Holiday bonuses are not wages: Supreme Court

The Supreme Court ruled that holiday bonuses should not be counted as regular wages.

Holiday bonuses are given during Korea’s two largest holidays - the Lunar New Year and Chuseok.

On Sunday, the Supreme Court upheld a lower court ruling that holiday bonuses could not be counted as part of regular wages because they are irregular.

The court defined regular wages as payments made to workers in exchange for their contribution during a given period. It said that in order to be considered regular wages, payments have to be made regularly, uniformly and consistently.

The court said that the only condition in paying holiday bonuses is that a worker has to be employed when that bonus is given, and that it therefore lacks consistency.

The Supreme Court upheld the decision, pointing out that the Korea Infrastructure Safety Corporation (KISC) does not give holiday bonuses to workers who retire, but it does include regular bonuses given four times a year in retirement packages.

In 2012, three KISC employees sued the state-owned company, demanding repayment of the money excluded from their regular wage between September 2009 and August 2012. They argued that the company owed them holiday bonuses, as well as meals and transportation, that should have been included in their regular wages.

The KISC counts basic wages, regularly paid bonuses and physical exercise expenses as regular wages.

Yet holiday bonuses and meal and transportation payments are earmarked under different categories, including as welfare payments.

The inclusion of the holiday bonuses and the other payments that were claimed by the employees would have raised the retirement payments that the workers received.

The first ruling in July 2013 was in favor of the employees, arguing that the company should count bonuses that are paid every year at the Lunar New Year and Chuseok as regular wages.

The court ordered the company to pay the plaintiffs between 28 million won ($25,000) and 35 million won.

The high court overturned the ruling regarding holiday bonuses, but upheld the decision that the other expenses count as regular wages, ordering the company to pay between 7 million won and 7.94 million won.

The Supreme Court, while accepting the high court’s ruling that holiday bonuses should not be included in regular wages, also told the high court to reassess the amount that the company has to pay on the grounds that the calculation should be based on the labor standard regulation rather than the company’s own wage regulations. The ruling by the high court on regular wages was based on the national labor standard regulation, but it used the company’s own regulations when determining the amount owed for food and transport.

BY LEE SU-JEONG, LEE HO-JEONG [lee.hojeong@joongang.co.kr]