[1] In a case where a business performance evaluation performance bonus is continuously and regularly paid, and a payment condition is determined and thus an employer is obligated to pay, whether it is included in the wage constituting the basis for calculating the average wage (affirmative), and whether it is not deemed that it is not paid as the remuneration for work solely on the ground that the payment or payment rate may vary according to the business performance evaluation result (negative)

[2] In a case where: (a) A died of an occupational accident while serving as a member of the Korea Appraisal Board; (b) the Korea Workers’ Compensation and Welfare Service paid the bereaved family’s benefits and funeral expenses to B; and (c) B requested the Korea Workers’ Compensation and Welfare Service to correct the average wage and pay the difference in the insurance benefits, the case affirming the judgment below holding that the remaining performance-based bonus paid to A based on the performance-based payment rate set by the Government and the internal management evaluation manual shall be included in the total wage as the basis for calculating the average wage

[1] Wages, which are the basis of the calculation of average wages, are money and valuables paid by an employer to an employee as remuneration for work, and are paid continuously and regularly to an employee and are crossed out by collective agreements, rules of employment, wage regulations, employment contracts, and labor practices.

If the management evaluation performance rating is continuously and regularly paid, and if an employer is obligated to pay due to the determination of the payment terms and conditions, it shall be deemed to be included in the wage which serves as the basis for calculating the average wage, given that it has the nature of the wage paid as remuneration for labor. Even if the payment or payment rate may vary according to the results of the management performance evaluation, it cannot be deemed that the management evaluation performance rating

[2] The case affirming the judgment below that the payment rate applied to the Korea Appraisal Board according to the result of the management performance evaluation under the former Framework Act on the Management of Government-Funded Institutions (repealed Article 2.2 of the Addenda to the Act on the Management of Public Institutions (amended by Act No. 8258 of Jan. 19, 2007) was determined after the implementation of the Act on the Management of Public Institutions, and the Korea Appraisal Board determined the payment rate applied to the Korea Appraisal Board after the implementation of the Act on the Management of Public Institutions, on the ground that the payment rate of the annual performance-based performance-based performance-based performance-based performance-based bonus was determined based on the payment rate set by the Government and the calculation method set by the internal management evaluation manual, and the Korea Appraisal Board paid the remaining performance-based bonus to its employees in accordance with the payment rate of the remuneration regulations and the calculation method set by the internal management evaluation manual, in light of the fact that the Korea Appraisal Board calculated the average wage including both the performance-based bonus paid when Gap paid after the death of the occupational accident.

[1] Article 2 (1) 6 of the Labor Standards Act / [2] Article 11 (1) of the former Framework Act on the Management of Government-Funded Institutions (repealed by Article 2 (2) of the Addenda to the Act on the Management of Public Institutions (Act No. 8258 of Jan. 19, 2007) (see current Article 48 (1) of the Act on the Management of Public Institutions), Article 48 (1) of the Act on the Management of Public Institutions, Article 5 (2) of the Industrial Accident Compensation Insurance Act, Article 2 (1) 6

[1] Supreme Court Decision 96Nu15084 Decided May 28, 1997 (Gong1997Ha, 1893), Supreme Court Decision 97Da56235 Decided February 9, 199 (Gong199Sang, 451), Supreme Court Decision 2001Da53950 Decided October 23, 2001 (Gong2001Ha, 2529), Supreme Court Decision 2012Da48077 Decided April 11, 2013

Plaintiff (Law Firm Persons, Attorneys Park Sung-min et al., Counsel for the plaintiff-appellant)

Korea Labor Welfare Corporation

Seoul High Court Decision 2014Nu62908 decided December 19, 2014

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Based on the Act on the Management of Public Institutions (hereinafter “Public Institutions Operation Act”), public corporations or quasi-governmental institutions pay piece rates (hereinafter “management evaluation performance rates”) to employees according to the results of management performance evaluation conducted by the Minister of Strategy and Finance. The key issue of the instant case is whether management evaluation performance ratings constitute wages that serve as the basis for the calculation of average wages.

Wages, which are the basis for calculating average wages, are money and valuables paid by an employer to an employee as remuneration for work, which are paid continuously and regularly to an employee and whose payment obligation is crossed out by collective agreements, rules of employment, wage rules, employment contracts, labor contracts, labor practices, etc. (see Supreme Court Decision 2001Da53950, Oct. 23, 2001, etc.).

If the management evaluation performance rating is continuously and regularly paid, and if an employer is obligated to pay due to the determination of the payment terms and conditions, it shall be deemed to be included in the wage which serves as the basis for calculating the average wage, given that it has the nature of the wage paid as remuneration for labor. Even if the payment or payment rate may vary according to the results of the management performance evaluation, it cannot be deemed that the management evaluation performance rating

2. According to the reasoning of the lower judgment and the record, the following facts are revealed.

A. On February 5, 2007, the Nonparty, who was employed by the Plaintiff, was killed due to occupational accidents on November 8, 2008 while serving as the Korea Appraisal Board (hereinafter “Korea Appraisal Board”).

B. At the time of the Non-Party’s death, Article 32(2) of the Korea Appraisal Board’s Remuneration Regulations provides that “150% of the performance bonus shall be paid on the first business day of February, and the remaining performance bonus shall be paid differently according to the previous year’s performance within 30 days from the date when the result of management evaluation under Article 11 of the Framework Act on the Management of Government-Affiliated Institutions was published.” Article 33(3) of the Remuneration Regulations provides that “Detailed matters such as the subject of and criteria for payment of the remaining performance bonus shall be governed by the internal management evaluation manual under Article 19 of the Regulations on Management Planning and Evaluation.” The Korea Appraisal Board’s internal management evaluation manual (208) specifically determined the subject of the application of the remaining performance bonus, the timing of payment, the method and criteria for payment of the differential payment rate based on the payment rate

C. Article 11(1) of the former Framework Act on the Management of Government-Funded Institutions (repealed by Act No. 8258, Jan. 19, 2007) provides that the head of the competent agency shall evaluate the management performance of government-affiliated institutions meeting certain requirements. Article 48(1) of the Public Institutions Operation Act (amended by the Government Organization Act (amended by Act No. 8852, Feb. 9, 2008) provides that the Minister of Planning and Budget (amended by the Government Organization Act) shall evaluate the management performance of public corporations and quasi-governmental institutions. The Government set the rate of performance rates applied to the Korea Appraisal Board according to the evaluation results of the management performance under the Framework Act on the Management of Public Institutions under the Public Institutions Operation Act after the Korea Appraisal Board enters into force of the Public Institutions Operation Act.

D. The Korea Appraisal Board calculated the remaining performance bonus and paid it to its employees in accordance with the standards and calculation methods set out in the Regulations on Remuneration and the Internal Management Evaluation Manual based on the annual rate of performance determined by the government as above.

E. The Korea Appraisal Board calculated the average wage including both the performance bonus of KRW 2,068,500 on February 1, 2008, and the remaining performance bonus of KRW 2,931,00 on July 16, 2008, based on the remuneration regulations and the internal management evaluation manual determined by the government in 2008, based on the performance-based bonus payment rate set by the government. The Nonparty calculated the average wage including all the performance-based bonuses paid when the Nonparty paid retirement allowances after death.

3. Examining these factual relations in light of the legal principles as seen earlier, the remaining performance bonus of this case paid by the Korea Appraisal Board to the Nonparty by the time of 2008 shall be continuously and regularly paid, and since the subject of payment and payment terms have been determined, the obligation to pay is crossed out to the employer, and thus, the obligation to pay is deemed as having the nature of wage paid as compensation for work. In the same purport, the lower court is justifiable in that the remaining performance bonus of this case is included in the total amount of wage which forms the basis for calculating the average wage. The allegation in the grounds of appeal that the remaining performance bonus of this case

4. The Defendant’s appeal is without merit, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Dong-won (Presiding Justice)