[1] The meaning of "cases where the average wage cannot be determined" under Article 5 of the Enforcement Decree of the former Labor Standards Act

[2] In a case where the basic average wage for the calculation of retirement pay is significantly less or more than that for ordinary reasons, the method of calculation

[3] The case holding that, in case where the average wage calculated on the basis of the wage paid during the three-month period before retirement as a result of a worker's temporary retirement for at least three months after his/her detention is considerably less than ordinary wage, the average wage should be calculated on the basis of the wage for the

[1] Article 5 of the former Enforcement Decree of the Labor Standards Act (amended by Presidential Decree No. 15320, Mar. 27, 1997) provides that where the average wage cannot be calculated pursuant to the Labor Standards Act and the Enforcement Decree thereof, it shall be determined by the Minister of Labor. The phrase that the average wage cannot be calculated in this context includes not only the case where it is technically impossible, but also the case where the calculation of the average wage is considerably inappropriate under the relationship of the Labor Standards Act.

[2] The basic principle of calculating the ordinary wages of workers is that the "total amount of wages paid to the worker" is to be included in the calculation of the average wages for the three months prior to the date on which the cause occurs, and where the "total amount of wages paid to the worker" is significantly less or more than that of ordinary wages for special reasons, it shall not be used as the basis of the calculation of the average wages. The retirement allowance system based on the calculation of the average wages aims to guarantee the ordinary life of the worker in accordance with class, salary class, etc. as before. Thus, it is against the basic purpose of the system. Thus, where the retirement benefits are remarkably more or less than that of ordinary cases due to special and incidental circumstances, the average wages, which is the basis of the calculation of the retirement allowances, should be calculated in accordance with Article 5 of the former Enforcement Decree of the Labor Standards Act (amended by Presidential Decree No. 15320, Mar. 27, 1997). Thus, the average wages should be calculated in accordance with the basic principle of the system as well as the method and purpose of the system.

[3] The case holding that, in case where the average wage calculated on the basis of the wage paid during the three-month period before retirement after the worker was detained for three months or more after retirement is considerably less than ordinary wage, the average wage should be calculated on the basis of the wage for the three-month period before retirement

[1] Article 5 (see current Article 4) of the former Enforcement Decree of the Labor Standards Act (amended by Presidential Decree No. 15320 of March 27, 1997) / [2] Articles 19 (see current Article 19), 28 (1) (see current Article 34) of the former Labor Standards Act (amended by Act No. 5309 of March 13, 1997), Article 5 (see current Article 4) of the former Enforcement Decree of the Labor Standards Act (amended by Presidential Decree No. 15320 of March 27, 1997) / [3] Articles 19 (see current Article 19), 28 (1) (see current Article 34), 28 (1) (see current Article 34), and Article 5 (1) (see current Article 4 (2) of the Enforcement Decree of the Labor Standards Act) of the former Act (amended by Presidential Decree No. 15309 of March 13, 1997)

[1] [2] Supreme Court Decision 94Da8631 delivered on February 28, 1995 (Gong1995Sang, 1443) / [2] Supreme Court Decision 90Nu2772 delivered on April 26, 1991 (Gong1991, 1524) Supreme Court Decision 97Nu14798 delivered on November 28, 1997 (Gong1998Sang, 150), Supreme Court Decision 97Da18936 delivered on January 20, 1998 (Gong198Sang, 561), Supreme Court Decision 97Da54727 delivered on April 24, 1998 (Gong198, 1456), Supreme Court en banc Decision 97Da15979 delivered on May 15, 199 (Gong194, 195)

Plaintiff Co., Ltd. (Attorney Lee Jae-soo et al., Counsel for the plaintiff-appellant)

Defendant

Seoul District Court Decision 98Na13968 delivered on September 4, 1998

The judgment of the court below is reversed, and the case is remanded to the Seoul District Court Panel Division.

The grounds of appeal are examined.

Under the former Labor Standards Act (amended by Act No. 5245, Dec. 31, 1996; hereinafter the same), average wage refers to the amount calculated by dividing the total amount of wages paid to the worker during the three-month period immediately before the day on which the cause for calculating the average wage occurred by the total number of days during the said three-month period. However, if the calculated amount is below the ordinary wage, the ordinary wage amount shall be the average wage (Article 19(1) and (2) and Articles 2 through 4 of the Enforcement Decree of the Labor Standards Act (amended by Presidential Decree No. 13997, Oct. 22, 1993; hereinafter the same shall apply) provide for a special provision on average wage, and Article 5 provides that if the average wage cannot be calculated pursuant to the Labor Standards Act and its Enforcement Decree, it shall be calculated by the Minister of Labor. The fact that it is impossible to calculate the average wage in this context shall not be limited only to a technical case where it is impossible to calculate it as it is, but also shall be deemed inappropriate to calculate the average wage under the relationship of the Labor Standards.

In addition, the basic principle of calculating the ordinary wages of workers is that the total amount of wages paid to the worker for the three months prior to the date on which the cause for calculation of the average wages occurred is significantly less or more than that of ordinary wages due to special reasons. The purpose of the retirement allowance system based on which the average wages are calculated is to guarantee the ordinary life of the worker in accordance with class, salary class, etc. as before. Thus, it is against the fundamental purpose of the system that the retirement benefits are remarkably more or less than that of ordinary cases due to special and incidental circumstances.

Therefore, in a case where the average wage, which is the basis of the calculation of a retirement allowance, is remarkably less or more than the ordinary wage due to a special reason, the average wage shall be calculated as prescribed by the Minister of Labor pursuant to Article 5 of the above Enforcement Decree, and there is no such standard or method as yet specified. Thus, in light of the basic principle of the average wage and the purport of the retirement allowance system as seen earlier, the average wage should be calculated by reflecting the ordinary living wage of the worker as a true way (see, e.g., Supreme Court Decisions 90Nu2772, Apr. 26, 1991; 94Da8631, Feb. 28, 1995; 97Nu14798, Nov. 28, 1997; 97Da18936, Nov. 20, 198; 97Da54727, Apr. 24, 1998; 9Da575, May 15, 1995).

However, according to the records, on July 1, 1992, the defendant joined the plaintiff company and worked as the director of the Dong Dong Dong office on August 28, 1995, and was detained for marriage ice and was treated as paid leave from September 23 of the same year, and thereafter retired on February 15, 1996. The plaintiff company calculated average wages of 5,064,717 based on the defendant's wages paid for the three months before his leave of absence, and calculated the remaining amount after deducting the amount of taxes and provisional seizure from 16,460,30 won for the period of 39 months before his/her leave of absence. According to the above provision, the plaintiff company calculated the average amount of 10 to 100 won for the period of 10 months before his/her leave of absence and the average amount of 10 to 30 months for the period of 3 months before his/her leave of absence, the plaintiff company calculated the amount of 10 to 10 months for the preceding month's retirement benefits.

As above, the Defendant’s period of leave of absence is more than three months before retirement and there is no wage paid during that period, and thus, the Defendant’s average wage should be calculated as the average wage pursuant to Article 19(2) of the Labor Standards Act. Accordingly, the Defendant’s ordinary wage, as the head of an insurance company’s place of business, is about 1.5 million won per month, which is calculated excluding efficiency wage, because most of the wages are composed of performance-based benefits as the head of an insurance company’s place of business, is about 1.5 million won per month. This is not only less than 1/3 of the average wage prior to the retirement, but also contrary to the purport of the Plaintiff company’s provision regarding the retirement allowance that allows the Defendant to include efficiency wage as the basis for calculating the retirement allowance. Considering that the Defendant’s average wage (monthly average wage) and retirement allowance calculated on the basis of the Defendant’s monthly average wage paid for three months prior to the retirement, which are considerably less than the average wage paid by the Defendant for three months prior to the retirement, it does not clearly violate the purport of the retirement system.

Furthermore, with respect to the method of calculating average wages, the average wage as the basis for calculating the average wage is the basic principle that reflects the actual living wage of the worker in principle. This is the amount equivalent to the average wage that can be calculated if there were no special circumstances such as long-term temporary retirement. In light of the above purport of the Labor Standards Act which provides that the defendant's wage status, the provision of the plaintiff company's retirement allowance, and the period immediately before the worker's retirement is the most well-being the ordinary living wage, it is reasonable to calculate the average wage on the basis of the wage during the three months immediately before the retirement (see, e.g., Supreme Court Decisions 90Nu2772, Apr. 26, 191; 94Da8631, Feb. 28, 1995; 97Nu14798, Nov. 28, 1997).

Nevertheless, the court below calculated the average wage as zero won on the basis of the wage paid during the period of leave for three months before the defendant's retirement, i.e., the average wage, and as a result, calculated the retirement allowance based on the ordinary wage during the above period immediately on the ground that it is clear that the average wage is less than the ordinary wage, shall have affected the conclusion of the judgment in conflict with the above Supreme Court precedents as to the calculation method of the average wage

The appeal on this point is with merit.

Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below. It is so decided as per Disposition by the assent of all participating Justices.

Justices Song Jin-hun (Presiding Justice)