The Supreme Court ruled that an allowance a company pays regularly and uniformly twice a year as an employee's length of service increases also constitutes ordinary wages. This follows the full bench's precedent change at the end of last year that "a bonus paid only to those still employed, or with certain conditions attached, still constitutes ordinary wages if it is paid regularly and uniformly."
The Supreme Court's First Division (Presiding Justice Ma Yong-ju) said on Oct. 19 that it had quashed and remanded a lower court ruling in a wage lawsuit filed by workers of the Korea Health and Medical Workers' Union Chonnam National University Hospital Branch against Chonnam National University Hospital, ordering a rehearing of the appellate decision that "the long-service allowance paid by the hospital to workers does not constitute ordinary wages."
Chonnam National University Hospital reportedly excluded the long-service allowance and regular bonuses from ordinary wages, which serve as the basis for calculating overtime, night, and holiday pay, from 2010 to 2015. The long-service allowance adds a set amount according to length of service every Jan. and Jul. for employees who have worked more than one year. The hospital also paid employees 50% of their salary as a regular bonus every Mar. and Oct.
Chonnam National University Hospital excluded the long-service allowance from ordinary wages in line with the Supreme Court's then-prevailing view that "a bonus with conditions such as being currently employed or a certain number of working days does not constitute ordinary wages." Both the long-service allowance and the regular bonus were paid only to workers who were still employed.
Following Supreme Court precedent, the first-instance court in 2016 and the appellate court in 2020 both held that the long-service allowance and the regular bonus were not ordinary wages.
However, the Supreme Court quashed the decision and sent the case back to the Gwangju High Court for a new hearing, saying last December's full bench precedent change must be reflected. The court said, "The condition that a worker must still be employed is merely a condition that would be satisfied by a worker who fully provides the contracted labor," adding, "The mere fact that such a condition is attached does not mean the long-service allowance and the like are not ordinary wages."