[Plaintiffs, Appellants] Jang Il-yeong and 6 others; Plaintiffs' Attorney Kang Dae-heon
[Defendant, Appellee] Munhwa Broadcasting Corporation (주식회사 문화방송); Defendant's Attorney Kwon Jong-geun
[Judgment Below] Seoul High Court, Judgment rendered December 2, 1981, Case No. 81Na2743
[Order]
The part of the judgment below in which plaintiffs lost on the claim for additional retirement pay is reversed, and this part of the case is remanded to the Seoul High Court.
The remainder of plaintiffs' appeal is dismissed.
The costs of the appeal relating to the dismissed portion shall be borne by each of the appellants.
[Reasoning]
1. As to the appeal concerning the claim for annual and monthly leave allowances,
Although plaintiffs, in their grounds of appeal (application for permission to appeal), objected to the entirety of the judgment below and sought its reversal, they stated no grounds whatsoever in either the petition of appeal or the appellate brief with respect to the portion of the judgment below in which plaintiffs lost on their claim for annual and monthly leave allowances.
Therefore, pursuant to Article 399 of the Civil Procedure Act (민사소송법), this portion of the appeal cannot avoid dismissal.
2. The Court now examines the grounds of appeal submitted by plaintiffs' litigation representative.
(1) First, we examine the point that annual and monthly leave allowances should be included in the calculation of average wages, which form the basis for calculating retirement pay.
According to the reasoning of the judgment below, the court below, upon comprehensive consideration of the evidence cited, found as follows: In implementing an annual and monthly leave compensation system based on the Labor Standards Act (근로기준법) for the purpose of improving employees' health and welfare, the defendant company, taking into account the company's business circumstances, in principle does not grant actual leave but instead pays a corresponding leave allowance; under the defendant company's internal regulations for implementing the annual and monthly paid leave system, monthly leave is granted at the rate of one day per month (12 days per year) to employees with perfect monthly attendance, and annual leave is granted as follows: 8 days to employees with perfect annual attendance; 8 days to employees who were absent for 1 to 12 days (in which case the number of absent days is deducted from the monthly leave days); 3 days to employees who were absent for 13 to 42 days (in which case there is no monthly leave); and no annual or monthly leave at all to employees absent for 43 days or more. For employees who have worked continuously for 2 years or more, a number equal to their years of continuous service minus 1 year is added to the above leave days. The company-designated summer vacation of 7 days is deducted from the above annual and monthly leave days, and the said monthly leave accumulates over a one-year period. The court below further found that, under the said internal regulations, the leave allowance is calculated by dividing the base salary by 25 (the number of monthly working days) to determine the daily leave allowance rate, and multiplying this rate by the number of leave days (monthly leave days + annual leave days − summer vacation days − absent days); that the leave days are calculated based on the period from November 1 of the preceding year to October 31 of the following year; that the leave allowance rate is based on the October salary (base pay) of the year of payment, and is in principle paid every November, only to employees who remain employed as of the date of payment; that, accordingly, the defendant company had paid the said annual and monthly leave allowances around November 20 of each year; and that the plaintiffs likewise received the prescribed annual and monthly leave allowances under the said internal regulations around November 20, 1979. On this basis, and upon comprehensive review of the contents of the defendant company's internal regulations implementing the annual and monthly paid leave system, the court below determined that the leave allowance received by the plaintiffs was compensation for work performed from November 1, 1978 to October 31, 1979, and not compensation for work performed during the three months preceding the plaintiffs' retirement (July 1980), and therefore could not be included in the calculation of average wages forming the basis for retirement pay.
However, Article 47 of the Labor Standards Act (근로기준법) provides, with respect to monthly leave, that the employer shall grant one day of paid leave per month, and that such paid leave may, at the employee's own discretion, be accumulated for up to one year and used, or used in divided portions; Article 30 of the Enforcement Decree of the same Act (근로기준법시행령) provides that "monthly paid leave under Article 47 of the Act means leave granted to a person who has had perfect attendance on the prescribed working days for one month"; and Article 48 of the same Act, with respect to annual leave, provides: (1) the employer shall grant 8 days of paid leave to an employee with perfect attendance, and 3 days of paid leave to an employee who has attended 90% or more of the working days; (2) the employer shall grant, to an employee who has worked continuously for 2 years or more, one additional day of paid leave under paragraph (1) for each year of continuous service exceeding one year, provided that where the number of leave days exceeds 20 days, the employer may pay ordinary wages for the excess days in lieu of granting paid leave for such excess days; and (3) the paid leave under paragraphs (1) and (2) shall be granted at the time requested by the employee, and for such period, ordinary wages or average wages as determined by the rules of employment or otherwise shall be paid, provided that if granting paid leave at the time requested by the employee would seriously impede business operations, the employer may change the timing. In light of these provisions, so-called annual and monthly leave allowances are moneys paid by the employer pursuant to the above Act because the employee continued working instead of using the leave, and by their nature constitute wages paid as compensation for labor. However, since a monthly leave allowance necessarily arises for a person who has had perfect attendance for one month, and since it is left to the employee's free discretion whether to accumulate it for use within one year or to use it in divided portions, even if the defendant company has internal regulations restricting, as found by the court below, the timing of payment and the persons entitled to receive it, if the plaintiffs had perfect attendance during the three months preceding their retirement, the corresponding allowance amount should properly be included in the calculation of average wages forming the basis for retirement pay, regardless of such internal regulations. However, annual leave allowance, as noted above, is payable only where an employee has worked continuously for one year and has had perfect attendance or attended 90% or more of the working days; absent any other special provision, annual leave is compensation for one year of labor, and the annual leave allowance likewise becomes fixed only upon completion of one year of labor with perfect attendance or 90% or more attendance. Therefore, it must be construed that annual leave, or the annual leave allowance, cannot be granted or paid for labor of less than one year. According to the facts lawfully established by the court below, the defendant company has fixed the period for payment of annual leave allowance as running from November 1 of each year to October 31 of the following year, and since the plaintiffs all retired from the defendant company in July 1980, it is clear that, measured as of the time of retirement, the plaintiffs' period of labor had not reached one year, and therefore they cannot claim payment of annual leave allowance for that period of labor. Accordingly, the measure taken by the court below, in rejecting plaintiffs' claim on this point that annual leave allowance for one year should be calculated on a monthly pro rata basis and included in the average wage even for labor of less than one year, is correct in this respect, and the argument on this point is without merit. However, the measure taken by the court below in holding that monthly leave allowance cannot be included in the calculation of average wages is erroneous, in that it misapprehends the legal principles concerning monthly leave allowance and average wages, and therefore the argument on this point is meritorious.
(2) Next, we examine the point that the special bonus should be included in the calculation of average wages forming the basis for retirement pay.
According to the reasoning of the judgment below, the court below, upon comprehensive consideration of the evidence cited, found as follows: Under the defendant company's bonus payment regulations, the bonus payment rate, payment date, etc. are determined by the board of directors taking into account the company's ordinary management conditions, and each bonus is to be paid based on the base salary at a fixed rate (ranging from 25% to 100% of the base salary) determined according to the type of work and length of service. Around mid-March 1980, the defendant company's board of directors resolved to amend the previous practice of paying employees an annual bonus of 400% of base salary, and to pay 500% from April 1, 1980 onward, and the defendant company has since paid bonuses to its employees accordingly. Meanwhile, the defendant company was originally established under the trade name Korea Munhwa Broadcasting Corporation, engaged primarily in radio and television broadcasting business; on November 1, 1974, it absorbed and merged with Kyunghyang Shinmun Company, which was primarily engaged in the publication and sale of newspapers and magazines, and with Munhwa Broadcasting Advertising Corporation, which had engaged in advertising agency business through mass media, and changed its trade name to Munhwa Broadcasting Corporation, Kyunghyang Shinmun, thereby greatly expanding its business scale. In commemoration and celebration of this epoch-making new beginning, on November 1, 1976, the second anniversary of the merger-based founding, the defendant company paid all its employees a "merger-anniversary special bonus" of 200% of base salary, and thereafter, until 1979, paid the same rate of merger-anniversary special bonus to its employees every year on the November 1 anniversary date. Unlike what is provided in the above bonus payment regulations, the special bonus was not paid pursuant to a resolution of the defendant company's board of directors, but was paid each year through a separate internal approval process, with the defendant company's representative director giving final approval under his own full authority; in giving such approval, the representative director made clear that the special bonus was not being paid pursuant to the defendant company's bonus payment regulations, and set the payment rate at a higher level than under those regulations; moreover, in light of the fact that the special bonus carried the meaning of commemorating and celebrating the merger-based founding, it was paid at the full rate of 200% of the original base salary even to employees who had been subjected to a pay reduction, unlike under the said regulations, and to employees on overseas training, for whom the original bonus payment rate was 50%, the full 200% was paid. Based on these findings, the court below further determined that the bonus which the defendant company was obligated to pay under the labor contract was limited to 500% of base salary annually, and that the said special bonus was clearly not provided for in the labor contract between the plaintiffs and the defendant, nor in any collective agreement, nor in the defendant company's salary regulations, bonus payment regulations, or other internal regulations establishing the employees' terms of employment; and that the payment of the said special bonus could not be regarded as having become an established practice to the extent of constituting an implicit modification of the terms of employment. On this basis, the court below held that the said special bonus was merely a goodwill or gratuitous payment by the defendant company and could not be regarded as wages, and therefore that the said special bonus could not be included as wages in the calculation of average wages forming the basis for retirement pay.
However, while whether a so-called bonus is in the nature of deferred wages or is in the nature of a gratuitous or commendatory payment cannot be determined uniformly, where a bonus is paid on a regular basis and the amount payable is fixed, it must be construed as having the character of wages paid as compensation for labor (see this Court's Decisions 81Daka174, rendered November 24, 1981, and 81Daka137, rendered April 13, 1982). As found by the court below, if the special bonus equivalent to 200% of base salary, which the defendant company has paid to all its employees since 1976, was continuously and regularly paid every November to all employees by the defendant company from November 1976 onward, then it must be regarded as having the character of wages, being compensation for labor. The circumstances found by the court below — namely, that the initial payment of this special bonus originated in the celebration and commemoration of the merger-based founding; that it was paid not pursuant to a board resolution but through internal approval upon the representative director's exclusive authorization (although, according to Defendant's Exhibit No. 8, it can be seen that the defendant company's board of directors subsequently resolved to approve payment of this special bonus); that it was paid in full at the rate of 200% of original base salary even to persons subjected to a pay reduction; and that it was paid in full at the rate of 200%, rather than at the original bonus payment rate of 50%, even to persons on overseas training — do not, by themselves, constitute grounds for concluding that this special bonus lacks the character of wages and is instead a gratuitous benefit or a temporarily paid allowance.
If that is so, then this special bonus is not, in terms of its deferred-wage character, of a nature different from the bonus equivalent to 500% of base salary that the defendant company has originally paid as a bonus, and therefore the amount corresponding to the three months preceding retirement should be included in the calculation of average wages forming the basis for retirement pay. Accordingly, the measure taken by the court below in reaching the contrary conclusion that the said special bonus is not wages to be included in the calculation sheet of average wages forming the basis for the plaintiffs' retirement pay is, in the end, erroneous in that it misapprehends the legal principles concerning bonuses and average wages, and therefore the argument on this point is likewise meritorious, and the foregoing meritorious portions constitute grounds for reversal under Article 12, Paragraph 2 of the Act on Special Cases Concerning Expedition, etc. of Legal Proceedings (소송촉진등에 관한 특례법).
3. Accordingly, the portion of the judgment below in which plaintiffs lost on the claim for additional retirement pay is reversed, and this part of the case is remanded to the Seoul High Court for further hearing; the appeal concerning the claim for annual and monthly leave allowances is dismissed, and the costs of the appeal relating to the dismissed portion shall be borne by the losing party. This judgment is rendered as set forth in the Order, by the unanimous opinion of the participating Justices.
Justice Kang Woo-yeong (Presiding Justice), Kim Jung-seo, Lee Jeong-woo, Shin Jeong-cheol