Korea Federation of SMEs expresses "Concerns over Labor-Management Conflicts" regarding Supreme Court's 'Ordinary Wage Ruling'

The Korea Federation of Small and Medium Business (Kbiz) expressed its position on the Supreme Court's ruling on ordinary wages on the 19th, stating, "We respect the judiciary's decision but express our regret." Earlier, the Supreme Court en banc ruled that 'conditional bonuses' must also be included in ordinary wages. This changed the previous Supreme Court precedent.

In a statement released that day, Kbiz said, "Recently, small and medium-sized enterprises and small business owners have faced worsening business conditions due to sustained high interest rates, high inflation, and prolonged domestic demand stagnation," adding, "This ruling may increase additional cost burdens on SMEs, escalate labor-management conflicts, and potentially lead to employment reductions."

Kim Ki-moon, Chairman of the Korea Federation of SMEs. Photo by Jo Yong-jun

However, it also noted, "It is fortunate that retroactive application was not enforced to prevent confusion." It further added, "This ruling should serve as an opportunity for labor and management to work together to transition from a seniority-based wage system to a 'job performance-centered' wage system."

The Supreme Court en banc ruled in the appeal trial of wage claims filed by Hyundai Motor and Hanwha Life Insurance employees or retirees against their companies that conditional bonuses should also be included in ordinary wages. This overturned the previous Supreme Court precedent (December 19, 2013), which regarded 'fixity' as a conceptual indicator of ordinary wages.

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