Only the guaranteed minimum portion of Korea Hydro & Nuclear Power's (KHNP) basic performance pay that is paid regardless of work performance qualifies as ordinary wage, the Supreme Court has ruled. The court also found that KHNP's basic bonus is included in ordinary wage.
According to legal circles on Tuesday, the Supreme Court's First Division, with Justice Shin Sook-hee as the presiding judge, recently overturned in part a lower court ruling that had partially sided with 99 retired KHNP workers in a wage lawsuit, and remanded the case to the Seoul High Court.
The retired KHNP workers filed the lawsuit in August 2013, claiming it was unjust that the company paid various allowances based on ordinary wages that did not reflect basic performance pay and basic bonuses. They argued that the company should recalculate the allowances based on ordinary wages including the basic bonus and pay the difference from what they had already received. KHNP countered that the basic performance pay and basic bonus could not be considered ordinary wages because they were not paid on a fixed, uniform, and regular basis.
The lower courts ruled that the entire basic performance pay was included in ordinary wage. The first-instance court explained, "It is paid regularly to all workers regardless of work performance, meeting all the requirements of uniformity, fixedness, and regularity."
However, the Supreme Court found that the entire basic performance pay could not be conclusively categorized as ordinary wage. It ruled that only the "minimum payment portion" of KHNP's basic performance pay could be considered ordinary wage. The reason was that while the compensation regulations stipulate the payment rate of basic performance pay at 200% of the base wage in principle, they also specify that it may be paid differentially by business site or individual. In fact, KHNP paid basic performance pay ranging from 133% to 267% of the base wage for 2012. The Supreme Court stated, "The lower court judged the minimum payment portion of the basic performance pay to be the entire 200% of the base wage. After remand, the lower court must conduct additional review on the scope of the minimum payment portion and recalculate the ordinary wage and the accepted amount of statutory allowances based on it."
However, the Supreme Court upheld the lower court's ruling that the basic bonus is included in ordinary wage. The court explained, "A basic bonus, which is a fixed amount linked to base pay and paid in installments at regular intervals, qualifies as ordinary wage paid regularly and uniformly as compensation for prescribed work, despite the employment condition requirement."
