I. Introduction

A director’s exclusive driver (hereinafter referred to as “the employee”) of the company A (hereinafter referred to as “the company”) who resigned after serving about 6 six years filed a petition to the Ministry of Employment and Labor for less-paid severance pay as well as less-paid statutory allowances for overtime, night time, and holiday work. The employee joined the company on September 29, 2005 as a temporary employee driving the director’s car, and renewed his employment contract annually for four years. Then, the company transferred the employee to the dispatch company due to the limit on employment period as fixed-term employees and had him continue to work for the same position. The employee resigned on August 13, 2011, after working two years additionally. The reason why the employee filed the petition is that the company just paid fixed allowances for the overtime time work exceeding the fixed overtime and the holiday work. These fixed allowances were much lower than the allowances calculated by the Labor Standards Act. So, the less-paid statutory allowance contained different amounts between the amounts received and statutory allowances for the past three years, and different amounts of less-paid severance pay from the wrong calculations.

The legal disputes on this labor case are 1) overtime and holiday work allowances for an intermittent worker, 2) calculation method for overtime, night time, and holiday work, 3) the responsible employer for the dispatched worker’s overtime, 4) negative prescription for unpaid wages, and 5) method of calculating average wages for severance pay.

II. Contents of the Petition

1. The company’s fixed allowance and statutory allowance

As the employee had to drive the car in accordance with the director’s work schedule as an exclusive director’s driver during the employment period, he had worked overtime exceeding the contractual working hours, 8 hours per day and 40 hours per week stipulated in the employment contract all the times. Working hours were stipulated from 9 am to 6 pm, and one hour recess was given during the working hours. Wages contains a basic pay and a certain allowance which was set to cover a fixed overtime allowance of two hours every day. For overtime, nighttime, and holiday work, a fixed allowance was paid monetary compensation of the minimum 5,000 won (for daily overtime exceeding 2 hours) and the maximum 80,000won (for holiday work exceeding 8 hours).
The calculation of statutory allowance by the Labor Standards Act is not to pay a fixed allowance stipulated in the employment contract, but to multiply the number of overtime and holiday working hours with hourly ordinary wages and then add 50% of additional statutory allowance.

The employee’s employment contract: Article 2 (wages)

① Contents of wages
Basic pay        ₩2,086,000
Fixed OT allowance         ₩783,000
Total        ₩2,869,000 / month
② Overtime work allowance for hours within 8 pm is replaced with the fixed OT
allowance under the above ①.
③ ₩5,000 for overtime work over 8 pm, but less than 10 pm;
₩10,000 for overtime work over 10 pm, but less than 12pm;
₩20,000 for overtime work over 12 pm.
④ ₩40,000 for holiday work of 4 hours or more; ₩80,000 for holiday work of 8 hours
or more. (However, working hours less than 4 hours will not be paid additionally.

Related examples are as follows:

1) Work day: Arrived at 6 am on Wednesday, Nov 19 2008, and started driving and finished at 2 am on the following day. They are 11 hours for overtime and 4 hours for night time.
 Company’s payment: ₩20,000 as a fixed overtime allowance was paid.
 Statutory allowance: It shall pay 150% of 9 hours excluding 2 hours already included in the fixed OT allowance, plus 50% of 4 hours for night time work. That is, 13.5 hours for overtime and 2 hours for night time are 15.5 hours. Daily ordinary wages, ₩9,980, times 15.5 hours is equal to ₩154,690. Accordingly, as ₩20,000 was already paid, ₩134,690 is the amount less paid.

2) Saturday work : Arrived at 7:30 am on Saturday, May 30, 2009, and finished working at 12:20 am at night. They are 16 hours for overtime and 2:30 hours for night time.
 Company’s payment: It regarded it as holiday work, exceeding 8 hours. So, it paid ₩80,000 as a fixed allowance.
 Statutory allowance: It shall pay 150% of 16 hours, plus 50% of 2.5 hours for night time work. That is, 24 hours for overtime and 1.15 hours for night time are 25.15 hours. Daily ordinary wages, ₩9,980, times 25.15 hours is equal to ₩250,430. Accordingly, as ₩80,000 was already paid, ₩170,190 is the amount less paid.

3) Sunday work: Arrived at 5:30 am on Sunday, September 20, 2009, and finished working at 22:30 pm. They are 16 hours for holiday work, 8 hours for overtime work and 30 minutes for night time.
 Company’s payment: It paid ₩80,000 as a fixed holiday allowance.
 Statutory allowance: It shall pay 150% of 16 hours for holiday work, 50% of 8 hours for overtime work, and 50% of 8 hours for night time work. That is, 24 hours for holiday work, 4 hours for overtime, and 0.15 hours for night time are 28.15 hours. Daily ordinary wages, ₩9,980, times 28.15 hours is equal to ₩280,430. Accordingly, as ₩80,000 was already paid, ₩200,430 is the amount less paid.

2. Calculation of average wages to calculate severance pay
The employee’s employment contract stipulates, “30 days’ average wages as severance pay are payable to the employee who served one year or more when his contract is expired.” In calculating average wages, the company included only the basic pay and fixed OT allowance into the total amount of wages received for the three months prior to the date of resignation, excluding other allowances. In addition, the company also paid his severance pay every year by renewing the employee’s employment contract. The average wages calculated under the Labor Standards Act shall include not only basic pay and fixed OT allowance, but also meal charge and statutory allowances like overtime work, night time work, and holiday work. So, the employee requested the different amounts paid less due to excluded allowances.

3. Contents of unpaid wages
(1) Less-paid statutory allowances: ₩93,961,874
(2) Less-paid severance pay: ₩10,946,582
(3) Total amount claimed: ₩104,908,456

III. Major Disputed Items

1. Overtime and holiday work allowances for an intermittent worker
Generally, director’s driver has long working hours, and among them, majority hours are waiting hours, and it is hard to treat a driver’s working hours as the regular employee’s working hours. So, in the cases where the company received a permission of exceptional applications, the overtime and holiday work allowances can be exempted. Accordingly, in this case, as the company did not receive any exceptional application from the Minister of Employment and Labor, statutory allowances cannot be excluded, and the driver’s allowances shall be recalculated according to the Labor Standards Act.
【The Labor Standards Act】Article 63 (Exceptions to Application)
The provisions as to working hours, recess, and holidays shall not be applicable to workers who are engaged in any of works described in the following subparagraphs: 3. surveillance or intermittent work, for which the employer has obtained the approval of the Minister of Employment and Labor.
【Administrative Guideline】Kungi 68207-1215, Oct 2, 2003
Even though the work characteristic is surveillance or intermittent work, if the employer has not obtained the approval of the Minister of Labor, provisions concerning working hours, recess, and holiday applied to the L