Blanket Wage System—If your wage is lower than actual hours worked?

 

Blanket Wage System—If your wage is lower than actual hours worked?

 

Employment & Labor Law | English-speaking Korean Lawyers | Korean Corporate Lawyers | South Korea | Dowoo Hwasan

 

Blanket Wage System? Is it justifiable to calculate overtime, night, or holiday work in advance?

 



The blanket wage system is a wage calculation method under which wages are paid monthly by including extended, night, and holiday work allowances set in advance to the blanket wage based on the labor-management agreement. This is an exception allowed when calculating working hours is difficult at the time of signing an employment contract.

The Supreme Court (see Supreme Court 2009. 12. 10. Decision 2008DA57852) has held that “determining whether there is an agreement on the blanket wage system depends on comprehensive consideration of various circumstances including working hours, types and nature of work, wage calculation units, collective agreements, employment rules, and actual conditions of business sites in the same industry,” stating that “even when extended, night, and holiday work is naturally expected due to the nature or type of work, it cannot be concluded that an agreement on the blanket wage system is established when the collective agreement, employment rules, or wage regulations clearly specify the payment to be divided into specific items such as extended, night, or holiday allowances separately from the basic wage.”

What does the Labor Standard Act prescribe about adding the extended, night, or holiday work wages?

 

​Adding overtime work: Add 50% of the normal wage

Adding holiday work: Add 50% of the normal wage when less than 8 hours, Add 100% of the normal wage when over 8 hours

Adding night work: Add 50% of the normal wage (between 10 PM - 6 AM the next day)

 

Article 56 of the Labor Standard Act (Extended, Night or Holiday Work)

An employer shall, in addition to the ordinary wages, pay 50 percent or more thereof for extended work (work during the hours as extended pursuant to Articles 53 and 59 and the proviso of Article 69), night work (work between 10:00 p.m. and 6:00 a.m.), or holiday work.

 

Ø  Case on the existence of a blanket wage agreement

(1st Trial-Incheon District Court 2013 GAHAP 308989 Decision; Appeal-Seoul High Court 2014 NA 2033671 Decision; Supreme Court 2015 DA 217287 Decision)

ü  Worker v. Employer

l  Arguments by the Worker

As far as the collective agreement and wage agreement stipulate wages to be paid by dividing specific items such as overtime work allowance, night work allowance, and weekly holiday allowance in addition to the basic wage, it cannot be concluded that a blanket wage agreement has been concluded between the defendant and the labor union of A Bus Company.

 

l  Arguments by the Employer

Due to the nature of the city bus transportation business, additional work such as overtime work, night work, and holiday work inevitably occurs. Thus, the defendant has agreed with the workers in advance about the overtime work, night work, and holiday work, and has been paying wages as a blanket wage system in which the sum of various allowances and the wage is paid as a monthly salary regardless of the actual hours of work. Also, this blanket wage system has been specified in the collective agreement, wage agreement, and employment contract. In light of the amount of wages the defendant paid to the plaintiffs, paying wages under a blanket wage system is not more disadvantageous than the standards set by the Labor Standards Act. Thus, the method of paying wages according to the agreement on a blanket wage system of the defendant is valid. Accordingly, as long as the defendant has paid all wages to the plaintiff, etc. under a blanket wage system, there is no statutory allowance for which the plaintiffs was not paid.

 

· Wage Agreement ·

The wage for drivers shall be based on a monthly basic salary and shall be applied with the number of working days according to the wage table calculated using a blanket wage calculation method.

 


ü  Court Decision

l  Denied establishment of a blanket wage agreement

The collective agreement and wage agreement from 2009 to 2012 clearly classify the wages into basic pay and various allowances and calculate the amount of the basic pay and various allowances, respectively, based on the basic hourly pay with the hourly pay concept as a starting point. There is a prior agreement that deems the number of working days as 22 or 24 days per month and the daily working hours as 8 hours of basic work and 1.5 hours of overtime work, of which 1 hour of night work is considered as performed. Thus, it can be identified that the monthly wage amount is calculated by summing the amount of various allowances for the above overtime working hours, in addition to the basic pay for each working day.

Accordingly, if the defendant has paid wages to the plaintiffs in such a method, this cannot be considered that a wage payment agreement of a blanket wage method has been concluded or that wages have been paid in such a way. And it is insufficient to accept that the method of wage payment of the defendant falls under a blanket wage system, and there is no evidence to conclude it otherwise.

Thus, the defendant’s argument that no additional statutory allowances need to be paid to the plaintiffs as the wage system of the defendant qualifies as a blanket wage system has no ground.

 


For any additional inquiries or information regarding this content on the blanket wage system, please do not hessite to contact Dowoo Hwasan Attorneys & Counselors (+82.2.6207.1114 or dowoo@dowoolaw.com). Our Human Resources & Labor Team attorneys will help you.




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