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CEO of General Motors at a roundtable for South Korean and US CEOs hosted by the US Chamber of Commerce at the Willard InterContinental Hotel in Washington

By Lee Jung-gook, staff reporter

“I felt shame.”

Yang Je-ho, a lawyer who is currently working on a wages claim filed against GM Korea, was referring to what South Korean President Park Geun-hye told General Motors CEO Daniel Akerson during her recent visit to the US. “Regular wages is an extremely difficult issue. It is an issue that affects the entire South Korean economy,” Park said. “I will do what it takes to find a solution.”

“Regular wages” is a South Korean term that refers to the standard wages that a worker is paid. That figure is then used as the basis for calculating overtime, holiday pay, and other forms of allowance that employers are legally required to provide.

“In a broad sense, you could say that the CEO of GM is the defendant in my lawsuit,” Yang explained. “In effect, he met the President and put pressure on her under the pretext of discussing investment in Korea.”

In 2010, GM Korea was sued by four workers, including a man surnamed Nam, 56, who demanded recalculation and payment of overtime and other legal allowances. The court has ruled against the company and for the workers in both the initial case and the first appeal.

During both of these rulings, the courts found that incentives provided on a regular basis should be included in the calculation of regular wages. Following the ruling, about 10,000 workers have filed an additional suit asking for back pay.

Yang and other legal professionals are concerned that Park’s remarks about regular wages could violate the constitutional separation of powers between the executive and judicial branches of government.

On May 10, Lee Jeong-ryeol, a judge at the Changwon District Court, wrote on his Twitter feed that “the President’s remarks could be dangerous, since they do not bear in mind the separation of powers stipulated in the constitution.”

Lee found it difficult to understand Park’s remarks. “There is a long-standing Supreme Court precedent that interprets payments that are made regularly and consistently as regular wages,” he said. “I cannot think of any special or logical reason why the legal principles based on this precedent ought to be changed now.”

On the same day, MINBYUN-Lawyers for a Democratic Society issued a statement on the matter. “For the president of South Korea, the head of the government, to promise to solve the issue of regular wages at the request of a US company indicates that she intends to nullify a judicial decision,” the group said in the statement. “This runs contrary to the principle of the separation of powers.”

A review of the court decisions made in cases related to regular wages indicates that the scope of allowances that are recognized to be included in regular wages have gradually increased.

In the 1990s, the Supreme Court established a consistent standard for determining regular wages: fixed, uniform compensation. Subsequent judgments determined that childcare allowance (1994) as well as travel allowance for holidays, summer vacation allowance, and other benefits (1996) should be taken into account when calculating ordinary wages. In 2011, the courts decided that incentives given at the end of each quarter must also be regarded as part of regular wages. And in Mar. 2012, when 19 workers at Guma Limousine filed a lawsuit against their company asking for recalculation and payment of legal allowances, the court also found that regular incentives should be included in regular wages, even if they were not paid every month.

When the Seoul High Court found in favor of the Korea GM workers in Nov. 2012, it not only increased the scope of regular wages, but also started a discussion about the very definition of wages.

The Seoul High Court explained its reason for finding that regular incentives ought to be included in regular wages. “If regular incentives are not regarded as part of regular wages, this would mean that incentives are taken into account for the compensation of basic working time but are not taken into account for the compensation of overtime,” the court said. “As a consequence, the per hour value of overtime work decreases.”

Take for example a worker who works eight hours each day according to his regular schedule and works four hours of overtime. In this case, it would be illogical to calculate the overtime payment on the basis of regular wages that have been calculated without taking into account these four extra hours.

"The court is seeking a change in the way that overtime work is calculated,” argued Kim Geon-u, a lawyer with the Wooriro Joint Law Firm who is representing the GM Korea workers in the lawsuit. “At present, overtime work receives less attention relative to regular working hours, but the court is asking that it be treated the same as fixed working hours.”

While courts are handing down positive decisions of this sort, the remarks made by Park and the stance adopted by the Ministry of Employment and Labor are drawing the ire of workers. The Ministry has revised the method for calculating regular wages four times since first announcing it in 1988. Even so, regular forms of allowance including regular incentives, physical training allowance, commuting allowance, family allowance, education allowance, and food allowance are still not recognized as part of regular wages.

Put simply, the Ministry is not implementing the Supreme Court’s more expansive view that these regular forms of allowance are part of regular wages. Instead, the Ministry continues to reiterate its position that the decisions were not issued by the full panel of the Supreme Court and that they vary from case to case.

After Park’s remarks, the Ministry offered to host talks between labor, management, and the government, but this has only added fuel to the fire.

Both the Korean Confederation of Trade Unions (KCTU) and the Federation of Korean Trade Unions (FKTU) are criticizing Park’s remarks about regular wages, and neither has indicated that it will take part in talks with management and the government.

There are indications that the backlash will grow more intense, with the KCTU planning to hold a protest in front of the citizen’s center in Seoul’s Cheongun neighborhood, near the Blue House, on May 14.

“When the judicial branch makes a decision, the executive branch ought to respect it and reflect it in its policy,” said Kwon Yeong-guk, a lawyer and the chairman of MINBYUN. “But in this case, the executive branch is instead moving to invalidate the decision. This behavior is a violation of common sense.”

Please direct questions or comments to [english@hani.co.kr]