[1] Whether it is permissible to enter into an inclusive wage system in which a certain amount of working hours is paid as statutory allowances regardless of the number of working hours, even though it is not difficult to calculate working hours, such as surveillance and control work (negative)

[2] In a case where a fixed amount of statutory allowances agreed to be paid by the inclusive wage system falls short of the statutory allowances calculated under the Labor Standards Act even though there is no circumstance such as difficulty in calculating working hours, the validity of the inclusive wage agreement on the part falling short of the statutory allowances (= invalid) and whether the employer is obliged to pay the deficient amount of statutory allowances

[1] If it is not difficult to calculate working hours, such as surveillance and intermittent work, the principle of wage payment according to the working hours under the Labor Standards Act shall apply unless there are special circumstances to deem that the provision on working hours under the Labor Standards Act cannot be applied as it is. Thus, even in such a case, entering into a wage contract with the method of paying a certain amount as a statutory allowance regardless of the number of working hours is not permissible so long as it violates the regulation on working hours under the Labor Standards Act.

[2] Article 22 of the former Labor Standards Act (wholly amended by Act No. 8372 of Apr. 11, 2007) (Article 15 of the current Labor Standards Act) provides that a labor contract that sets a working condition that does not meet the standard under the Labor Standards Act shall be null and void only in its part and that the invalidated part of the labor contract shall be based on the standard under the Labor Standards Act (recientness of the Labor Standards Act). Therefore, in a case where a comprehensive wage system is agreed in the absence of circumstances such as difficulty in calculating working hours, inasmuch as a fixed amount of the wage included in the comprehensive wage system is less than the statutory allowance calculated in accordance with the standard under the Labor Standards Act, the part of a wage payment contract under the comprehensive wage system shall be deemed null and void disadvantageous to the employee, and the employer is obliged to pay the worker the deficient amount of statutory allowance

[1] Article 24 of the former Labor Standards Act (amended by Act No. 8293, Jan. 26, 2007; see current Article 17); Article 22 (see current Article 15), Article 49 (see current Article 50), Article 50 (see current Article 51), Article 51 (see current Article 52), Article 52 (see current Article 53), Article 55 (see current Article 56), Article 58 (see current Article 59), Article 67 (see current Article 69); Article 25 (see current Article 50 of the former Enforcement Decree of the Labor Standards Act; see current Article 205 (see current Article 57 of the former Enforcement Decree of the Labor Standards Act); Article 50 (see current Article 57 of the former Enforcement Decree of the Labor Standards Act; Article 205 of the former Enforcement Decree of the Labor Standards Act (wholly amended by Presidential Decree No. 20142, Apr. 11, 2007); Article 2019 (see current Article 27) of the former Labor Standards Act

Plaintiff 1 and four others

Korea

Seoul Central District Court Decision 2007Na2861 Decided December 13, 2007

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

The grounds of appeal are examined.

Article 24 of the Labor Standards Act (amended by Act No. 8293, Jan. 26, 2007) provides that “An employer shall specify wages, working hours, and other working conditions for workers at the time of concluding a labor contract. In this case, matters concerning the items, calculation method, and payment method of wages shall be specified in the manner prescribed by Presidential Decree.” Article 55 of the same Act (amended by Act No. 8372, Apr. 11, 2007) provides that an employer shall, under Articles 52, 58, and the proviso of Article 67 of the same Act (amended by Act No. 8293, Apr. 11, 2007), calculates allowances for overtime and night work exceeding standard working hours as prescribed in Articles 49, 50, 51, and the main sentence of Article 67 of the same Act (amended by Act No. 8293, Apr. 26, 200).

Such principle of the method of payment of wages is premised on the calculation of the number of working hours. There may be cases where it is acknowledged that it is difficult to calculate working hours, such as surveillance and surveillance work. In such a case, without calculating basic wages between an employer and an employee, the amount included in statutory allowances is determined as monthly pay or daily pay, or the basic wage is calculated in advance without distinguishing legal allowances, and even if a wage payment contract is concluded based on the so-called comprehensive wage system with the contents that a certain amount is to be paid regardless of the number of working hours, without distinguishing legal allowances, as statutory allowances, it shall be valid if it is otherwise deemed that there is no disadvantage to an employee and it is justifiable in light of various circumstances (see Supreme Court Decisions 95Da4056, Apr. 25, 1997; 9Da2895, Jul. 22, 199; 9Da281, May 28, 199; 208Da6365, Feb. 16, 2005).

However, if it is not difficult to calculate working hours as above, the principle of wage payment in accordance with the working hours under the Labor Standards Act should be applied as seen earlier, barring special circumstances to deem that the provision on working hours under the Labor Standards Act cannot be applied as it is. Thus, even in such a case, entering into a wage payment contract in the form of a comprehensive wage system that pays a certain amount of working hours as a statutory allowance regardless of the number of working hours is impermissible so long as it violates the regulations on

Meanwhile, Article 22 of the former Labor Standards Act (wholly amended by Act No. 8372 of Apr. 11, 2007) (Article 15 of the current Act) provides that a labor contract that sets the working conditions that do not meet the standard under the Labor Standards Act shall be null and void only in its part, and that the invalidated part shall be based on the standard under the Labor Standards Act (divities of the Labor Standards Act). Therefore, in a case where a comprehensive wage system is agreed on even though there are no circumstances such as difficulty in calculating working hours, if the statutory allowances of the fixed amount included in the comprehensive wage system are less than the statutory allowances calculated in accordance with the standard under the Labor Standards Act, the part of wage payment contract under the comprehensive wage system shall be deemed null and void disadvantageous to the employee, and the employer is obligated to pay the worker a statutory allowance short of the standard under the Labor Standards

In Supreme Court Decisions 95Da4056 delivered on April 25, 1997 and 2002Da16958 delivered on June 14, 2002, which are cited in the grounds of appeal, the court below held that the court below erred in the misapprehension of legal principles as to the inclusive wage system that ordered the payment of the difference between allowances and allowances under the provisions of the Labor Standards Act recognized by the court below, since various allowances that the plaintiff received as comprehensive wage include all the statutory allowances under the Labor Standards Act. Thus, as stated in its holding, the court below erred in ordering the payment of the difference between allowances and allowances under the provisions of the Labor Standards Act, which were paid as comprehensive wage by recognizing specific overtime hours of the plaintiffs as stated in its holding. However, each of the above Supreme Court decisions are all cases where it is difficult to calculate working hours in light of the form of work or the nature of work. Accordingly, the above legal principles stated above are that "in cases where it is difficult to calculate working hours, claiming the difference between legal allowances under the Labor Standards Act cannot be accepted." Furthermore, it is inappropriate to include the aforementioned case as a comprehensive wage contract regardless of working hours.

The lower court acknowledged the fact that the wage system of the Plaintiffs’ wage system in this case is a blanket wage system that requires the payment of a certain amount of overtime work allowance in light of the Plaintiffs’ form of work and content, etc., and after May 1, 2004, the payment of “service fee” was suspended, the Plaintiffs’ payment of overtime work allowance was considerably less than that of overtime work allowance calculated in accordance with the Labor Standards Act, and determined that the comprehensive wage agreement on the part below was null and void, and that the Defendant is obligated to pay the part of the wage to the Plaintiffs.

In light of the above legal principles and records, the above judgment of the court below is just and acceptable.

As alleged in the grounds of appeal, the court below did not err by making a decision contrary to the Supreme Court precedents regarding the calculation of statutory allowances under the comprehensive wage system.

Therefore, the appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Yang Chang-soo (Presiding Justice)