[1] Method of determining whether wages paid to workers fall short of the minimum wage under the Minimum Wage Act, and meaning of the ordinary wage / Whether the ordinary wage of workers to whom the minimum wage applies is the lowest amount (negative)

[2] In a case where Eul et al., an employee of Gap limited liability company, sought against Gap company the payment of the difference between overtime work allowances and night work allowances calculated on the basis of the minimum wage amount as provided by the Minimum Wage Act and the allowances actually paid, the case holding that the court below erred by misapprehending the legal principles, which held that if ordinary wages are less than the minimum wage amount, overtime work allowances and night work allowances should be calculated on the basis of the

[1] Article 6(1) of the Minimum Wage Act provides that “an employer shall pay workers to whom the minimum wage is applied at least the minimum wage amount” (Article 6(4) of the same Act provides that “wages, other than those paid periodically once or more a month, as determined by the Minister of Employment and Labor (Article 1)”, “other wages, other than those paid for contractual working hours or prescribed working days, which are determined by the Minister of Employment and Labor (Article 2)” and “other wages determined by the Minister of Employment and Labor as inappropriate to be included in the minimum wage amount” shall not be included in the wages under paragraph (1). Accordingly, the Enforcement Rule of the Minimum Wage Act provides that the scope of wages that are not included in the minimum wage amount shall be determined by comparing the amount of wages or wages (Article 6(4) of the Minimum Wage Act and Article 2 [Attachment 1] of the Enforcement Rule of the same Act with the amount of regular wage paid at night (Article 2(4) of the Minimum Wage Act, which means the minimum wage subject to increase or decrease of work hours and the minimum wage amount per year.”

As such, the comparative wage for the application of the minimum wage or the minimum wage is a separate concept different from the ordinary wage, and thus, the employer’s ordinary wage itself cannot be deemed as immediately lower the minimum wage amount by deeming that the employer should pay the worker to whom the minimum wage is applied. However, in the case where the total comparable wage is less than the minimum wage amount, the total comparable wage amount should be increased to the minimum wage amount. Accordingly, the individual wage included in the comparative wage can be newly calculated on the basis of the wage corresponding to the ordinary wage among the increased individual wage.

[2] In a case where Eul et al., an employee of the limited company Gap filed a claim against Gap company for the payment of the difference between the overtime work allowance and night work allowance calculated on the basis of the hourly minimum wage under the Minimum Wage Act and the allowance actually paid, the case holding that the court below erred by misapprehending the legal principles that the court below should calculate overtime work allowance and night work allowance based on the hourly minimum wage under the Minimum Wage Act, on the ground that the total comparative wage for applying the minimum wage under the Minimum Wage Act is included in the comparative wage, since the basic wage, continuous service allowance, basic wage among weekly paid holiday allowances, and continuous service allowances, which are included in the comparative wage, is considered to constitute ordinary wage, as the total comparative wage for applying the minimum wage under the Minimum Wage Act increases to the minimum wage amount, the court below erred by misapprehending the legal principles.

[1] Article 6 (1), (3), and (4) of the Minimum Wage Act; Article 2 [Attachment 1] of the Enforcement Rule of the Minimum Wage Act; Article 2 (1) 5, 6, (2), 26, 56, and 60 of the Labor Standards Act; Article 6 (1) of the Enforcement Decree of the Labor Standards Act / [2] Article 6 (1), (3), and (4) of the Minimum Wage Act; Article 2 [Attachment 1] of the Enforcement Rule of the Minimum Wage Act; Articles 2 (1) 5 and 56 of the Labor Standards Act; Article 6 (1) of the Enforcement Decree of the Labor Standards Act

[1] Supreme Court en banc Decision 2006Da64245 Decided January 11, 2007 (Gong2007Sang, 289) Supreme Court en banc Decision 2012Da89399 Decided December 18, 2013 (Gong2014Sang, 236)

Plaintiff 1 and fourteen others (Attorney Park Jae-hoon, Counsel for the plaintiff-appellant)

Han-si Co., Ltd. (Law Firm Yang Hun-Hun, Attorneys Kim Il-young et al., Counsel for the plaintiff-appellant)

Busan High Court (Chowon) Decision 2013Na2422 decided June 26, 2014

The part of the judgment below against the defendant is reversed, and that part of the case is remanded to Busan High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Regarding ground of appeal No. 2

In light of the circumstances in its holding, the lower court determined that the instant claim seeking payment of wages, etc. based on the instant collective agreement and wage agreement cannot be deemed to be contrary to the good faith principle or unfair because it constitutes an abuse of rights, and solely based on the circumstance alleged by the Defendant, it is difficult to view that the instant collective agreement was rescinded due to the failure to conclude a new collective agreement, even if there was a significant change in circumstances unexpected at the time of concluding the instant collective agreement, even though

In light of the relevant legal principles and records, the above judgment of the court below is just, and contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to the validity of the

2. Regarding ground of appeal No. 3

The lower court determined that the instant overtime work allowance and night work allowance are wages other than those paid for contractual work hours and are not included in the comparative wage for applying the minimum wage, as those paid on the premise of night work or work for a certain period of more than a certain number of hours.

In light of the relevant legal principles and records, the above determination by the court below is just, and contrary to the allegations in the grounds of appeal, there were no errors by misapprehending the legal principles on the calculation of comparative wages for the application of

3. Regarding ground of appeal No. 4

A. The part concerning overtime allowance and night work allowance

(1) Article 6(1) of the Minimum Wage Act provides that “an employer shall pay workers to whom the minimum wage is applied at least the minimum wage.” Article 6(4) of the same Act provides that “wages, other than those that are regularly paid once or more a month, as determined by the Minister of Employment and Labor (No. 1),” “wages, other than those that are paid for contractual work hours or contractual work days, as determined by the Minister of Employment and Labor (No. 2),” and “other wages determined by the Minister of Employment and Labor as inappropriate to be included in the minimum wage amount” shall not be included in the wages prescribed in paragraph (1). Accordingly, the Enforcement Rule of the Minimum Wage Act provides that the scope of wages that are not included in the minimum wage amount [Attachment 1] prescribed in Article 2 [Attachment 1] and Article 6(4) of the Minimum Wage Act and Article 2 [Attachment 1] of the Enforcement Rule of the same Act (see Supreme Court en banc Decision 201Da620168, Apr. 1, 2007).

As such, the comparative wage for the application of the minimum wage or the minimum wage is a separate concept different from the ordinary wage, and thus, the employer’s ordinary wage itself cannot be deemed as immediately lower the minimum wage amount by deeming that the employer should pay the worker to whom the minimum wage is applied. However, in the case where the total comparable wage is less than the minimum wage amount, the total comparable wage amount should be increased to the minimum wage amount. Accordingly, the individual wage included in the comparative wage can be newly calculated on the basis of the wage corresponding to the ordinary wage among the increased individual wage.

(2) In light of the following circumstances, the lower court determined that, with respect to overtime work allowances and night work allowances for the rest of the Plaintiffs other than Plaintiffs 4, 6, and 8 (hereinafter “Bab Plaintiffs”), the amount calculated by multiplying the payment rate stipulated in the instant wage agreement by the minimum wage rate stipulated in the Minimum Wage Act, rather than the urgency stipulated in the instant wage agreement, should be paid.

(A) Under the instant wage agreement, the Defendant agreed to pay overtime work allowances and night work allowances calculated by multiplying the remaining Plaintiffs by the rate of payment determined at the level of pay based on the number of working days.

(B) The portion determined as wages under the labor contract between the workers and the employer subject to the minimum wage under the Minimum Wage Act shall be null and void, and the invalidated portion shall be deemed to have been paid the same wages as the minimum wage amount under the Minimum Wage Act.

(C) Since the sum of the basic pay, weekly leave pay, and continuous service pay, which are included in the comparative wage for the application of the minimum wage, among the wage details that the Defendant paid to the remaining plaintiffs, falls short of the minimum wage amount, the Defendant is obligated to pay the difference to the remaining plaintiffs in accordance

(3) However, we cannot accept the above judgment of the court below as it is.

In light of the above legal principles and records, the remaining plaintiffs sought the payment of the difference between overtime work allowance and night work allowance calculated on the basis of the minimum wage amount as determined by the Minimum Wage Act and the above allowances actually paid. The court below appears to have included the comparative wage in the calculation of the minimum wage. The court below should have ordered the payment of the difference between the basic wage, continuous work allowance, basic wage among weekly paid holiday allowances, and continuous work allowance, which are included in the comparative wage under the Minimum Wage Act, based on the premise that the total comparative wage for applying the minimum wage amount increases as the minimum wage amount. Thus, the court below should have ordered the payment of the difference between the basic wage amount, continuous work allowance, and night work allowance calculated on the basis of the newly calculated ordinary wage and the above allowances actually paid.

(4) Nevertheless, the lower court determined that, on the premise that, in calculating overtime allowance and night work allowance paid in addition to 50/100 of ordinary wage, if the ordinary wage is less than the minimum wage amount, the instant overtime allowance and night work allowance should be calculated on the basis of the minimum wage amount under the Minimum Wage Act, instead of using the aforementioned method. In so doing, the lower court erred by misapprehending the legal doctrine on the relationship between the minimum wage and ordinary wage, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds of appeal on this point is with merit.

B. The bonus portion

(1) The lower court acknowledged the fact that the Plaintiff’s wage subject to the Minimum Wage Act is stipulated to pay 200% of the average wage on a quarterly basis to union members who worked for more than one year under Article 7 of the instant wage agreement concluded between the Labor Relations Division and the Defendant, and on the grounds indicated in its reasoning, determined that the “average wage” as the basis for calculating the above bonus should also be increased as the minimum wage amount in cases where the wage paid to the Plaintiffs’ wage subject to the instant wage agreement falls short of the minimum wage amount

(2) However, it is difficult to accept the above determination by the court below for the following reasons.

(A) According to the record, the instant wage agreement provides that bonus calculated on the basis of the “average wage” as above, but does not separately define the meaning of the “average wage”. As such, the relevant language and text, motive and circumstances of the wage agreement, practices, purposes to be achieved by the labor union and the employer under the wage agreement and the genuine intent thereof, etc., shall be reasonably interpreted in accordance with the empirical rules so that it can conform to the ideology of social justice and equity (see, e.g., Supreme Court Decision 2014Da82026, Oct. 27, 2016).

(B) Meanwhile, if the “average Wage” under the instant wage agreement refers to the statutory “average Wage” as stipulated under the Labor Standards Act, the total amount shall be increased by applying the Minimum Wage Act to each of the wage items constituting the “average Wage” as seen earlier. However, if the mean the average amount based on only the wage paid for a certain period by an agreement between the parties, barring any special circumstance, the total amount shall not be changed regardless of whether the Minimum Wage Act is applied to each of the individual wage items

(C) Therefore, the lower court should have determined the legitimacy of the Plaintiffs’ claim for unpaid bonuses after examining whether the meaning of “average wage”, which serves as the basis for calculating bonuses under the instant wage agreement, is a statutory “average wage” or the total amount of specific wages paid for a certain period agreed upon under the instant wage agreement, refers to the average amount calculated by dividing the total number of days during the calculation period.

(3) Nevertheless, the lower court determined that “average wage” for the calculation of the instant bonus ought to be increased as the minimum wage amount, without conducting a proper deliberation as to this. In so doing, the lower court erred by misapprehending the legal doctrine on the interpretation of the meaning of “average wage”, thereby failing to exhaust all necessary deliberations.

4. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the part against the defendant among the judgment below is reversed, and the case is remanded to the court below for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench

Justices Lee Ki-taik (Presiding Justice)