Bonuses should be included in ordinary wages: court

By Kim Se-jeong

Bonuses should be included in ordinary wages if they are given on a regular basis, although the amount of the bonus may differ from employee to employee, the nation’s top court said, Thursday.

The Supreme Court upheld most parts of a lower court ruling that ordered GM Korea to reassess overtime pay and allowances for its 1,025 workers by including bonuses.

But it said transportation fees for holidays, vacation allowances and some other payments should not be included, sending the case back to the Seoul High Court.

“The amount may be different from one employee to another; but what is not changing is that the pay is given every month. For this reason, we recognize the bonus as a part of the ordinary wage,” the court said.

A full-time employee’s monthly paycheck consists of their base pay and a combination of extra payments. These vary, ranging from a bonus to a transportation allowance. What to include in the ordinary wage is important because some other payments, such as overtime and retirement allowances, are decided based on ordinary wages, and including bonuses these pushes up payments for employees.

Since 2006, GM Korea paid different bonuses to workers based on the evaluation of their performance during the previous year. Workers filed a lawsuit claiming the bonuses should be included in ordinary wages when calculating pay for overtime work.

A district court did not accept the claim, saying the amount of the bonuses differed according to the results of the evaluation.

But the high court overturned the ruling, saying the bonus was given regularly and the amount was fixed for the year. It ordered the company to pay the employees a total of 8.2 billion won by re-calculating the ordinary wage.

The top court ruling is expected to influence other similar suits. There have been numerous disputes between employers and employees about extra pay and how it should be included in ordinary wages. Employers wanted it to be as small as possible, prompting employees to file a suit.