Gov't, judiciary at odds over bonus

By Kim Jae-won

Whether bonuses should be included in “regular wages” has become a hot labor issue pitting the government against the judiciary.

A court recently ruled that bonuses should be considered part of regular wages while the government argues they are not.

How to define regular wages is a very sensitive issue between employers and employees because they are used as a base to calculate overtime, nighttime and holiday pay, and severance payments.

Business lobby groups estimate they may need an additional 38 trillion won ($34 billion) to cover expenses if bonuses are included in regular wages.

President Park Geun-hye rekindled the debate by promising to address the issue during a meeting with American business leaders in Washington last week.

“It is a very difficult matter that the Korean economy faces. It is not just a matter of GM, and I will seek solutions as reasonable as possible,” said the president to GM Chairman Daniel Akerson, who raised the issue at the meeting.

GM Korea is now in litigation over the issue. A local district court ruled in 2011 that the Korean unit of the U.S. carmaker should pay about 10,000 employees a combined 814 billion won in additional overtime and other overdue wages on the ground that bonuses should be included in regular wages. An appellate court upheld the ruling, and the case is now pending at the Supreme Court.

Legal experts say GM Korea may lose the suit in the top court, too, because the Supreme Court already ruled that bonuses which were paid regularly should be included in regular wages in a separate case.

Judges were upset with Park’s remarks, criticizing her for not respecting the courts’ authority.

“There is no way the president can change rulings because the Constitution is based on the principle of separation of powers. In conclusion, the president’s remarks are worrisome because they do not consider the principle,” said Lee Jeong-ryeol, a senior judge at Changwon District Court in South Gyeongsang Province on his Twitter account last week.

Yoon Sang-jick, the minister of trade, industry and energy, on Wednesday expressed his hope bonuses will be excluded from regular wages.

“Until the government, labor and management reach agreement on the issue, I want bonuses to be excluded from regular wages,” he said.

During a meeting with political editors of media outlets on Wednesday, President Park said the issue should be settled by an agreement between management and labor.

As tensions between courts and the government run high, the Ministry of Employment and Labor said a tripartite commission of labor, management and the government would begin discussing the issue next month.

However, unionists argued that it is not a matter for discussion, and urged the ministry to order companies to follow the courts’ rulings.

“The government should let companies take responsibility for refusing to pay due wages. They are reluctant to invest in new projects and create jobs, though they set apart cash worth hundreds of trillion won,” said the Federation of Korean Trade Unions in a statement.