The case holding that the requirements for employment as bonus payment under the rules of employment do not apply to piece rates and performance rewards that stipulate the payment conditions, payment timing, etc. according to business performance shall not be deemed bonuses or changes thereof under the rules of employment, which provide that the president of a securities company may determine the amount and payment time at his/her discretion, considering the nature thereof.

The case holding that the conditions of payment according to business performance and the timing of payment are not the same as the bonus under the rules of employment that the president of the securities company voluntarily determines the amount and the timing of payment, or the change of such bonus is not the same as that of the bonus under the rules of employment, and thus the above performance-based bonus and performance-based reward shall not be applied to the above performance-based bonus and performance-based reward, which are to be paid in accordance with the performance-based bonus system introduced to prevent the divulgence of superior professional manpower through liberalization

Articles 18, 42(2), and 96 of the Labor Standards Act

Plaintiff (Attorney Song-ro, Counsel for the plaintiff-appellant)

Han-sung Securities Co., Ltd. (Attorney Choi Jong-soo et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2000Na37809 delivered on April 27, 2001

The judgment below is reversed and the case is remanded to Seoul High Court.

1. Summary of the judgment below

(a) Fact-finding;

(1) The defendant company is a stock company with the purpose of securities transaction and brokerage, and the plaintiff was enrolled in the defendant company on December 1, 1987, and around June 26, 1999, the head of the sales division worked at the central branch of the defendant company and retired from office.

(2) The Defendant Company made payment of bonuses and basic salary according to the annual fixed bonus payment rate with a wage system composed of the original basic pay, regular bonus (800%) and business performance bonus to its members. On the end of the end of the year96, the Defendant Company established a salary system proportional to the business performance of its members in terms of management innovation, established management policies to prevent the leakage of outstanding professional human resources due to liberalization of the establishment of securities company, and introduced the performance-based bonus system from July 1, 1997 with the consent of its members to actively attract outstanding professional human resources. The parts related to store employees are as follows.

(a) Pay consists of monthly basic salary, fixed bonus, 400% per annum, 0% or 400% per annum, piece rate 1 for excess earnings, piece 2 for excess earnings, and piece rate 3 by final settlement.

(B) Each piece rate shall be paid twice every half year after calculating the total amount paid according to the business performance during the half-year period.

(C) In 197, the base profit (in 1997, the bonus) is not paid when the individual profit is less than the base profit [the base profit (the monthly salary + the bonus 800% + the allowance for severance and retirement benefits)]. The base profit (=the base profit 1 + the financial expense + the direct general management expense + the rental expense) is less than the base profit 10%, and the base profit 3 = the base profit (the base profit 2 + the indirect general management expense) is less than 110% of the base profit (the base profit 2 + the indirect general management expense).

(D) The amount of piece rate 2 (excess profit) shall be the remainder obtained by subtracting fixed pay and piece rate 1 from the amount obtained by multiplying the total amount of profit by the distribution rate (30% in the case of below 12 billion won, and 35% in the case of exceeding 12 million won, and 35% in the case of exceeding 12 million won) where individual profit exceeds 110% of the base profit 3.

(e) The piece rate 3 (final settlement) shall be allocated to 5% of the surplus earnings after final settlement of piece rate 1 and piece rate 2.

(3) After the conclusion of a collective agreement on December 3, 1997, the defendant company and the trade union agreed that "standard bonus shall be 800%, and the bonus shall be paid differently according to the performance. The bonus payment period shall be 1,4,7,10 months in principle." The contents of the above agreement were decided to be enforced from September 16, 1997, and the payment period of the labor-management agreement was changed to 2,4,5,6,8,8,99,11,12 months on February 17, 1998.

(4) Around July 30, 1998, the Defendant Company re-amended the performance-based bonus system, and as to store operating staff, the amended contents are as follows.

(a) Pay consists of a monthly basic pay, 200 per annum, 00% per annum, 0% to 60% per annum, 1 performance bonus and 2 performance bonus.

(B) The performance-based bonus shall be paid 0 to 300% as additional bonus according to the performance classification, if the individual profit is less than 110% of the base profit 3 during a half-year period.

(C) Performance rewards shall be divided into performance rewards 1 and performance rewards 2. Performance rewards 1 shall be the amount calculated by subtracting fixed wages and performance bonuses from the amount calculated by multiplying the total income by the distribution rate (30% in cases where personal income exceeds 12 million won, and 35% in cases where the amount exceeds 12 million won, and 35% in cases where the amount exceeds 12 million won) if individual income exceeds 110% of the base income 3 during a half-year period. Performance rewards 2 shall be allocated in accordance with the distribution rate, performance bonuses 5% in excess of the base income after the last settlement after performance bonuses 1.

(D) The evaluation of the business performance on a semi-annual basis and the determination of the total payment shall be made in installments within the following half year.

(5) The Plaintiff: (a) during the period from January 1, 1999 to June 26, 199, KRW 338,940,00 (=business revenue of KRW 315,620,00 + Property gains of KRW 22,90,00 + Loan gains of KRW 330,000 + Loan gains of KRW 330,00). Based on the foregoing, the Plaintiff calculated performance rates and performance rewards, performance rates for business performance are KRW 4,640,00,000, and performance rewards are KRW 65,40,000,000.

(6) Article 51 of the Rules of Employment of the Defendant Company provides for bonuses as follows.

(A) A bonus may be paid not less than twice a year to the employees with excellent service performance.

(b)The amount and time of payment of bonuses shall be determined by the president.

(C) No bonus shall be paid to the retiring prior to the date of payment of the bonus.

(b) Markets:

The nature of bonus and bonus is different from fixed allowances, which are paid at all or on a monthly basis, rather than a fixed monthly bonus and are paid at all or on a monthly basis depending on work performance. Although bonus and bonus are partially paid, if there are the timing or objects of payment, it shall be determined by the rules of employment, the specific amount shall be determined by the evaluation according to the business performance or work performance of the company. The payment rate and payment date are determined by the agreement between the labor and management, so there is a different nature from the monthly paid bonus and thus the employer may choose the time of retirement at will, barring any special circumstances, it shall not be deemed unreasonable or invalid even if bonus and the rules of employment between the labor and management provide for the person working on the payment date in accordance with Article 51(3) of the Rules of Employment of the defendant company. Since the payment rate and payment date of bonus are determined by the agreement between the labor and management, it shall be determined differently from the monthly paid bonus and the promotion of future labor provision through the improvement of his desire to work, it shall not be deemed unreasonable or invalid.

2. Judgment of the Supreme Court

However, the judgment of the court below that the plaintiff lost the right to receive performance-based bonuses or performance-based rewards under Article 51 (3) of the Rules of Employment of the defendant company on the premise that performance-based bonuses or performance-based rewards of the defendant company are a kind of bonus under Article 51 of the Rules

According to the facts acknowledged by the court below, the rules of employment of the defendant company may pay bonuses to employees with excellent work performance under Article 51(1) not less than twice a year, the president determines the amount and time of payment of bonuses under Article 51(2), and Article 51(3) does not provide for the meaning of bonuses to those retired before the date of payment of bonuses, and there is no separate provision regarding the meaning of bonuses. Therefore, it is inevitable to interpret that bonuses under Article 51(3) of the above rules of employment refer to bonuses which can be paid at will by the president to those who have excellent work performance by determining the amount and time of payment.

On the other hand, before June 30, 1997, the defendant company introduced the performance-based bonus system in order to prevent leakage of outstanding professional human resources through liberalization of securities company's new establishment and to actively attract excellent professional human resources by establishing a benefit system in proportion to the business performance of employees with a basic salary, regular bonus (800%) and basic salary based on annual fixed bonus payment rate with a benefit system composed of performance-based bonus under a collective agreement and regular bonus. The defendant company introduced the performance-based bonus system in order to prevent the leakage of outstanding professional human resources through liberalization of securities company's establishment in terms of management innovation. The performance-based bonus system of the defendant company calculated the total payment amount based on business performance during the half-year period and paid the performance-based bonus by dividing it into the following half-year period. The performance-based bonus is not paid according to individual business performance or different within a certain part of the existing regular bonus. The performance-based bonus is not limited to the amount of payment based on the performance-based bonus and performance-based bonus under the rules of employment. Thus, the payment period of the defendant company does not include the performance-based bonus and performance-based bonus.

Thus, the defendant company shall pay the performance-based incentives and performance-based incentives according to the plaintiff's business performance during the period from January 1, 1999 to June 26, 199 within the next half year in accordance with the performance-based bonus regulations as of July 30, 1998, and the payment shall not be refused under Article 51 (3) of the Rules of Employment.

The judgment of the court below that judged otherwise is erroneous in the misapprehension of legal principles as to the interpretation of bonuses under the rules of employment of the defendant company and the nature of the performance bonus and performance reward in this case, which affected the conclusion of the judgment. The ground of appeal pointing this out is justified.

3. Conclusion

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices.

Justices Byun Jae-chul (Presiding Justice)