Supreme Court Supports Workers, Rules "Kia Motors' Regular Bonuses Are Also Ordinary Wages" (Comprehensive)

Union Victory in 10-Year Legal Battle... Similar Lawsuits on Ordinary Wages Awaiting Trial

Members of the Kia Motors Branch of the Korean Metal Workers' Union held a press conference on the 20th in front of the Supreme Court in Seocho-gu, Seoul, regarding the Supreme Court ruling on the ordinary wage lawsuit. On the same day, the Supreme Court upheld the lower court's partial ruling in favor of the plaintiffs in the wage claim lawsuit filed by Kia Motors workers against Kia Motors. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Baek Kyunghwan] The Kia Motors labor union has won the final verdict in a 1 trillion won ordinary wage lawsuit against the company. The management argued that the union's demands would cause difficulties in company management and violate the principle of good faith, but the Supreme Court did not accept this.

The Supreme Court's First Division (Presiding Justice Kim Seonsu) confirmed the appellate court's ruling on the morning of the 20th, which partially ruled in favor of the union in the wage claim lawsuit filed by 3,531 Kia Motors workers against the company. In 2011, 27,451 Kia Motors workers filed a lawsuit demanding that various allowances, including an annual 700% regular bonus, be included in the ordinary wage to calculate allowances and severance pay. The wage difference claimed by the union against the company amounted to 658.8 billion won, and with interest of 433.8 billion won added, the total reaches 1.0926 trillion won.

The key issue in the appeal was whether the principle of good faith applies, specifically whether "even if regular bonuses, etc., qualify as ordinary wages, additional statutory allowances need not be paid if it causes business management difficulties." In December 2013, the Supreme Court's full bench had outlined a general concept that if additional wage payments put a company in "business management difficulties," the claim for ordinary wages could be limited under the principle of good faith.

The first trial ordered the payment of 422.3 billion won in total, including delayed interest, which is half of the claimed amount, 312.6 billion won. The court judged that it was inappropriate to argue that paying wages that workers rightfully deserved only now, thereby incurring additional costs, poses a significant threat to the economy. The appellate court also ruled partially in favor of the union, stating that it was difficult to conclude that the union's wage claim caused serious business difficulties or threatened the company's survival.

The Supreme Court also agreed with the second trial's ruling. The bench reaffirmed that "the ordinary wage nature of regular bonuses and the acceptance of the good faith defense regarding ordinary wages must be judged carefully and strictly," and stated that "the appellate court's ruling that the plaintiffs' claims do not violate the principle of good faith in the ordinary wage lawsuit is reasonable," dismissing all appeals.

Additionally, the 'break time' of 10 to 15 minutes granted during regular and extended working hours for production workers was recognized as working hours under the Labor Standards Act. Since the remaining time excluding lunch during regular working hours is 8 hours, the collective agreement and attendance management regulations assumed that the time designated as break time is also working hours.

However, considering that the company's payment obligation was already adjusted to half of the claimed amount, 312.6 billion won, in the first trial and that a subsequent labor-management agreement was reached, the burden is expected to decrease significantly.

In the legal community, similar lawsuits surrounding ordinary wages are lined up, and this ruling is expected to have a significant impact on the entire industry. The Hyundai Heavy Industries ordinary wage case is a representative example. The first trial in February 2015 ruled that it was unfair to disadvantage workers due to worsening company management conditions and ordered retroactive payment of an 800% bonus, whereas the second trial applied the 'principle of good faith' and decided that retroactive payment of additional wages was not required. Considering Hyundai Heavy Industries' second-quarter performance, it was judged that the additional ordinary wage burden would further exacerbate the financial crisis. The Supreme Court's full bench is currently reviewing the appeal of this case. Other companies such as Kumho Tire, Mando, Hyundai Mipo Dockyard, and Doosan Motrol are also awaiting the Supreme Court's judgment.

This content was produced with the assistance of AI translation services.