Supreme Court: Even with Bonus Payment Conditions Based on Employment Status, It Should Be Considered 'Regular Wage'

Court: "Bonus for work period must be paid to employees who retired before payment date"

[Asia Economy Reporter Heo Kyung-jun] The Supreme Court has ruled that if a worker resigns before the regular bonus payment date, the bonus must still be paid unless there is clear evidence excluding retirees from the bonus payment, even if there is a regulation stating that bonuses are paid only to those employed as of the payment date.

The Supreme Court's 3rd Division (Presiding Justice Kim Jae-hyung) on the 28th upheld the lower court's ruling in favor of plaintiffs A and others, who worked at a subcontractor and filed a wage lawsuit against company B.

Company B paid bonuses every two months at 100% based on an agreed annual regular wage of 600%. The workers claimed that this money constituted a regular bonus and should be included in the ordinary wage to recalculate various statutory allowances and receive the difference, filing a lawsuit in 2014.

During the trial, the labor union and the company clashed over a collective agreement clause stating that "persons who joined, returned from leave, or took leave before the bonus payment date shall receive a pro-rated bonus," and a work rule stating that "bonuses are paid only to those employed as of the payment date."

The workers argued, "According to the collective agreement, which is a higher norm than the work rules, the pro-rated payment rule should also apply to retirees," and "The 'employment condition' for the regular bonus does not mean that retirees are not paid the regular bonus itself, but that retirees receive a pro-rated amount."

On the other hand, the company countered, "The wording of the work rules clearly means that retirees are not paid the regular bonus itself," and "Regular bonuses paid only to current employees and not to retirees lack uniformity and fixity, so they do not qualify as ordinary wages."

Both the first and second trials sided with the workers. The 'pro-rated payment' clause in the collective agreement literally means payment based on the period worked and cannot be interpreted as excluding those who resigned before the bonus payment date. Accordingly, the bonus was included in the ordinary wage.

The Supreme Court also agreed with the lower courts' judgment. The court stated, "The collective agreement in this case is understood as establishing the intention that the regular bonus is considered wages by mutual recognition of labor and management, and that persons who join, return from leave, or take leave before the bonus payment date receive a pro-rated regular bonus based on the period worked. It does not contain provisions treating resignation differently from leave and excluding retirees."

Furthermore, the court ruled, "'Employment condition' means that the 'full amount' of the regular bonus is paid only to those employed as of the payment date, and it cannot be interpreted as meaning that those who resigned before the payment date are not paid even the portion corresponding to the period already worked."

A Supreme Court official explained, "This ruling interprets the employment condition stipulated in the work rules not as 'completely excluding workers who resigned before the payment date from the regular bonus payment target,' but as 'paying the regular bonus proportionally to workers who resigned before the payment date based on the period already worked,' thereby accepting the lower court's judgment recognizing the regular bonus as part of the ordinary wage."

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