How Is a Regular Bonus Subject to an Employment Condition or a Days-Worked Condition Assessed as Consideration for Prescribed Work in Determining Ordinary Wages?

Starting Point of the Case and the Core Legal Question

Supreme Court en banc Judgment 2020Da247190 rendered on December 19, 2024 (Wages) squarely addresses the following question: can wages subject to an employment condition or a days-worked condition nonetheless constitute ordinary wages?

The Supreme Court's core conclusions may be summarised as follows. Applying the criteria of conformity with statute, mandatory nature, reflection of the value of prescribed work, prior calculability and policy conformity, the Supreme Court holds that fixedness should be removed from the conceptual hallmarks of ordinary wages. Ordinary wages are wages that are agreed to be paid regularly and uniformly as consideration for prescribed work, and ordinary-wage status is not denied merely because it is uncertain whether a condition will be fulfilled. The Court states that being employed is a natural precondition for providing prescribed work, and that a days-worked condition set within the number of prescribed working days likewise does not negate ordinary-wage status. It draws the line that a days-worked condition exceeding the number of prescribed working days, and performance-based pay in the pure sense, lack the character of consideration for prescribed work and therefore are not ordinary wages. The Court limits the new legal principle so that it applies to overtime work, etc. provided on or after December 19, 2024, and applies retroactively only to the instant case and parallel cases. The disposition reads: "All appeals are dismissed. The costs of appeal arising from the appeal by the plaintiff (appointed party) shall be borne by the plaintiff (appointed party), and those arising from the appeal by the defendant shall be borne by the defendant." The judgment's mode of determination is the setting of requirements (overruling of precedent).

This analysis follows the structure of the issues and the criteria for determination that appear in the public judgment, and examines why the Supreme Court upheld the conclusion of the court below.

Sources for this section: Supreme Court en banc Judgment 2020Da247190 rendered on December 19, 2024 — official judgment text, National Law Information Center

Structure of the Issues Set by the Holdings and the Referenced Provisions

The framework of the holdings, as organised in the judgment, is as follows: the concept of ordinary wages and the criteria for determining them, and whether fixedness may be regarded as a conceptual hallmark of ordinary wages (negative) / whether ordinary-wage status is denied merely because a condition is attached providing that the wage is paid only to workers employed at a specific point in time, or only upon satisfying a certain number of days worked (negative), and whether performance-based pay paid according to work performance constitutes ordinary wages (negative) / the scope of effect of the new legal principle concerning the concept of ordinary wages.

The referenced provisions to be read together in this case are Article 2 (1) subparagraphs 5 and 6 and (2), Article 17 (1) subparagraph 2, Article 26, Article 50 (1), Article 53, Article 56, Article 109 and Article 110 of the Labor Standards Act, and Article 6 (1) of the Enforcement Decree of the Labor Standards Act. The first step is to separate, among the constituent elements or the requirements for the arising of rights laid down in the statutory text, how far the domain of statutory interpretation extends and where the domain of individual fact-finding begins.

In relation to prior precedents, this judgment stands in the position of an overruling. Read alongside the referenced precedents (Supreme Court en banc Judgment 2012Da89399 rendered on December 18, 2013 (Gong2014Sang, 236) (overruled), and Supreme Court en banc Judgment 2012Da94643 rendered on December 18, 2013 (Gong2014Sang, 276) (overruled)), it shows which of the legal principles in the earlier precedents the Court changed.

Sources for this section: Supreme Court en banc Judgment 2020Da247190 rendered on December 19, 2024 — official judgment text, National Law Information Center

Analysis of the Supreme Court's Summary of Judgment and Key Holding Sentences

The core of the summary of judgment set out by the Supreme Court is as follows. (a) The concept of ordinary wages must, above all, be newly established in a direction consistent with the nature and function of ordinary wages as required of a reference wage, as set out below. First, because ordinary wages are a legal concept, they must in principle be interpreted faithfully to the statutory definition (conformity with statute). Second, because ordinary wages are a mandatory concept, the parties must not be able to alter at will the scope of ordinary wages under statute (mandatory nature). Third, ordinary wages must be a concept capable of fully capturing the value of prescribed work (reflection of the value of prescribed work). Fourth, ordinary wages must be clearly calculable in advance (prior calculability). Fifth, the concept of ordinary wages must conform to the policy objective of the Labor Standards Act of restraining overtime, night and holiday work (hereinafter "overtime work, etc.") (policy conformity). Considering the above requirements as a whole, it is right to exclude the concept of fixedness presented by the earlier precedents from the conceptual hallmarks of ordinary wages. (b) Article 6 (1) of the Enforcement Decree of the Labor Standards Act defines ordinary wages as "an hourly, daily, weekly, monthly or piece-rate amount which is agreed to be paid regularly and uniformly to a worker for prescribed work or total work." Interpreting the concept of ordinary wages faithfully to the definition and purpose of the statute, ordinary wages mean wages agreed to be paid regularly and uniformly as consideration for prescribed work. Because ordinary wages serve as the basis for calculating various wages prescribed by the Labor Standards Act, their essence lies in being a reference wage that values the work the worker has agreed to provide during prescribed working hours. Regularity and uniformity are conceptual hallmarks supporting that the wage is consideration for prescribed work. Wages determined to be paid regularly and uniformly as consideration when a worker fully provides prescribed work constitute ordinary wages regardless of whether any condition is attached to them or whether such condition is likely to be fulfilled. A condition attached to a wage may be considered as one of the factors negating the character as consideration for prescribed work, regularity or uniformity in the course of substantively determining the objective nature of the wage concerned, but ordinary-wage status cannot be regarded as denied merely because it is uncertain whether the condition will be fulfilled. Even without the yardstick of fixedness, whether a wage constitutes ordinary wages can be correctly determined through the concepts of "consideration for prescribed work", meaning consideration for the work that the worker and the employer have agreed is to be provided during prescribed working hours, and "regularity" and "uniformity", which require that the time of payment and the recipients of the wage be fixed in advance. Because the concepts constituting ordinary wages carry the meaning of "a certain prior regulation of wage payment", money or valuables paid temporarily or variably irrespective of the provision of prescribed work remain excluded from ordinary wages. ① Wages paid only to workers employed at a specific point in time (hereinafter "employment-conditional wages"): Because ordinary wages are an instrumental concept reflecting the value of prescribed work as distinct from actual work, they must be calculated on the basis of an employment relationship that presupposes the continuous provision of prescribed work. A worker's being employed is a natural precondition for providing prescribed work under the employment contract. "Retirement", together with reaching the retirement age, death, dismissal and the like, is merely an impediment that terminates the employment relationship and prevents the provision of actual work, and conceptually has no relation whatsoever to the consideration for the work that the worker and the employer have agreed is to be provided during prescribed working hours. Accordingly, the character of a wage as consideration for prescribed work, or its ordinary-wage status, is not denied merely because a condition is attached requiring employment at a specific point in time in order to receive that wage. ② Wages paid only upon satisfying a certain number of days worked (hereinafter "days-worked-conditional wages"): In the case of a days-worked condition that a worker fully providing prescribed work would satisfy, that is, a days-worked condition set within the number of prescribed working days, the ordinary-wage status of the wage is not denied merely because such a condition is attached. Even if a worker's actual days worked fall short of the number of prescribed working days and the worker therefore does not receive the days-worked-conditional wage, so long as the wage possesses the character of consideration for prescribed work, regularity and uniformity, it must be included in ordinary wages in calculating the statutory allowances for overtime work, etc. This is because ordinary wages are a reference wage set to reflect the value of prescribed work irrespective of actual days worked or wages actually received. By contrast, days-worked-conditional wages whose condition exceeds the number of prescribed working days are not paid because prescribed work has been provided, but are consideration for additional work beyond prescribed work, and therefore are not ordinary wages. ③ Performance-based pay: Performance-based pay paid according to a worker's work performance is not paid simply because prescribed work has been provided, but only when a certain work performance is achieved or the result of its evaluation reaches a certain standard; it is therefore generally difficult to regard it as having the "character of consideration for prescribed work". Accordingly, even if fixedness is excluded from the conceptual hallmarks of ordinary wages, such performance-based pay in the pure sense still cannot be regarded as ordinary wages. However, where it is agreed that a certain minimum amount is to be paid irrespective of work performance, that amount constitutes consideration for prescribed work. (c) The parts of Supreme Court en banc Judgment 2012Da89399 rendered on December 18, 2013 and Supreme Court en banc Judgment 2012Da94643 rendered on the same date that treated fixedness as a conceptual hallmark of ordinary wages, the parts that accordingly determined the ordinary-wage status of employment-conditional wages, days-worked-conditional wages and performance-based pay by reference to whether fixedness was recognised, and the part that held that employment-conditional wages lacked the character of consideration for prescribed work because of the attached condition, together with earlier judgments to the same effect, are all overruled to the extent that they conflict with the view in this judgment. Because this overruling re-establishes the concept of ordinary wages, which forms the foundation of the wage system, it has a significant impact on employment relationships concerning wage payment, which are collective legal relationships. Applying the new legal principle fully and retroactively would directly affect the validity of numerous legal relationships formed in reliance on the earlier precedents, thereby undermining legal stability and running contrary to the protection of legitimate expectations. Accordingly, it is appropriate to apply the new legal principle from the calculation of ordinary wages on or after the date this judgment is rendered. However, owing to the nature of the judiciary, whose purpose is the redress of rights in concrete cases, the new legal principle must be applied retroactively to the instant case and to cases pending before the courts at the time this judgment is rendered in which the legal principle changed by this judgment is a premise of the adjudication and whether wages constitute ordinary wages is disputed (hereinafter "parallel cases"). Accordingly, the amount of statutory allowances for overtime work, etc. provided on or after December 19, 2024, the date this judgment is rendered, must be calculated on the basis of the scope of ordinary wages under the new legal principle, and statutory allowances for overtime work, etc. provided up to December 18, 2024 must, except in the instant case and parallel cases, be calculated on the basis of ordinary wages under the former legal principle.

In particular, the passage in the judgment that directly supports the conclusion is the following: "(a) The concept of ordinary wages must, above all, be newly established in a direction consistent with the nature and function of ordinary wages as required of a reference wage, as set out below."

This sentence is not merely an abstract declaration. It serves as the reference point for confirming the legal premise on which the judgment of the court below was upheld.

Sources for this section: Supreme Court en banc Judgment 2020Da247190 rendered on December 19, 2024 — official judgment text, National Law Information Center

Key Factors for Determination Presented in the Judgment and a Record Cross-Check Table

The table below sets out the factors for determination on which the court placed weight in Judgment 2020Da247190 and the role each factor played in the disposition (appeal dismissed).

Sources for this section: Supreme Court en banc Judgment 2020Da247190 rendered on December 19, 2024 — official judgment text, National Law Information Center

Competing Readings of the Same Facts

In this case, one reading holds that wages whose payment is uncertain because they are subject to an employment condition or a days-worked condition lack fixedness and therefore do not constitute ordinary wages. By contrast, the Supreme Court's legal principle takes the character as consideration for prescribed work, regularity and uniformity as the criteria, and does not deny ordinary-wage status merely because it is uncertain whether a condition will be fulfilled.

Accordingly, in analysing similar cases, one should not merely quote the concluding sentence, but should test, as a counter-hypothesis, how the conclusion would change if any one of the factors for determination listed in the table above were absent.

Sources for this section: Supreme Court en banc Judgment 2020Da247190 rendered on December 19, 2024 — official judgment text, National Law Information Center

Remaining Questions and Conditions for Re-examination

A follow-up question that remains after reading this judgment is the following: can the value of prescribed work be removed from the reference wage merely because a condition has been attached?

It is also clear which subsequent materials or precedents, once accumulated, would require this framework to be re-examined. Once the records of overtime work, etc. on or after December 19, 2024 and whether a case qualifies as the instant case or a parallel case have been confirmed, the new standard is to be applied anew.

This is a research analysis prepared by cross-checking, as of October 21, 2026, the original text and referenced provisions of Supreme Court en banc Judgment 2020Da247190 rendered on December 19, 2024, as published on the National Law Information Center. It does not substitute for the conduct of litigation by any particular party or for legal advice.

Sources for this section: Supreme Court en banc Judgment 2020Da247190 rendered on December 19, 2024 — official judgment text, National Law Information Center