"Hyundai Heavy Industries' Ordinary Wage Ruling to Increase Business Management Uncertainty"

Federation of Korean Industries' Hankyung Research Institute Expresses Concern Over Supreme Court Ruling and Calls for Government Legislative Supplementation

[Asia Economy Reporter Lee Hye-young] The Korea Economic Research Institute under the Federation of Korean Industries expressed concerns on the 16th regarding the final court victory of Hyundai Heavy Industries workers in a lawsuit demanding the inclusion of bonuses in the ordinary wages, and called for legislative supplementation by the government.

In a statement released that day, the Korea Economic Research Institute pointed out, "In a situation where national competitiveness has weakened due to delays in economic recovery caused by the resurgence of COVID-19, this ruling, which does not recognize the principle of good faith (Shin-ui-chik), will lead to an unexpected surge in labor costs and increase uncertainty in corporate management."

The Korea Economic Research Institute criticized the Supreme Court for ultimately not recognizing the 'principle of good faith,' the core issue in this lawsuit that lasted nine years. There is a precedent that if retroactive payment of ordinary wages causes significant managerial difficulties or threatens the survival of a company, it violates the fundamental civil law principle of good faith, and Hyundai Heavy Industries is also in such a situation, but the Supreme Court did not accept this.

The Korea Economic Research Institute expressed concern, saying, "Hyundai Heavy Industries is in a very difficult business situation, recording a cumulative loss of 320 billion won in the third quarter of this year. By not applying the principle of good faith in this ruling, it is expected that wasteful disputes and lawsuits related to ordinary wages will increase."

It added, "To prevent ordinary wage lawsuits from leading to weakened corporate competitiveness, it is desirable to first consider the trust formed between labor and management during wage negotiations, and additionally review management indicators comprehensively to assess managerial difficulties."

The Korea Economic Research Institute also urged, "Since the essence of the ordinary wage controversy lies in legislative deficiencies, please prepare specific guidelines regarding the application of the principle of good faith."

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