(Updated) Hanwha Ocean performance bonuses excluded from severance pay, Supreme Court rules

The Supreme Court of Korea has upheld a lower court ruling that management performance bonuses are not part of severance pay, rejecting a lawsuit filed by about 970 former employees of Hanwha Ocean against the company to claim additional severance.
According to the legal community on the 12th, the Second Division of the Supreme Court of Korea, presided over by Justice Eom Sang-pil, accepted the lower court’s decision to exclude Hanwha Ocean employees’ management performance bonuses from the calculation of their average wage and dismissed the employees’ appeal. The average wage is the total amount of wages received during the three months prior to retirement and serves as the basis for calculating severance pay.
The Supreme Court found no fault with the first-instance and appellate courts’ conclusion that "management performance bonuses are merely a distribution of business profits and cannot be regarded as directly or closely related to the provision of labor, and therefore do not constitute wages."
An official at the Supreme Court of Korea explained, "For money or benefits paid by an employer to qualify as wages, they must be paid as consideration for work, and the obligation to pay them must arise in a way that is directly or closely related to the provision of labor. This decision reaffirms that established legal principle."
hwlee@fnnews.com Lee Hwan-joo Reporter