1. Current state of the lawsuits
Lawsuits concerning ordinary wages are spreading to all industries as well as to SMEs. The majority of the companies involved in these suits have lost in lower courts, but some companies such as Hansung Transportation, Seongnam Intercity Bus (SNCB), Gwangil Transportation and Samhwa Express have actually won their cases.
<Table 1> Current state of ordinary wage cases (MOEL, May 2013)
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• (Total) As of May, 2013, 135 out of 9,580 companies (1.41%) with 100 or more workers are in litigation.
* (Umbrella unions) 58 companies affiliated with the Federation of Korea Trade Unions, 51 companies with the Korean Confederation of Trade Unions, and 26 companies with other umbrella unions.
• (Size of business) Primarily against large workplaces.
• (Type of business) Concentrated on transportation (68.1%, 92 companies) and manufacturing industries (25.2%, 34 companies).
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The Supreme Court is planning to gather all member judges and decide on 2 cases with ‘KB Auto Tech’ as the defendant. A public hearing for the cases is scheduled on September 5th.
<Table 2> Current state of ‘KB Auto Tech’ cases
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Case No.
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Supreme Court 2012 Da 94643
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Supreme Court 2012 Da 89399
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Number of plaintiffs
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296
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1
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Value of the claim
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₩2.3 billion
($2.3 million) |
₩5 million
($5,000) |
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3rd trial entered on
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2012. 10. 23
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2012. 10. 10
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Subject to claim
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Bonus for New Year’s Day and Chuseok, summer vacation, other gifts, etc.
※ A regularly paid bonus is not actionable
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Regularly paid bonus
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1st trial
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Company lost the case
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Company won the case
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2nd trial
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Company lost the case
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Company lost the case
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2. Different Perspectives
The government planning to propose a bill to the National Assembly during the regular session
The Ministry of Employment & Labor (MOEL) established a committee on wage system improvement on June 21st, 2013 to resolve the issue of ordinary wage. The MOEL is planning to gather the opinion of the both labor and employers through the use of experts and propose a revised bill on the Labor Standards Act during the regular session of the National Assembly in September. In addition, the MOEL will discuss wage system and structure as a whole, and is considering various measures such as amendments to both the Act and enforcement decree.
• (Composition) 12 experts including the chairperson of the committee
• (Activities) Workshops once or twice per week
• (Survey) The MOEL to carry out fact-finding survey
The National Assembly; opposition parties proposed a revised bill on the Labor Standards Act
The Saenuri Party plans to carry out revisions to the law after gathering of various opinions, and then determine the realities through consultation with the tripartite members. On the other hand, the Democratic Party and Justice Party maintain that the Labor Standards Act and administration guide should be amended immediately, as per the ruling of the Supreme Court.
<Table 3> Revised bills on the Labor Standards Act (pending at the National Assembly)
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Date of proposal
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Proposed by
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Main points
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June 3 2013
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Democratic Party
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Ordinary wage means all wages, salaries or in-kind that an employer provides to a worker for his/her work
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June 4 2013
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Justice Party
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All wages, salaries or in-kind paid for longer than a 1-month period should be included in ordinary wage
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Labor bringing forward ordinary wage issues and working on class actions
Labor is insisting on a revision of the law in accordance with the ruling of the Supreme Court, and therefore it does not attend dialogues among the tripartite members. In addition, labor is using ordinary wage issue as the subject of class actions, and as a tactic for wage and collective bargaining.
3. The Way Forward
The National Assembly’s law revision which respects only the opinion of labor should be stopped. Business should demand that the government stipulate ordinary wage as ‘money and valuables paid to workers within 1 wage period (1 month)’ in the enforcement decree. Moreover, public awareness of judicial problems and economic impact needs to be raised, along with effective measures responding to the ruling of the Supreme Court.