The National Human Rights Commission of Korea found that implementing a wage-peak system that cuts pay by a set percentage solely because a worker reaches a certain age, while requiring the same work as before, amounts to unreasonable discrimination.
◇ Retirement age 58→60, same duties but pay cut by up to 40% over five years
According to the commission on the 30th, petitioners A and B worked at Company C and were subject to the wage-peak system. Company B's retirement age was 60, but it was lowered to 58 in 2011 and raised back to 60 in 2014, when the wage-peak system was introduced.
Company C currently applies the wage-peak system for five years to workers aged 56 and older. In the first year under the system, they receive 90% of their previous wages; in the second year, 81%; in the third year, 73%; in the fourth year, 66%; and in the fifth year, 60%.
Workers subject to the wage-peak system perform the same duties as before. Company C explained, "The intensity of work and roles are the same regardless of age."
The commission determined that "by implementing the wage-peak system, Company C reduced wages retroactively (for a total of five years) beyond the two-year extended retirement period without appropriate measures, which disadvantaged the petitioners in employment on the basis of age without a reasonable cause."
It recommended that Company C pay the petitioners the reduced wages and improve the system to operate the wage-peak scheme in a reasonable manner.
◇ Retirement age unchanged, but pay cut by up to 10% with no workload relief or reassignment
Another set of petitioners, D and F, worked at Foundation E and retired at the mandatory age on Dec. 31, 2024. The wage-peak system applied for three years from Jan. 2022 to Dec. 2024.
Foundation E ran a system that cut 10% of previous wages in the first year of application, 15% in the second year, and 25% in the third year. However, for D and F, because there was no staff to take over duties if managers were removed from their posts, the cuts were limited to 3% in the first year, 7% in the second year, and 10% in the third year.
An investigation by the commission found that Foundation E's retirement age had been 60 since before the petitioners joined. Because this falls under a "retirement-age maintenance wage-peak system," the foundation must reduce duties accordingly or adjust positions if it pays reduced wages.
Regarding Foundation E, the commission said it found discrimination, stating that it "treated the petitioners unfairly in employment on the basis of age without a reasonable cause." It recommended that Foundation E pay the petitioners the reduced wages and prepare reasonable improvement measures for the wage-peak system, such as reducing workloads and shortening working hours.