The Ministry of Employment & Labor (MOEL) has issued ‘Guideline on Ordinary Wage’, reflecting the Supreme Court ruling last December, to prevent confusion and unnecessary conflict in the workplace.
<Guideline on Ordinary Wage>
1. Labor and management are encouraged to have dialogue pursuant to the principle of good faith.
⇨ Guide to simplify wage items and to reform wage systems into job/performance-based ones.
2. In case of changing Employment Rules in relation to payment conditions of ordinary wage, due procedures to be followed.
⇨ Any unfavorable change in the regulations requires approval of a majority employee.
3. The principle of good faith applies up until the expiry date of the existing CBA (before new agreement is made).
⇨ Guide labor and management to reach an agreement through compromise and dialogue within the 1st half of this year.
4. Provide guidance on reforming wage system based on job /performance.
⇨ Simplify the composition of wages with base pay, performance-based bonus and certain allowances.
In addition, the MOEL has prepared a Q&A chapter to explain their standpoint on major issues surrounding ordinary wage.
<Major Q&A>
1. Regularly paid bonuses, if not ‘pre-determinable’, are not ordinary wage.
– Regular bonuses are not ‘pre-determinable’ if retired employees are excluded from the payment or if they are paid only to those who fulfilled certain number of work days (e.g.:15 days per month)
2. The good faith principle only applies to regularly paid bonuses
– Application of the good faith principle shall be determined by the legal court.
– Application of the good faith principle shall be determined based on the timing of the agreement and the company’s financial ability reflecting the total wage amount set out in the existing agreement.
3. The good faith principle shall not be denied just because of demands for collective bargaining
– The good faith principle shall not apply to new collective bargaining agreement.
– The good faith principle may not be denied simply because trade union demands to bargain or raises objections.
4. If collective bargaining agreement and wage agreement have different expiry dates, wage agreement shall usually take priority.
– Regardless of the title, agreement refers to the one which includes wage conditions
5. Any change in the rules of ordinary wage, such as adding a clause excluding retired employees from the payment, shall follow procedures as stipulated in the Labor Standards Act.
– Any unfavorable change requires the approval of a majority of employees
6. Abuse of Inclusive Wage System is strictly forbidden
– Abusing the Inclusive Wage System for the purpose of avoiding wage system reform is strictly forbidden.