Seoul Metro Loses Again in Severance Pay Lawsuit

Seoul Central District Court / Photo by Moon Honam munonam@

[Asia Economy Reporter Seongpil Cho] Seoul Metro lost another lawsuit regarding severance pay, resulting in the company having to return severance payments worth over 100 million won to hundreds of employees, including those who have already resigned.

According to the legal community on the 13th, Judge Park Yeon-ju of Civil Division 209 at the Seoul Central District Court ruled partially in favor of 218 plaintiffs, including Mr. Ko, who filed a severance pay claim lawsuit against Seoul Metro. The court ordered the defendant to pay a total of approximately 45 million won to 106 plaintiffs including Mr. Ko, along with interest calculated at an annual rate of 12% until the full amount is paid.

Seoul Metro had been paying position allowance ranging from 200,000 to 1,100,000 won depending on rank. However, when the wage peak system was introduced in 2016, the company did not include the position allowance in the average wage during the interim settlement of severance pay for the affected employees. Consequently, Mr. Ko and others filed a lawsuit against Seoul Transportation Corporation, established through the merger with Seoul Metro, claiming that the position allowance should be included in the average wage.

The corporation argued that the position allowance was unrelated to labor provision and there was no obligation to pay it, asserting that it did not qualify as wages for calculating average wages under the Labor Standards Act. However, the court judged that since the corporation had paid the position allowance monthly according to predetermined terms with the employees, it should be considered wages. Regarding the 112 plaintiffs whose claims were dismissed, the court stated that since they did not receive the position allowance separately, there was no additional severance pay to be paid.

Previously, the corporation lost a severance pay lawsuit filed by 173 current and former employees who had not received their full severance pay last year. At that time, the court ordered the corporation to pay a total of 194 million won to the employees.

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