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| The Supreme Court building in Seocho, southern Seoul. / Korea Times file |
By Lee Suh-yoon
The Supreme Court ruled in favor of retired Jungbu Express bus drivers regarding a wage calculation dispute, Wednesday, saying overtime pay should be calculated using actual working hours.
A worker's overtime pay in Korea is calculated by the number of overtime hours and one's hourly rate. Employers are required to pay workers an additional 50% over their ordinary hourly wage under the country's Labor Standards Act. One's hourly rate is determined by dividing one's monthly wage by the total number of working hours that month.
Previous court rulings allowed companies to underrepresent an employee's hourly rate in the overtime pay calculation. This was done by inflating the employee's overtime hours by 50 percent ―synonymous with the pay raise for overtime hours. This artificially increased the total number of working hours that was used to divide the monthly wage (2 hours of overtime work was magically counted as 3 hours under such a calculation scheme). This led to a downplayed hourly rate which was then used to determine the worker's overtime pay.
On Wednesday, however, the court overturned previous rulings and said the overtime pay calculation should use the employee's actual number of working hours. The ruling will not affect companies with a constant 9 to 5 schedule but it will affect hospitals, transport companies and other industries that regularly require overtime work from employees.
"The ruling will have an impact on workers with fixed overtime schedules," Sim Hui-cheon, a public labor attorney working at Kookmin Bank labor union, told The Korea Times. "All this time, companies have been under-calculating the overtime pay by inflating the employees' number of working hours in their calculation."
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