Ministry of Employment: "Not All Wage Peak Systems Are Invalid... We Will Minimize On-Site Confusion"

Supreme Court Rules 'Wage Peak System Invalid'... Ministry of Employment Official Statement Released

Lee Jeong-sik, Minister of Employment and Labor, giving a greeting
(Seoul=Yonhap News) Photo by Ryu Hyo-rim = On the afternoon of the 24th, Lee Jeong-sik, the newly appointed Minister of Employment and Labor, visited the Korea Federation of Small and Medium Business in Yeouido, Seoul, and held a meeting with Kim Ki-moon, president of the Korea Federation of Small and Medium Business, and other officials. 2022.5.24
ryousanta@yna.co.kr
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[Asia Economy Sejong=Reporter Lee Junhyung] The labor authorities have stated that the Supreme Court ruling that put a brake on the 'wage peak system' does not apply to all wage peak systems. This comes just one day after the Supreme Court ruled that a wage peak system that cuts wages without reasonable grounds constitutes age discrimination.

On the 27th, the Ministry of Employment and Labor issued a statement regarding the Supreme Court ruling, stating this position. The ministry said, "(The Supreme Court) judged that the wage peak system maintaining the retirement age is invalid if implemented solely based on age without reasonable grounds or any compensatory measures," adding, "It is significant in that it presented criteria for judging the validity of the wage peak system."

Previously, the Supreme Court ruled that a wage peak system that reduces wages solely based on age without reasonable grounds is invalid. The interpretation is that discriminating against workers' wages based solely on age violates the Labor Standards Act. The Supreme Court also presented standards that even if labor and management agree on the wage peak system, they must consider ▲ the validity of the purpose of introducing the wage peak system ▲ the degree of disadvantage suffered by the affected workers ▲ whether compensatory measures are introduced and their appropriateness.

Supreme Court: "Wage Peak System Without Rational Reason Is Invalid"
(Seoul=Yonhap News) Reporter Im Heon-jeong = The Supreme Court has ruled that the "wage peak system," which reduces employees' wages solely based on age without a rational reason, violates the Act on Employment of Older Persons and is therefore invalid.
The Supreme Court's First Division (Presiding Justice No Tae-ak) on the 26th upheld the lower court's ruling partially in favor of plaintiff A, a retiree, in the wage claim lawsuit filed against a research institute where he had worked.
The court stated, "Considering the content and legislative intent of Article 4-4, Paragraph 1 of the Act on Employment of Older Persons, this provision should be regarded as a mandatory rule prohibiting age discrimination," and added, "It is difficult to see any difference in the target levels or job content assigned to the plaintiff before and after the wage peak system in this case."
The photo shows an advertisement for the Older Worker Continued Employment Incentive on the exterior monitor of the Seoul Employment and Labor Office in Jung-gu, Seoul, on May 26, 2022.
Photo by kane@yna.co.kr
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However, the Ministry of Employment and Labor emphasized that the Supreme Court ruling does not uniformly apply to all wage peak systems. The ministry stated, "As the Supreme Court also clarified, not all wage peak systems maintaining the retirement age are invalid," and "the validity of wage peak systems implemented by other companies may be judged differently depending on whether the criteria are met."

The ministry plans to take follow-up measures to minimize confusion among companies implementing the wage peak system. The ministry said, "We plan to actively support to prevent confusion on the ground by analyzing related precedents and collecting opinions from experts and labor and management."

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