and Chuseok holiday bonuses, production employees' regular bonuses should be included as ordinary wage.
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The Appellants broadened their claims, including adding a claim for statutory allowances. They also adjusted and abandoned several prior claims.
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The Appellants then further argued that given the adjustment of their claims, KB AutoTech should not face "serious managerial difficulty" in paying the Appellants’ claims, and that the principle of good faith should not apply.
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In defense of KB AutoTech, Kim & Chang submitted additional analyses and evidentiary documents to successfully convince the High Court to affirm the Supreme Court’s prior ruling that the Appellants' claims related to regular bonuses were in violation of the principle of good faith. Further, we successfully demonstrated to the High Court that KB AutoTech would in fact face "serious managerial difficulty" if ordered to pay the Appellants' claims.
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(2) Office Employees
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In the High Court proceedings, the Appellants demanded payment of additional overtime allowance and payment for unused annual leave.
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However, Kim & Chang, using the “principle of minimum standards,” successfully convinced the High Court that the Appellants are not entitled to additional payment for unused annual leave, since KB AutoTech already pays out more generous allowance for unused annual leave than that required under the Labor Standards Act.
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Further, the High Court affirmed the Supreme Court's en banc decision and standard regarding the principle of good faith related to overtime allowance.
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Back to Main Page
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If you have any questions regarding this article, please contact below:
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For more information, please visit our website:
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