Hello, this is Attorney Choi Jong-ha from Cheongchul Law Firm.
The standard wage serves as the basis for various allowances paid to workers (overtime pay, night work allowance, holiday pay, annual leave pay, etc.) and may also be applied for calculating severance pay. The method of calculating the standard wage has a significant impact on the actual wages of workers.
According to the Labor Standards Act, 'standard wage' is defined in Article 6, Paragraph 1 of the Enforcement Ordinance as "'Standard wage' refers to the amount of hourly wage, daily wage, weekly wage, monthly wage, or contracted wage that is to be paid to workers on the basis of regularity and uniformity for the specified work or total work performed." In other words, if it is a payment made 'regularly' according to a certain period and 'uniformly' without distinction for those who have provided the same work, then it corresponds to the standard wage under the Labor Standards Act.
However, until recently, only payments meeting the criterion of 'fixity' were regarded as standard wages in addition to these legal standards. This means that unless the wage is a payment that is undoubtedly determined to be paid 'fixedly' regardless of any additional conditions at the time of work, it was excluded from the standard wage. This standard was presented in the Supreme Court ruling on December 18, 2013 (Case No. 2012Da89399), which has been the most frequently cited case in establishing the method for calculating the 'standard wage'.
Based on this standard, bonuses with conditions such as 'only paid to employees who are employed on the payment date' or 'only paid to employees who have worked more than a certain date' were excluded from the standard wage due to the lack of 'fixity'. As a result, many employers avoided increasing standard wages by including such conditions on bonuses, and recently, bonuses with conditions became more common than those without employment conditions.
The legal principle that has been maintained for over ten years has been completely replaced by two recent Supreme Court rulings (the Supreme Court ruling of December 19, 2024, Case No. 2020Da247190 and the Supreme Court ruling of December 19, 2024, Case No. 2023Da302838). The Supreme Court pointed out that there is no legal basis for the requirement of 'fixity' established in the ruling of 2012Da89399 and clarified that 'fixity' can no longer be recognized as a criterion for determining standard wage. Consequently, various 'conditional' bonuses (for example, end-of-year bonuses that were uniformly paid to all employees on an 'employment condition' basis) are now included in the calculation criteria for standard wages, and there arises a need to change the calculation of various allowances that must be paid to workers accordingly.
In anticipation of the confusion that the change in this judgment standard may bring, the Supreme Court has stated that this legal principle will fundamentally apply from the time of standard wage calculation after the date of the ruling. However, unlike large companies that have specialized teams including lawyers and labor consultants, smaller companies with insufficient personnel may face significant shocks due to the changes in standards themselves. Considering our legal system, which punishes wage arrears due to ignorance of the law, there may be a need to quickly re-establish formulas and adjust wage systems in accordance with the changed calculation methods.
