< This Week's Issues >
1. Supreme Court: "Bonus Payments for 'Current Employees' in Collective Agreements Must Also Include Employees on Leave"
(1) Case Background
(2) Key Issues of the Case
(3) Court Rulings
2. 627 Billion KRW from the Industrial Accident Insurance Fund Invested in Companies with Frequent Serious Accidents
- When selecting asset management companies, there were no investment principles related to ESG.
3. Increasingly Unremedied Unfair Dismissals
- Increase in Labor Commission Remedy Applications Annually, but Recognition Rate Falls to 11% Last Year
- Increase in Companies Not Complying with Remedy Orders, with 35% Rate of Appeals Against Rulings
4. Free HR Platforms Provided to Small Businesses
- Ministry of Employment and Labor signed MOU with 13 HR platform companies.
5. Employment Regulations for Foreign Workers in Mid-sized Root Industries to be Improved
- Employment of Foreign Workers (E-9) Allowed at Local Business Sites with Headquarters in the Metropolitan Area
< Detailed News >
1. Supreme Court: "Bonus Payments for 'Current Employees' in Collective Agreements Must Also Include Employees on Leave" (Source: Maeil Labor News)
The Supreme Court ruled that if a collective agreement specifies that bonuses are to be paid to "current employees," this also applies to employees on leave. The Second Division of the Supreme Court (Presiding Justice Kwon Young-joon) upheld the lower court's ruling in favor of Mr. A, a bus driver with Busan’s city bus company H, in a wage claim lawsuit against the company.
(1) Case Background
In June 2021, a collective agreement valid for two years was signed between the labor union and the transport company. The agreement stipulated that the bonus payment criteria would apply to "those employed as of the payment reference date" and that bonuses would be graded based on work performance over the two months prior to the payment reference date for employees who had joined the company at least three months prior. The performance bonus was to be paid in six installments, up to a maximum of 600% annually.
However, Mr. A took sick leave for one month starting in November 2022. The company did not pay Mr. A the 6th installment of the bonus, amounting to about 2 million KRW, due on December 10, 2022, because he was on leave at that time. In response, Mr. A filed a lawsuit in December of the same year, demanding payment of the performance bonus.
(2) Key Issues of the Case
In the trial, the interpretation of "currently employed" as specified in the collective agreement became the main issue.
Mr. A argued, "The term 'currently employed' means 'those affiliated with the defendant and maintaining an employment relationship,' so employees on leave should not be excluded."
In contrast, the company countered, "It refers to those who provided labor on the payment reference date, so employees on leave are excluded from receiving the payment."
(3) Court Rulings
The first-instance court upheld Mr. A’s claim. The court ruled, “The collective agreement stipulates that even if an employee worked only one day within the two months before the payment reference date, they are entitled to 90% of the performance bonus, meaning that long-term leave-takers are not excluded.”
The court also emphasized that the interpretation of "employment" should not be narrowly defined to disadvantage the workers. Limiting the performance bonus eligibility to those "currently working" could lead to fairness issues based on the number of working days. The court stated, “It would be unreasonable and create significant inequity between those who worked only one day during the two-month period and those who, despite working diligently for a considerable time, took leave around the payment reference date due to unavoidable circumstances.”
The appellate court reached the same conclusion, and the Supreme Court upheld the lower court's ruling.
2. 627 Billion KRW from the Industrial Accident Insurance Fund Invested in Companies with Frequent Serious Accidents (Source: Hankyoreh Newspaper)
- It has been revealed that the "Industrial Accident Compensation Insurance and Prevention Fund," which secures the financial resources necessary for compensating and preventing industrial accidents for workers, has been invested in companies where serious accidents occur frequently.
- As of the end of August, 627 billion KRW out of the 3.914 trillion KRW invested in domestic stocks by the industrial accident insurance fund was allocated to seven companies, including Korea Electric Power Corporation and Daewoo Shipbuilding & Marine Engineering, where serious accidents are frequent.
- The issue is that, when selecting asset management companies, there were no investment principles related to ESG (environmental, social, and governance) or corporate social responsibility.
- Democratic Party lawmaker Lee Yong-woo stated, "The asset management guidelines or regulations should be revised to prevent the fund from being invested in companies where serious accidents are frequent."
3. Increasingly Unremedied Unfair Dismissals (Source: Kyunghyang Newspaper)
- Although the number of remedy applications to labor commissions has significantly increased each year, the recognition rate has continuously declined, reaching only 11.1% last year.
- The enforcement fines imposed for non-compliance with remedy orders amounted to 32.3 billion KRW as of August this year, but only 5.6 billion KRW (17.5%) had been paid.
- In the past five years, 312 cases involved companies that were reported for failing to comply with remedy orders despite being fined. The rate of companies that filed lawsuits in response to unfair dismissal rulings reached 34.8%.
- During a National Assembly audit, there was a call for strengthening the current system by abolishing the two-year limit on enforcement fines, adjusting the maximum amount, and exploring other measures.
4. Free HR Platforms Provided to Small Businesses
- On October 17, 2024, the Ministry of Employment and Labor signed a memorandum of understanding (MOU) with 13 HR platform companies.
- Through this agreement, 500 small businesses, encompassing about 10,000 workers, will be able to use internet-based software for free to manage HR tasks such as attendance tracking and payroll processing easily and transparently.
- Minister Kim Moon-soo stated, “In November, we will also introduce a labor law consultation service utilizing generative AI to ensure that no vulnerable workers suffer due to a lack of legal knowledge.”
5. Employment Regulations for Foreign Workers in Mid-sized Root Industries to be Improved
- On October 17, the government held the 44th Foreign Workforce Policy Committee and finalized measures to improve employment permit requirements for mid-sized companies in root industries.
- Going forward, mid-sized root industry companies will be able to hire foreign workers (E-9) even if their headquarters are located in the metropolitan area but their factories or business sites are outside the metropolitan area.
- Previously, only local business sites of companies with headquarters outside the metropolitan area were allowed to hire foreign workers (E-9).
* Root companies: Manufacturing industries that play a pivotal role in the national economy, including types such as process-based technology (casting, molding, etc.), diversified process technology (injection, pressing, etc.), and intelligent process technology (robots, sensors, etc.).
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