KCCI on Supreme Court's Recognition of Regular Bonuses as Ordinary Wages: "Massive Cost Burden on Companies"

"Having to Predict and Respond to an Unpredictable Economic Environment... Practically Impossible"

[Asia Economy Reporter Yu Je-hoon] The Korea Employers Federation (KEF) expressed concern on the 16th that the Supreme Court's ruling in favor of the labor union in Hyundai Heavy Industries' 600 billion won ordinary wage lawsuit could lead to a massive labor cost burden.

In a statement released that day, KEF said, "By recognizing regular bonuses as ordinary wages, the Supreme Court denied the principle of good faith, putting companies that trusted the existing agreements between labor and management in a situation where they must bear enormous additional costs."

KEF particularly noted, "The Supreme Court interpreted the existing good faith judgment criteria more narrowly, denying the principle of good faith on the grounds that even if a company faces managerial difficulties, if the employer made reasonable and objective business forecasts, it could have sufficiently anticipated the deterioration of the business condition. The Supreme Court considers this an area where changes in the overseas economic situation and their impacts can all be predicted. However, contrary to this, today's industry is rapidly changing to the extent it is called the Fourth Industrial Revolution, and unpredictable crises and changes such as COVID-19 occur frequently," it pointed out.

KEF continued, "It is practically an impossible demand for business managers to predict the rapidly changing economic environment that no one can foresee and respond to business deterioration," adding, "This unreasonable judgment, which does not correspond at all to reality, is likely to cause confusion and conflict in the industrial field."

KEF also stated, "In a situation where the judicialization of labor issues is continuously raised, this ruling can only increase such concerns," and "We hope the courts will respect the autonomous practices and trust relationships between labor and management and make reasonable judgments that align with the rapidly changing business environment and industrial realities."

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