[Invest&Law] Whether Conditional Regular Bonuses Are Included in Ordinary Wages to Be Ruled by the Full Bench on the 19th

Two Cases Including Hanwha Life Insurance and Hyundai Motor Incident
Judgment Also Delivered on Installation of Facilities for the Disabled

The Supreme Court en banc (full bench) rulings on whether conditional regular bonuses are included in ordinary wages will be announced on the 19th. This is a long-awaited decision that has attracted significant attention from the business community. Depending on the outcome, the ripple effects on corporate burdens are expected to be substantial. On the 9th, the Legal News reported that the announcement of the Supreme Court en banc cases concerning the inclusion of conditional regular bonuses in ordinary wages is imminent.

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The two wage cases scheduled for ruling are: △ the Hanwha Life Insurance case (2020Da247190), which concerns whether regular bonuses paid only to employees employed at a specific point in time qualify as ordinary wages, and △ the Hyundai Motor case (2023Da302838), which deals with whether regular bonuses with a specific payment condition excluding employees who worked less than 15 days during the reference period qualify as ordinary wages. The business community is closely watching how the newly formed Supreme Court under Chief Justice Cho Hee-dae will rule on labor cases.

The Hanwha Life Insurance case involves plaintiffs claiming against Hanwha that regular bonuses with a "condition of employment" qualify as ordinary wages, and they sought the difference in recalculated overtime pay including these bonuses as ordinary wages. The appellate court ruled partially in favor of the plaintiffs, stating that the employment condition was invalid and that the regular bonuses had fixity, thus qualifying as ordinary wages.

The Hyundai Motor case disputes whether regular bonuses with the payment condition of "working at least 15 days" qualify as ordinary wages. The employees filed a lawsuit claiming that the exclusion rule?"excluding those who worked less than 15 days during the reference period"?should be included in ordinary wages, and sought the difference in recalculated extended work pay. The appellate court ruled in favor of Hyundai Motor.

Previously, the 2013 Supreme Court en banc recognized regular bonuses as ordinary wages but ruled that bonuses conditional on employment status were not ordinary wages. The rationale was that allowances not paid because the employee was not employed lacked "fixity" and thus did not qualify as ordinary wages (2012Da89399, 2012Da34643).

However, contrary to the en banc ruling from 11 years ago, recent lower court rulings have increasingly recognized that even if regular bonuses are paid only to employees in service, they should be considered ordinary wages.

Meanwhile, on the same day, the en banc will also rule on △ a case concerning the illegality and state compensation liability for the government's failure to amend the enforcement decree that inadequately regulates the obligation to install convenience facilities for the disabled (2022Da289051), and △ a case regarding the ownership transfer registration lawsuit filed by the state against Lee Woo-young, chairman of Grand Hilton Hotel and a descendant of the pro-Japanese collaborator Lee Hae-seung (2019Da255416). This lawsuit was filed after the Pro-Japanese Property Confiscation Act was amended to remove the phrase "as a merit of the Japan-Korea annexation."

Park Su-yeon, Legal News Reporter

※This article is based on content supplied by Law Times.