In cases where the performance rating of a public institution is continuously and regularly paid, and there is an obligation to pay to an employer due to the determination of the payment terms and conditions, whether it is included in the wage that forms the basis for calculating the average wage (affirmative), and whether it should be deemed as the wage paid in consideration of labor even if it is not paid in consideration of the performance rating of a public institution since 2012 because the minimum payment rate and the minimum payment rate of the performance rating of a public institution are not determined (affirmative)

Article 48(10) of the Act on the Management of Public Institutions provides that “The Minister of Strategy and Finance may take follow-up measures, such as making proposals and requests for personnel or budgetary measures based on the results of evaluation, and determining the payment rate of incentives, after deliberation and resolution by the Steering Committee,” the Minister of Strategy and Finance shall determine matters necessary for the procedures for the management performance evaluation, the measures according to the results of the management performance evaluation, and the composition and operation of the management evaluation team.” Article 27(4) of the Enforcement Decree of the Act on the Management of Public Institutions provides that “The Minister of Strategy and Finance may take follow-up measures, such as making proposals and requests for personnel or budgetary measures based on the results of evaluation, and determining the payment rate of incentives.” The Ministry of Strategy and Finance’s budget compilation guidelines for public corporations and quasi-governmental institutions annually announced by the Ministry of Strategy and Finance includes details of the budget compilation of the results of management evaluation of public institutions, and the guidelines for budget execution of public institutions and quasi-governmental institutions include detailed methods for calculating and paying the results of management evaluation in accordance with the standards finalized

Wages, which are the basis for the calculation of average wages, refer to money and valuables paid by an employer to an employee as remuneration for work, which are continuously and regularly paid to an employee and have an obligation to pay to an employer through collective agreements, rules of employment, wage regulations, labor contracts, labor practices, etc. If the public institution’s management evaluation performance rating is continuously and regularly paid, and if an employer is obligated to pay since the payment terms and conditions are determined, it shall be deemed to be included in wages which are the basis

On the other hand, since 2012, the minimum payment rate and the minimum payment amount of the performance rating of public institutions have not been determined, it may not be paid the performance evaluation performance rating according to the results of the management performance evaluation of the affiliated institution. Even if there is a failure to receive the performance evaluation rating, it shall be deemed as the wage paid as the remuneration for labor in light of the importance of the performance rating in total benefits, the actual status of payment and the purpose

Article 2(1)5 and 6 of the Labor Standards Act, Article 48(1) and (10) of the Act on the Management of Public Institutions, Article 27(4) of the Enforcement Decree of the Act on the Management of Public Institutions

Supreme Court Decision 2015Du36157 Decided October 12, 2018 (Gong2018Ha, 2117)

Plaintiff 1 and three others (Attorneys Kim Young-deok et al., Counsel for the plaintiff-appellant)

Korea Airports Corporation (Law Firm Chungcheong, Attorneys Choi Byung-mun et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2017Na2053447 decided April 17, 2018

All appeals are dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. The key issue of the instant case is whether the Plaintiffs, who are the workers of public institutions, are included in the wages that serve as the basis for the calculation of average wages.

Article 48(10) of the Act on the Management of Public Institutions provides that “The Minister of Strategy and Finance may take follow-up measures, such as making proposals and requests for personnel or budgetary measures based on the results of evaluation, and determining the payment rate of incentives, after deliberation and resolution by the Steering Committee,” the Minister of Strategy and Finance shall determine matters necessary for the procedures for the management performance evaluation, the measures according to the results of the management performance evaluation, and the composition and operation of the management evaluation team.” Article 27(4) of the Enforcement Decree of the Act on the Management of Public Institutions provides that “The Minister of Strategy and Finance may take follow-up measures, such as making proposals and requests for personnel or budgetary measures based on the results of evaluation, and determining the payment rate of incentives.” The Ministry of Strategy and Finance’s budget compilation guidelines for public corporations and quasi-governmental institutions annually announced by the Ministry of Strategy and Finance includes details of the budget compilation of the results of management evaluation of public institutions, and the guidelines for budget execution of public institutions and quasi-governmental institutions include detailed methods for calculating and paying the results of management evaluation in accordance with the standards finalized

Wages, which are the basis for the calculation of average wages, refer to money and valuables paid by an employer to an employee as remuneration for work, which are continuously and regularly paid to an employee and have an obligation to pay to an employer through collective agreements, rules of employment, wage rules, employment contracts, labor contracts, labor practices, etc. A public institution’s management evaluation performance rating is continuously and regularly paid, and if an employer is obligated to pay since the payment terms and conditions have been determined, it shall be deemed as included in wages which are the basis for the calculation of average wages, given that they have the nature of wages paid as remuneration for work (see, e.g., Supreme Court Decision 201

On the other hand, since 2012, the minimum payment rate and the minimum payment amount of the performance rating of public institutions have not been determined, it may be difficult to receive the performance evaluation performance rating according to the results of the management performance evaluation of the affiliated institution. Even if there is a failure to receive the performance evaluation rating, it shall be deemed as the wage paid as the remuneration for labor in light of the importance of the performance rating in the entire benefits, the actual status of the payment, and

2. The lower court determined that the Plaintiffs’ management evaluation performance rating is included in the wages that serve as the basis for calculating the average wage, and should be calculated as the average wage calculated accordingly. For that reason, the lower court determined that the Defendant’s employees’ annual salary rules and enforcement rules of the employee’s annual salary rules set the criteria, methods, and timing for payment under the premise that the Defendant has the obligation to pay management evaluation performance rating, and the Defendant paid the employees under its jurisdiction without exception to the management evaluation performance rating

Examining in light of the aforementioned legal principles, the lower court did not err by misapprehending the legal doctrine on average wages, contrary to what is alleged in the grounds of appeal.

3. The Defendant’s appeal is dismissed as it is without merit. 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)