Ahead of the collective wage agreement, the normal wage is ‘the same as the dream’… Practitioner response provided by a lawyer

May to June every year is the time when companies prepare for collective wage agreements. Unlike previous wage and collective bargaining where the main issues were extending the retirement age, shortening working hours, and expanding union activities, difficulties between labor and management are expected this year over the normal wage. The reason why ordinary wages emerged as a major topic came from the ruling of the Supreme Court en banc in December last year.

The key issue of the ruling is the abolition of the ‘fixity’ requirement in the standard for determining ordinary wages. The reason why many companies paid attention to this ruling is because, 10 years after the Supreme Court's unanimous decision on ordinary wages in 2013, a decision was made that was completely different from the existing interpretation.

Previously, three requirements were considered when determining ordinary wages: regularity, uniformity, and fixity. The Supreme Court also defined the concept of ordinary wages in decades of rulings as ‘wages paid regularly, uniformly, and fixedly in return for regular work.’ A representative example is the Supreme Court’s unanimous decision in December 2013 (Gabul Autotech case).

However, through this ruling, a new legal principle emerged: “If an employee provides the required work in full, the wages determined to be paid regularly and uniformly in return are equivalent to ordinary wages.” Accordingly, regular bonuses that are ‘paid regularly and uniformly’ are expected to benefit the most. Even if conditions such as length of service are attached to the bonus, it is expected that all workers will meet them.

Accordingly, from a company's perspective, there are three major things to consider. First, it is necessary to check the actual status of permanent wages. As the scope of inclusion in ordinary wages has been greatly expanded, work to simplify the wage structure must be done in parallel. In particular, it is necessary to clearly distinguish between ‘wages in the form of basic wages’ and ‘wages in the nature of performance bonuses’. Wages in the nature of performance bonuses include △family allowances based on the number of dependents, △performance bonuses based on performance, △management bonuses, and △statutory allowances. The standard for distinguishing them is whether or not 'predetermined work' is provided, and performance bonuses, etc. cannot be included in ordinary wages because the amount paid varies depending on performance. Therefore, there is a need to prospectively and comprehensively review the deficiencies in the employment contract.

Second, labor-management relations management must be reexamined. The process of collective wage negotiation takes a long time. Sometimes conflicts arise. Accordingly, although it is somewhat theoretical, it is also possible to hold regular labor-management council meetings and conduct briefing sessions on issues related to normal wages. In addition, one of the solutions is to check and establish a communication window for new agenda items, such as labor-management council meeting records. While corporate executives are deeply troubled to the point where they can't sleep at night over the issue of regular wages, there are many cases in which workers simply take this lightly, thinking that their salary may go up.

Lastly, there is a risk response plan. Theory and reality are different. Even if there is no problem when you try the calculator, complaints may arise in the field. From a company's perspective, minimizing these risks is of utmost importance. If there is a sharp conflict of interest, there is a high possibility that it will lead to a lawsuit. In fact, many companies, including Ssangyong Motors, Samsung Electronics partners, and Industrial Bank of Korea, have experienced legal disputes over ordinary wages. To prevent such a situation, it is necessary to actively utilize the in-house grievance handling system or to mediate step-by-step with the help of external experts such as labor lawyers.
 

Small Business Team

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Normal wage 'same dream' ahead of collective wage agreement... Practitioner response provided by a lawyer (link)