Hyundai Heavy Union: "It's Late but Relieved... Unpaid Wages Must Be Paid"

The Hyundai Heavy Industries labor union held a press conference in front of the Supreme Court on the 16th to welcome the ruling on ordinary wages. The Supreme Court ruled in favor of the union on that day.

[Asia Economy Reporter Choi Dae-yeol] With the Supreme Court ruling in favor of the labor union in the ordinary wage lawsuit filed against Hyundai Heavy Industries, employees are expected to receive retroactive payments for unpaid wages. Previously, it was agreed between labor and management that the ruling would equally apply to all employees not participating in this representative lawsuit and retirees since 2009.

On the 16th, the Supreme Court’s 3rd Division overturned the lower court’s ruling that had favored the company in the appeal trial of a wage claim lawsuit filed by 10 Hyundai Heavy Industries workers, and remanded the case to the Busan High Court. In the first trial, the principle of good faith (bona fide) was not accepted, resulting in a win for the workers, but in the second trial, the court accepted the principle of good faith and ruled in favor of the company. The application of the principle of good faith was a key point of interest in this Supreme Court ruling as well.

If bonuses and other payments are included in the ordinary wage as the union claims, statutory allowances and retirement pay will increase. Hyundai Heavy Industries’ bonuses amounted to a total of 600% paid every two months at 100%, plus an additional 100% at year-end and 50% each for the Lunar New Year and Chuseok holidays, totaling 800%. Among these, the holiday bonus of 100% was given only to current employees. The workers have argued that since the bonuses meet the criteria of regularity, uniformity, and fixity, the company should pay the retroactive amounts.

Although the detailed items differed, both the first and second trials recognized the ordinary wage. However, the second trial applied the principle of good faith and ruled that retroactive payments were not required. This was because it was considered that if the company paid retroactive amounts, the financial burden would increase to the point that the company’s survival could be threatened. The Supreme Court’s statement that "if there is a possibility of overcoming future management difficulties, the principle of good faith should not be used to easily reject workers’ additional claims for statutory allowances" is interpreted as being influenced by the recent recovery trend in the shipbuilding industry. This year, as the shipping industry has shown signs of recovery, the domestic shipbuilding sector’s order volume has increased to levels comparable to the past ‘supercycle’ period.

The amount the company will have to bear due to this ruling is estimated to exceed 400 billion to 600 billion KRW. A Hyundai Heavy Industries official said, "We respect the court’s judgment, but since there are differences with our position, we will carefully review the ruling once received and fully present our case in the retrial."

Opinions between labor and employer organizations diverged. The Hyundai Heavy Industries labor union stated after the ruling, "Although delayed, this is a fortunate and welcome decision after nine years since the start of the representative lawsuit," and added, "Only the retrial procedure remains in the lower courts, so the company should promptly discuss the plan for unpaid wage payments with the labor union." The Korea Economic Research Institute under the Federation of Korean Industries criticized, "This ruling, which does not recognize the principle of good faith, will cause an unexpected surge in labor costs and increase uncertainty in corporate management," and warned, "By not applying the principle of good faith in this ruling, wasteful disputes and lawsuits related to ordinary wages are expected to increase."

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