COURT RULING ON PEAK WAGE SYSTEM

입력 2022.05.27 (15:22) 수정 2022.05.27 (16:46)

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[Anchor Lead]

The Supreme Court has ruled that the peak wage system is against the law without a reasonable cause or criteria supporting it, even if the rule was introduced through agreement by labor and management. The ruling indicates that without the presence of corresponding measures such as lighter workload or extended retirement age, slashing wage levels based on one’s age is discrimination.

[Pkg]

The Korea Electronics Technology Institute introduced the peak wage rule in 2009 as agreed upon by the labor union. One employee whom we will call A was subject to the rule from 2011 when he turned age 55. His monthly salary went down by as much as 2.8 million won but there were no changes to his daily obligations or intensity of work. Basically, he only saw a wage cut with no compensation such as an extension in retirement age. This employee filed a lawsuit arguing such age-based discrimination is unjustified. Under the Elderly Employment Promotion Act, discriminating against wage levels on the basis of age alone is prohibited if without a valid reason. After a five-year deliberation, the Supreme Court has sided with the plaintiff. The court said the peak wage scheme was discrimination pointing out that while the company introduced the rule to save labor costs, it did not seek measures to address disadvantages suffered by the employees.

[Soundbite] Lee Hyeon-bok(Supreme Court Judicial Researcher) : "Companies that implement the peak wage system without standards proposed by the court should introduce compensation measures or revise the system."

The plaintiff will now get back some 130 million won in reduced wages from past years. The top court noted that if the peak wage rule is to be valid, companies should have introduced corresponding measures such as extended retirement age or lighter workload. They should also be responsible for using the saved costs for intended purposes.

[Soundbite] Yang Ji-woong(Lawyer) : "Costs saved through the peak wage should go towards recruiting new employees or funding the wage structure of existing workers."

The latest ruling serves as a warning against resorting to the peak wage rule only for corporate profitability.

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  • COURT RULING ON PEAK WAGE SYSTEM
    • 입력 2022-05-27 15:22:34
    • 수정2022-05-27 16:46:17
    News Today
[Anchor Lead]

The Supreme Court has ruled that the peak wage system is against the law without a reasonable cause or criteria supporting it, even if the rule was introduced through agreement by labor and management. The ruling indicates that without the presence of corresponding measures such as lighter workload or extended retirement age, slashing wage levels based on one’s age is discrimination.

[Pkg]

The Korea Electronics Technology Institute introduced the peak wage rule in 2009 as agreed upon by the labor union. One employee whom we will call A was subject to the rule from 2011 when he turned age 55. His monthly salary went down by as much as 2.8 million won but there were no changes to his daily obligations or intensity of work. Basically, he only saw a wage cut with no compensation such as an extension in retirement age. This employee filed a lawsuit arguing such age-based discrimination is unjustified. Under the Elderly Employment Promotion Act, discriminating against wage levels on the basis of age alone is prohibited if without a valid reason. After a five-year deliberation, the Supreme Court has sided with the plaintiff. The court said the peak wage scheme was discrimination pointing out that while the company introduced the rule to save labor costs, it did not seek measures to address disadvantages suffered by the employees.

[Soundbite] Lee Hyeon-bok(Supreme Court Judicial Researcher) : "Companies that implement the peak wage system without standards proposed by the court should introduce compensation measures or revise the system."

The plaintiff will now get back some 130 million won in reduced wages from past years. The top court noted that if the peak wage rule is to be valid, companies should have introduced corresponding measures such as extended retirement age or lighter workload. They should also be responsible for using the saved costs for intended purposes.

[Soundbite] Yang Ji-woong(Lawyer) : "Costs saved through the peak wage should go towards recruiting new employees or funding the wage structure of existing workers."

The latest ruling serves as a warning against resorting to the peak wage rule only for corporate profitability.

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