1. Case Overview

a. Party Represented by Barun Law

A local public enterprise established under the Local Public Enterprises Act and the ordinances of a city ("S Enterprise")

b. Background and Content of the Lawsuit

Filing this lawsuit, the plaintiffs (Mr. Ra and 164 others) argued that the defendant (S Enterprise) paid them evaluation pay divided into in-house evaluation pay and incentive evaluation pay. They claimed that since the in-house evaluation pay guaranteed at least 75% of the monthly salary and the incentive-based evaluation pay guaranteed at least 167% of the monthly salary, this part constituted regular and fixed wages, thus qualifying as ordinary wages. However, the defendant excluded this pay from the calculation of statutory allowances such as overtime pay.


2. Judgment

On May 17, 2024, the Seoul Southern District Court ruled that "the evaluation pay, being remuneration for the previous year's period, was paid in the current year, but it cannot be regarded as guaranteed at the time of providing service, thus lacking fixed nature. Therefore, it is difficult to consider the evaluation pay as part of ordinary wages. The plaintiffs' primary and preliminary claims, based on the premise that the evaluation pay constitutes ordinary wages, are without merit and do not need further consideration." The court dismissed all the plaintiffs' claims, and the judgment was finalized as the plaintiffs did not appeal.


3. Our Argument and Role

Drawing on extensive experience in winning lawsuits related to ordinary wages, we represented the defendant S Enterprise and successfully argued and demonstrated the following points:

ㆍ The evaluation pay is determined based on the payment rate decided by the head of the local government, according to the annual budget guidelines for local public enterprises.

ㆍ Employees of the defendant receive the evaluation pay distributed differentially according to their evaluation grades, hence lacking fixed and regular characteristics, and thus does not qualify as ordinary wages.


4. Significance of the Judgment

The current wage system has a dual structure, mainly divided into ordinary wages and average wages. The concept, scope, and calculation methods of ordinary wages are not clearly defined, making it a central issue in labor relations practices. This case reaffirms that the evaluation pay of local public enterprises does not qualify as ordinary wages and will serve as an important benchmark in determining the legal nature of in-house evaluation pay for other local public enterprises.


□ Attorney in charge: Moon Ki-joo