On December 18, 2013, the Supreme Court rendered en banc decisions in lawsuits involving ordinary wages, which were the most anticipated cases in the labor management relations. A summary of the key points of such decisions are as follows.

  1. Provision of Specific Standards to Determine Applicability of Ordinary Wages

As a concept for calculating overtime/nighttime/holiday work allowances, ordinary wages refer to the assessment of the value of labor which workers ordinarily provide at a certain period with regularity/uniformity/stability.

Regular bonuses that are regularly provided in return for labor during a certain period at intervals over more than one month (i.e., bonuses that are not provided every month) constitute ordinary wages, but wages that are provided to incumbent workers at a certain time regardless of whether such workers provide labor do not constitute ordinary wages.

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  1. Provision of Standards for Recognizing Effectiveness of Labor-Management Agreement and Application of the Principle of Good Faith

While the Supreme Court recognized a precedent case holding that a labor-management agreement which excludes allowances from ordinary wages when such allowances should have been included in ordinary wages is null and void since it violates the Labor Standards Act, the Supreme Court held that, if a request for legal allowances significantly violates the principle of good faith in light of justice and fairness, such request should not be permitted. The standard the Supreme Court set forth for determining whether a request violates the principle of good faith is set forth below.

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  1. Organization of Wage Items That Constitute Ordinary Wages

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Based on the Supreme Court en bane decisions, parties to pending lawsuits involving ordinary wages would need to adopt new strategies and, labor and management will have to consider such decision when determining future wages and engaging in discussions. The labor Team at Yoon & Yang LLC is prepared to provide superior legal services based on our extensive experience and knowledge of cases involving ordinary wages. For any questions regarding the above, please contact the attorneys below.