Supreme Court: "Must Pay 'Suspension Allowance' for Working at Another Job During Unfair Dismissal"

[Asia Economy Reporter Heo Kyung-jun] The Supreme Court has ruled that while the income earned by a wrongfully dismissed worker from another job during the dismissal period can be deducted from unpaid wages, the employer must still pay the ‘suspension allowance’.

The Supreme Court’s 3rd Division (then presided by Justice Kim Jae-hyung) announced on the 21st that it overturned the lower court’s ruling partially in favor of worker A in a wage lawsuit against service company B and remanded the case to the Suwon District Court.

A, who had been working as a facility manager employed by a service company at a public institution in Gyeonggi Province since 2013, was refused employment succession. In April 2018, the Local Labor Commission accepted A’s relief application and ruled it a ‘wrongful dismissal.’ Later, when B signed a labor contract with A for the period from July 1 to December 31 of that year, A filed a lawsuit demanding payment of unpaid wages for the wrongful dismissal period from January to June 2018 and severance pay for one year of work.

The first and second trials ruled in favor of A, determining that "only the portion of the monthly interim income exceeding the suspension allowance (at least 70% of the average wage) stipulated by the Labor Standards Act should be deducted from the payment amount." B’s claim that income tax withholding and social insurance premiums such as national pension should be deducted from unpaid wages was also rejected.

However, the Supreme Court overturned the second trial’s ruling, stating that the issue of deducting income during unemployment should be reconsidered. While the ‘interim income’ earned by the worker from another job during the wrongful dismissal period can be deducted from the ‘unpaid wage amount,’ the employer must still pay the ‘suspension allowance’ required by the Labor Standards Act.

Nonetheless, the Supreme Court agreed with the second trial’s judgment that B should not deduct income tax withholding and social insurance premiums in advance from the unpaid wages to be paid.

The court stated, "The employer can only collect and deduct income tax withholding and social insurance premiums such as national pension insurance ‘when paying’ the unpaid wages and severance pay for the dismissal period to the worker," adding, "They cannot collect and deduct income tax withholding and social insurance premiums in advance before the payment."

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