Supreme Court: "Companies Facing Financial Difficulties May Reduce Ordinary Wage Allowances and Severance Pay"

The Supreme Court ruled that if a company faces the risk of managerial difficulties, it is not obligated to pay allowances and severance pay recalculated based on the ordinary wage standard.

The Supreme Court's Third Division announced on the 13th that it upheld the lower court's ruling, which partially ruled against 13 Ssangyong Motor workers who filed a lawsuit against the company regarding ordinary wage standards.

The Ssangyong Motor workers filed a lawsuit against the company demanding payment of 512 million won in allowances and severance pay not received based on the ordinary wage standard from March 2010 to November 2013. Both the first and second trials acknowledged that they did not receive allowances and severance pay based on the ordinary wage standard.

However, the courts found that if the allowances and severance pay were paid as claimed by the workers, the company would fall into managerial difficulties, which would violate the principle of good faith. The principle of good faith means that parties involved in a legal relationship must exercise their rights while considering the interests of the other party.

The basis for this was that Ssangyong Motor posted significant losses every year until 2015 and faced existential threats in 2009. It was also considered that including bonuses in the ordinary wage, as claimed by the workers, would impose additional burdens on the company amounting to hundreds of billions of won.

The court ruled that the company must pay 9.3 million won to the workers, ranging from 170,000 to 4.7 million won per person. The Supreme Court dismissed the appeal, stating that the lower court's ruling did not misinterpret the law regarding the principle of good faith.

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