JIPYONG LLC

[Case No. Supreme Court decision 2017da4638, 4645, 4652, 4669 dated April 9, 2020]

The Supreme Court held that the bonus set to be paid only to the currently employed employees shall not be included in the ordinary wage.

The defendant was a company in a chemical manufacturing business, and the plaintiffs were former and current employees working at the defendant factory. The defendant paid the bonus as provided under the collective agreement (the “Bonus”) to the employees. The plaintiffs claimed for the unpaid wage on the presumption that the Bonus should be included in the ordinary wage. In response, the defendant argued that the Bonus should not be included in the ordinary wage because it was paid only to the employees currently engaged as of the date of the payment.

The lower court’s decision pointed out that the defendant’s collective agreement and the rules of employment did not state that the Bonus should be paid only to those currently engaged as of the date of payment. However, the court held that, because (i) the defendant never paid the Bonus in proportion to the number of days of employment and (ii) the provisions on wage stated the intent to pay the Bonus only for those who were employed as of the date of payment, the conditions of payment of the Bonus included the condition of “being currently employed as of the day of payment” by express or implied consent or by customary practice. Therefore, the court held that the Bonus was not of a fixed nature and should not be included in the ordinary wage.

The Supreme Court agreed with this decision and dismissed the appeal.