Supreme Court: "Seoul Facilities Corporation's Self-Evaluation Bonus Not Part of Ordinary Wages"

Yonhap News Agency

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Former and current employees of the Seoul Facilities Corporation have lost their final appeal in a lawsuit seeking to have the self-evaluation bonus included in their ordinary wages for the purpose of recalculating statutory allowances.

The Supreme Court's First Division (Presiding Justice Shin Sookhee) on April 16 upheld the lower court's ruling in favor of the defendant in the wage claim lawsuit filed by 2,163 former and current employees against the Seoul Facilities Corporation.

The central issue in this case was whether the self-evaluation bonus met the legal requirement of "fixedness" to be considered part of ordinary wages. Fixedness means that an allowance must be paid unconditionally if the employee provides the prescribed labor, regardless of performance or other conditions. The plaintiffs argued that because the corporation had paid 75% or 100% of the monthly salary in advance each year during the first half, that amount constituted a fixed wage, as a minimum payment was guaranteed.

However, the courts in both the first and second trials found that the self-evaluation bonus did not possess fixedness. Since the payment rate for the bonus is determined each year based on the Ministry of the Interior and Safety's budget guidelines and the results of the Seoul Mayor's management evaluation, it was not considered guaranteed. The courts ruled that the advance payment was merely for administrative convenience in accordance with budget guidelines, and could not be viewed as an advance to guarantee a minimum payment rate. Additionally, the possibility of payment being restricted due to corruption or management diagnosis results under the budget guidelines was cited as another reason for denying fixedness.

The Supreme Court also found no legal error in the lower court's reasoning and dismissed the plaintiffs' appeal. The Supreme Court stated, "While it may not have been appropriate for the lower court to assume fixedness as a conceptual indicator of ordinary wages when judging whether the self-evaluation bonus constituted ordinary wages, it is difficult to conclude that a minimum guaranteed payment existed at the time the plaintiffs provided their labor, and therefore, the lower court's decision to exclude the bonus from ordinary wages is ultimately justified."

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