The Supreme Court of Korea rendered a judgment on May 26, 2022 that the salary peak system shall be invalid if there is no justifiable reason to discriminate elderly workers for their age, and set out the criteria to refer to when determining whether such justifiable reason exists or not.

However, the judgment is not clear on whether such ruling is applicable to only the salary peak system for full-time workers or whether the ruling is applicable even if a company has introduced the salary peak system after extending the retirement age in accordance with the Act on Prohibition of Age Discrimination in Employment and Elderly Employment Promotion.

Accordingly, many companies that have implemented the salary peak system are in a state of confusion as they try to come up with new ways to operate their personnel system.  Also, many employees who are subject to the salary peak system and even retirees are showing signs to commence class action lawsuits against their respective employers.