KCCI Questions Judicial Legitimacy Following Kia Motors' Loss in Ordinary Wages Case

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 ruling partially 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 Kiho Sung] After the Supreme Court ruled in favor of the labor union in the Kia Motors regular wage dispute, the Korea Employers Federation expressed regret, stating, "We have doubts about the legitimacy of the judiciary's decision."

On the 20th, the Federation issued a statement saying, "The Supreme Court ruling recognized regular bonuses as part of the regular wage but did not acknowledge exceptions based on the principle of good faith. This unilaterally imposes a massive additional overtime pay burden on companies that have faithfully adhered to the existing wage system agreed upon by labor and management, which the business community deeply regrets."

It continued, "The issue stems from the unclear standards regarding 'serious managerial difficulties,' which serve as the basis for the principle of good faith judgment presented in the 2013 Supreme Court plenary session ruling. The court mainly bases the application criteria of good faith for regular wages on short-term financial statements, but this largely fails to consider the managerial situation of companies that must strategically operate amid fierce international competition," it pointed out.

The Federation added, "Overall, Korean automobile companies have a labor cost ratio exceeding 12% of sales, and competitiveness in R&D and marketing is continuously deteriorating. This ruling will increase labor costs, inevitably leading companies to face serious managerial crises," and "This empirically demonstrates the worsening difficulties faced by many companies in Korea's automobile industry."

It also questioned the legitimacy of the ruling. The Federation stated, "Given the unprecedented national economic crisis caused by the novel coronavirus infection (COVID-19), and the massive management and employment crises companies are facing, this ruling shows no consideration, raising doubts about the legitimacy of the judiciary's decision at the national level," and criticized, "The Kia Motors labor and management agreed in 2019 on the regular wage lawsuit, sharing concerns about weakened competitiveness and employment instability caused by the lawsuit, but this ruling by the judiciary has even blocked the path for labor and management to resolve the issue autonomously."

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