The Busan District Court (Civil Division 6) recently recognized the validity of an adverse change to the rules of employment (transitioning from a seniority-based system to a performance-based system for employee compensation) even though a formal “group meeting” was not held.
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1. |
Key Issues and Court Ruling |
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(1) |
Procedural Defect: The transition to a performance-based system is void because the university failed to hold a group meeting where all faculty members could gather together and discuss the transition. |
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(2) |
Incorrect Salary Calculation: The university had already erred in calculating the salary of its faculty members under the previous seniority-based system, and the errors affected the university’s calculation under the new performance-based system. Thus, even if this transition were deemed valid, the salary must be re-calculated under the new performance-based system. |
Regarding item 2, the Court ruled in favor of the faculty members on the grounds that the university had previously made errors in calculating the salary under the seniority-based system, and such salary information was used as the basis for calculating salaries under the new performance-based system. The Court ordered payment of the difference in wage due to this error.
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Practical Implications |
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(1) |
Since 2010, many private universities have transitioned to performance-based systems. This is the first case where the court explicitly affirmed the validity of such a transition amidst numerous pending lawsuits. |
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(2) |
This ruling clarified that “group consent” for adverse changes to the rules of employment does not strictly require a physical meeting of all employees. Rather, individual consent is legally valid if (i) there are practical difficulties in holding a single large-scale meeting, (ii) there is no interference or intervention by the employer; and (iii) employees are provided with sufficient opportunities to review and discuss the changes. |
Employers who find it difficult to gather all employees in a single large-scale meeting can still ensure the validity of changes made to the rules of employment by providing ample time for discussion and showing that consent was obtained from employees freely without coercion.
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