In a case where a fixed allowance paid in the form of a monthly or daily rate as a wage for agreed working hours in excess of the standard working hours prescribed by the Labor Standards Act is converted into an hourly ordinary wage, the method of calculating the number of agreed working hours included in the total working hours that serve as the basis for calculating hourly ordinary wage, and in such a case, whether the “additional rate” should be considered in calculating premium allowances (negative in principle)

Articles 50, 55, and 56 of the Labor Standards Act; Article 6 of the Enforcement Decree of the Labor Standards Act

Supreme Court en banc Decision 2015Da73067 Decided January 22, 2020 (Gong2020Sang, 427)

Plaintiff 1 and two others (Law Firm Doz., Attorneys Jeong Young-jin et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2001Na14484 decided May 1, 201

Daejeon High Court Decision 2014Na3120 decided November 5, 2015

The judgment of the court below is reversed, and the case is remanded to Daejeon High Court.

The grounds of appeal are examined.

1. Judgment on the Defendant’s grounds of appeal regarding the scope of ordinary wages

Based on its stated reasoning, the lower court determined that the Defendant’s continuous service allowances, food allowances, and bonuses paid to the Plaintiffs constituted ordinary wages as a regular, uniform, and fixed wage.

Examining the reasoning of the lower judgment in light of the relevant legal doctrine, the lower court did not err in its judgment by misapprehending the legal doctrine regarding the scope of ordinary wages, or by exceeding the bounds of the principle of free evaluation of evidence.

2. Determination of the plaintiffs' grounds of incidental appeal regarding the determination of property at the basic level

The lower court rejected the Plaintiffs’ assertion on the ground that, with regard to the Plaintiffs’ assertion that the daily amount paid per week is divided into a weekly standard working hours and the number of hours calculated by adding the extended working hours, night work hours, and weekly working hours, which do not consider the premium rate, and that statutory allowances, such as overtime allowances, should be calculated based on the fixed basic hourly rate, it is difficult to deem that the basic rate per week, as prescribed by the collective agreement and wage agreement, is in violation of the Minimum Wage Act or the Labor Standards Act.

Examining in light of the relevant legal principles, the lower court did not err by misapprehending the legal doctrine regarding hourly ordinary wages, contrary to what is alleged in the grounds of appeal.

3. Determination of the Plaintiffs’ grounds of incidental appeal on the number of total working hours for calculating hourly ordinary wages and the Defendant’s grounds of appeal

A. In a case where a fixed allowance paid in the form of a monthly or daily rate as a wage for agreed working hours in excess of the standard working hours prescribed under the Labor Standards Act is converted into an hourly ordinary wage, the calculation of the number of agreed working hours included in the total working hours that are the basis for the calculation of hourly ordinary wage should, barring any special provision, be added up the number of hours actually agreed to provide labor by an employee, and the number of extended working hours and night work hours, taking into account the premium rate for the calculation of premium allowances, shall not be added up. In addition, in a case where a collective agreement provides a premium rate for weekly working hours in consideration of the premium rate for the calculation of premium allowances, this is merely the purport to pay the premium rate by adding a certain rate to the basic weekly working hours when paying weekly working allowances, and thus, the foregoing legal principle also applies to this case. Therefore, the premium rate prescribed in the weekly working allowance is not considered when calculating the number of hours deemed to have been worked on weekly working hours to be included in the number of total working hours (see Supreme Court en banc Decision 2015Da73067, Jan.

B. The reasoning of the lower judgment reveals the following facts.

1) The collective agreement in 2009, the wage agreement in 2009, and the wage agreement in 2010 (hereinafter “each of the instant wage agreements”) concluded between the △△△△△△ branch under the ○○○○○○○ branch of the Korean Automobile Trade Union to which the Plaintiffs are affiliated with respect to the working hours and wages as follows.

A) Members’ working hours per day shall be eight hours per week, but may engage in overtime work of 30 hours per week, and the extended working hours include night work hours of 3 hours per week.

B) Daily working hours, which serves as the basis for wage calculation, are five hours of extended working hours (30 minutes of total working hours) for eight hours of basic working hours.

C) “The structure and calculation basis of wage”, which is part of each wage agreement of the instant case, is set at the additional rate as follows with respect to weekly holiday allowances.

- Week leave allowances: 12 hours (8 hours + 4 hours) per week;

- Week leave allowances: 8 hours ¡¿ 150/100 = 12 hours;

2) The Defendant deemed the basic hourly wage calculated under each of the instant wage agreements as the hourly ordinary wage, and determined the “daily wage” including the basic wage, overtime allowance, night work allowance, and weekly holiday allowance calculated on the basis of the basic hourly wage, and paid the amount calculated by multiplying the number of days for which the Plaintiffs worked by the daily wage by the daily wage amount.

3) Each working day, the Plaintiffs worked during the agreed working hours in excess of the standard working hours stipulated under the Labor Standards Act, and received various fixed allowances in the form of monthly pay or daily pay in addition to the monthly basic pay in return for the agreed working hours.

C. Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine, the number of total working hours for calculating the hourly ordinary wage of each of the fixed allowances ought to include extended working hours, night work hours, and weekly paid leave hours without considering the additional rate.

Unlike this, the lower court erred by misapprehending the legal doctrine regarding the calculation of hourly ordinary wages, thereby adversely affecting the conclusion of the judgment, in order to calculate the hourly ordinary wages of a fixed allowance paid in the form of a daily rate and a monthly rate, including overtime hours and night work hours in consideration of each additional rate. The Plaintiffs’ ground of supplementary appeal assigning this error is with merit.

On the other hand, the lower court’s determination that did not consider the premium rate for weekly paid leave allowances in the number of total working hours to calculate the hourly ordinary wage of a fixed allowance paid in the form of a monthly rate, including the monthly average weekly paid hours of work, was partially erroneous in its reasoning. However, it did not err by misapprehending the legal doctrine on the calculation of hourly ordinary wage.

4. Judgment on the Defendant’s ground of appeal on the agreement on the inclusive wage system

Based on its stated reasoning, the lower court determined that it is difficult to deem that there was an agreement on the inclusive wage system solely on the grounds that there was a prior agreement on working hours in excess of the prescribed working hours under each of the instant wage agreements.

Examining the reasoning of the lower judgment in light of the relevant legal doctrine, the lower court did not err by misapprehending the legal doctrine regarding the establishment of a comprehensive wage system, or by exceeding the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules.

5. Scope of reversal

The part of the judgment of the court below against the plaintiffs is reversed. The defendant's appeal against the part against the defendant among the judgment below against the defendant is in violation of the principle of good faith against the plaintiffs' claim seeking additional legal allowances, etc. calculated by including bonuses into ordinary wages. Since the defendant's assertion of good faith needs to be deliberated and determined together with the plaintiffs' claim which is reversed on the ground as seen earlier, the part against the defendant is reversed together

6. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court 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 Noh Tae-tae (Presiding Justice)