Labor Minister: "Extended Retirement Age Wage Peak System Is Legal... Different from Supreme Court Ruling" [Wage Peak System Aftermath]

Minister Lee Jeong-sik: "Most Impije are extended retirement type... Illegal rulings are for fixed retirement type"
Reiterates importance of Impije... "Can achieve a 'win-win' result for labor and management"
Also hints at wage system reform... "Necessary to respond to labor market 'megatrends'"

Minister of Employment and Labor Lee Jeong-sik speaking
(Seoul=Yonhap News) Shin Hyun-woo, trainee reporter = On the morning of the 3rd, Minister of Employment and Labor Lee Jeong-sik visited Crown Confectionery in Yongsan-gu, Seoul, and is speaking at a field visit meeting at a workplace operating the wage peak system. 2022.6.3
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[Asia Economy Sejong=Reporter Lee Jun-hyung] Lee Jeong-sik, Minister of Employment and Labor, stated that the Supreme Court's ruling declaring the "wage peak system invalid" does not apply to most wage peak systems. This is because the wage peak system deemed invalid by the Supreme Court fundamentally differs from the "retirement age extension type wage peak system" adopted by the majority of companies.

Minister Lee made these remarks on the 3rd during a visit to the headquarters of Crown Confectionery in Seoul. He said, "Most wage peak systems are 'retirement age extension type' wage peak systems introduced against the backdrop of mandatory retirement at age 60," adding, "They are essentially different from the wage peak system addressed in the recent (Supreme Court) precedent." He further stated, "As the Supreme Court also clarified, the 'retirement age maintenance type' wage peak system is not always illegal," and added, "Whether it is illegal or not must be examined specifically according to the criteria presented by the Supreme Court."

The retirement age extension type wage peak system is a wage peak system introduced as part of extending the retirement age. In contrast, the wage peak system introduced without changing the retirement age corresponds to the retirement age maintenance type. The wage peak system recently ruled invalid by the Supreme Court is the retirement age maintenance type, which maintains the retirement age as is while reducing the wages of workers above a certain age until retirement. The Ministry of Employment and Labor regards the wage peak systems introduced after the 2013 amendment to the Elderly Employment Act, which mandated retirement at age 60, as retirement age extension types.

However, the Ministry of Employment and Labor also holds the position that the retirement age extension type wage peak system can be illegal in certain cases. A ministry official explained, "According to precedent, the retirement age extension type wage peak system is generally not considered age discrimination," but added, "However, if it is nominally a wage peak system but excessively reduces the wages of workers of a specific age for purposes such as cost reduction or employee dismissal, it can exceptionally be considered age discrimination."

Minister Lee also reiterated the importance of the wage peak system. This is interpreted as considering the growing voices demanding the abolition of the wage peak system following the recent Supreme Court ruling. He said, "Supporting older workers to work longer is a very important task," adding, "Companies can continue to utilize highly skilled and excellent personnel, and older workers can work at the same workplace, resulting in a 'win-win' outcome for labor and management."

He also hinted at a reform of the wage system. Minister Lee stated, "In response to labor market megatrends such as the increase in the elderly population, it is necessary to prepare a wage system where older and younger workers, as well as workers and employers, can coexist," and added, "The government will also do its best to expand the infrastructure necessary for wage system reform and support the establishment of a cooperative labor-management culture."

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