Supreme Court: "Performance Bonuses Based on Work Results Are Not Included in Ordinary Wages"

[Asia Economy Reporter Seongpil Cho] The Supreme Court has ruled that performance bonuses paid based on the previous year's work performance are not included in the ordinary wages.

The Supreme Court's Third Division (Presiding Justice Min Yusook) announced on the 26th that it upheld the appellate court's ruling partially in favor of 3,564 employees of KEPCO KPS in a wage claim lawsuit against the company. As a result of their final victory in this lawsuit, KEPCO KPS employees will receive a wage difference amounting to 9.3 billion KRW.

The court stated, "Although the appellate court's ruling was somewhat insufficient in not clearly specifying which year's wages the internal performance bonuses pertain to, there was no legal error affecting the judgment in the appellate court's determination that internal performance bonuses do not constitute ordinary wages."

The KEPCO KPS employees filed a lawsuit worth 48.7 billion KRW in 2014, claiming that the company excluded overseas work allowances, technical allowances, and working environment allowances from ordinary wages when calculating various allowances and retirement benefits, and demanded payment of the difference between recalculated wages and the actual payments.

Ordinary wages refer to the regular, uniform, and fixed wages paid by a company to workers as compensation for prescribed work. The court examined whether each allowance should be included in the ordinary wages based on this standard.

The first trial court ruled that among the allowances mentioned by the employees, internal performance bonuses are not ordinary wages, but working environment allowances and overseas allowances are considered ordinary wages. Accordingly, the court ordered the company to pay the employees the difference of 9.2 billion KRW between the recalculated allowances and retirement benefits and the actual payments.

The appellate court accepted the employees' claim that since some allowances were included in ordinary wages, the interim settlement portion of retirement benefits included in the retirement pension should also be adjusted, revising the company's payment amount to 9.3 billion KRW.

This content was produced with the assistance of AI translation services.