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What happens if the salary peak system does not go through a board resolution?

Recently, we agreed to implement a salary peak system through a labor-management agreement. However, there were directors on the board with differing opinions, so an agreement was not reached and a resolution could not be passed. Under the law applicable to our company, matters concerning the enactment, amendment, and repeal of important regulations are required to go through the board's deliberation and resolution. In such a case, is a salary peak system implemented by a labor-management agreement alone still valid?

Salary peak system

Answer

Published: 2025-04-16

Author : Kuk Il KIM

Hello. I will provide an answer regarding a salary peak system implemented by a labor-management agreement alone.

Unfortunately, if a matter requiring changes to personnel regulations and budget adjustments did not go through the board's deliberation and resolution, it is difficult to recognize the validity of the salary peak system.

A salary peak system consists of reducing wages by a certain percentage until the retirement age, and in return extending employment for two years after the retirement age.

Therefore, it inevitably entails changes to personnel regulations, adjustments to major budgets, and changes in the scale of new hiring.

Finalizing such matters constitutes an important matter requiring a board resolution.

For that reason, in order to implement it, a board resolution must precede it.

Even if a system that conflicts with the existing personnel regulations is thus implemented without a board resolution and agreements are concluded with individual employees accordingly, it is difficult to regard it as having been legally validly implemented.

If a detailed review of the procedures and regulations for matters requiring a board resolution is needed in this way, we recommend that you seek advice from an attorney specializing in this field.