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Supreme court rules ordinary wages to include regular bonuses

Updated: 2013-12-19 (KST)
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The nation's top court has ruled that regular bonuses paid to workers in Korea must now be considered part of ordinary wages.
The Supreme Court ruling made by 13 judges is expected to play an important role in how companies recognize ordinary wages for workers across the country.

The so-called ordinary wage refers to the basic, minimum wage paid to employees, but also acts as a benchmark for calculating certain allowances such as overtime pay and severance packages.
The new guidelines will now incorporate fixed bonuses into the final total of this basic wage, therefore potentially increasing statutory allowances and other benefits.

The court clarified that certain fringe welfare benefits such as holiday bonuses cannot be viewed as part of standard wages, and that workers can retroactively request unpaid allowances dating back the last three years.

Major labor unions have welcomed the ruling, while expressing hope that the court's decision will change the practice of companies asking employees to work long hours and endure low wages.

Korea's business community, however, say they're concerned the ruling will negatively impact the nation's economy due to higher employment costs.
The Korea Federation of Small and Medium Business said the new guidelines will cost smaller firms more than 13.6 billion U.S. dollars in the short term, with even heavier financial burdens down the line.

Meanwhile, the government said it would consult with employers and labor unions to come up with new legislation that would fairly reflect the court's ruling.

Paul Yi, Arirang News


Reporter : paulyi@arirang.co.kr

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