Cleaning workers affiliated with Gangnam District Office won a final lawsuit demanding unpaid wages, claiming that “bonuses,” which include final allowances, long-service allowances, fitness training expenses, and holiday vacation pay, also qualify as ordinary wages. This ruling reaffirmed the Supreme Court plenary session decision from last December, which stated that “the fact that a condition requires an employee to be in service at a specific point in time to receive certain wages does not negate the ordinary wage nature of those wages.”
The Supreme Court Civil Division 1 (Presiding Justice No Tae-ak) dismissed the appeal by Gangnam District Office and confirmed the lower court’s partial ruling in favor of plaintiffs, including former and current sanitation workers from the Gangnam District Cleaning Administration Department, on February 20 in the wage lawsuit (2021Da216957) filed against Gangnam District Office.
[Facts]
Seoul City paid sanitation workers fixed allowances every month according to collective agreements with labor unions and wage agreements for sanitation workers, including △commuting allowance of 150,000 KRW △safety education allowance of 180,000 KRW. Additionally, welfare points were provided annually (1,800 points uniformly allocated to all employees, with an additional 10 points per year of service, each point worth 1,000 KRW).
Plaintiffs, including Mr. A, filed a lawsuit in 2017, arguing that commuting allowance, safety education allowance, and welfare points should be considered ordinary wages, but Gangnam District Office excluded them when calculating ordinary wages and based overtime pay and night work pay on that calculation.
Gangnam District Office countered that commuting and safety education allowances were paid for the welfare of union members and thus should not be considered ordinary wages. They also argued that welfare points were provided solely for welfare purposes, had to be used within a predetermined validity period, and had restricted usage, so they did not qualify as ordinary wages.
[First and Appellate Court Decisions]
The first trial partially accepted the claims of Mr. A and others. The court ruled that “commuting allowance, safety education allowance, and welfare points qualify as ordinary wages, so the statutory allowances payable to Mr. A and others are the statutory allowance amounts recalculated based on ordinary wages minus amounts already paid.”
The first trial stated, “Since Gangnam District Office has uniformly paid commuting and safety education allowances to workers, these are not discretionary or benevolent payments but wages paid as compensation for prescribed work.” Regarding welfare points, the court said, “Because they are uniformly paid to all workers, they qualify as fixed, uniform, and regularly paid ordinary wages.” The court added that the fact welfare points are not provided in cash form or have limited usage does not negate their wage nature, and since workers generally have disposal rights over welfare points, they can be regarded as definitively paid to workers.
In the appellate court, plaintiffs argued that not only commuting and safety education allowances but also bonuses?including final allowances, long-service allowances, fitness training expenses, and holiday vacation pay?should be considered ordinary wages. Gangnam District Office argued that bonuses lacked the “fixedness” required for ordinary wages because they were paid differentially based on work performance (attendance rate).
However, the appellate court accepted the plaintiffs’ claims and ruled that bonuses, as well as commuting and safety education allowances, qualify as ordinary wages. The court held that “the agreement to add attendance rate criteria to bonuses is no different from an agreement to exclude bonuses from ordinary wages and is an unreasonable collective agreement that disadvantages working conditions,” thus declaring such an agreement invalid.
[Supreme Court Decision]
The Supreme Court dismissed the appeal and upheld the appellate court’s ruling. It cited the plenary session decision from December 19 last year, stating, “The mere fact that a condition requires an employee to be in service at a specific point in time to receive certain wages does not negate the nature of those wages as compensation for prescribed work or as ordinary wages.”
Although the Supreme Court found the appellate court’s judgment that the attendance rate condition was invalid to be inappropriate, it agreed that the conclusion recognizing bonuses as ordinary wages was justified.
The court stated, “The bonuses in this case, which are fixed amounts determined in relation to the base salary and paid periodically in installments, qualify as ordinary wages paid regularly and uniformly as compensation for prescribed work, even if attendance rate conditions or employment conditions requiring a minimum number of working days are attached. Since these bonuses still qualify as ordinary wages regardless of the attendance rate condition, it cannot be concluded that the agreement adding the attendance rate condition is effectively an agreement to exclude these bonuses from ordinary wages. Therefore, the lower court’s reasoning alone is insufficient to declare such an agreement invalid.”
Reporter Hong Yoon-ji, Legal Newspaper
※This article is based on content supplied by Law Times.
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