1. Case Overview
a. Party Represented by Barun Law: The defendant.
b. Background
The defendant company paid management performance bonuses to employees on a discretionary basis and made contributions to the retirement pension plan without including management performance bonuses, children’s tuition subsidies, or long-service awards in the average wage calculation.
c. Litigation
The Plaintiff, a retired employee, filed suit against the defendant company claiming:
- unpaid portions of management performance bonuses, and
- recalculated retirement pension contributions including management performance bonuses, children's tuition subsidies, and long-service awards in the average wage.
2. Judgment
Seoul Central District Court Decision No. 2024Gahap53336 dated August 22, 2025
3. Grounds for Judgment
The Seoul Central District Court recognized the defendant company's discretion in determining conditions for the payment of management performance bonuses, ruling that management performance bonuses, children's tuition subsidies, and long-service awards should not be included in the average wage. Accordingly, the court dismissed most of the plaintiff's claims.
4. ur Arguments and Role
By closely examining the company's wage regulations and long-standing practices, we established that management performance bonuses are funded out of profits depending on business performance, and that whether and under what conditions they are paid is subject to the company's discretion.
We also demonstrated that children's tuition subsidies and long-service awards, considering their basis, method, and timing of payment, are not compensation for work performed, and therefore cannot be included in the average wage, which serves as the basis for calculating retirement pension contributions.
5. Significance of the Judgment
In a context where the wage nature of management performance bonuses is often disputed, this judgment confirmed that management performance bonuses merely represent a retrospective distribution of part of the profits subject to the occurrence of operating profits, and that the company retains discretion in granting them. Notably, in a prior lawsuit filed by the plaintiff against the company, the court had recognized the wage nature of management performance bonuses. However, in this subsequent case, the court ruled that management performance bonuses are not to be included in the average wage.
In addition, the court emphasized that children's tuition subsidies and long-service awards are primarily welfare benefits, provided only to employees who meet certain conditions, and unrelated to the amount or quality of work performed. Therefore, they are not paid continuously or regularly as remuneration for work, and do not have the nature of wages.
