Only 4 Companies Face Additional Annual Burden of 3 Trillion Won... 67% of Worker Status Confirmation Lawsuits Lost This Year (Comprehensive)

'Hyundai Wia Supreme Court Ruling' 1 Year
8 out of 12 Manufacturing Companies Lost to Management This Year
Additional Lawsuits Could Deal a Fatal Blow to Business Management
Concerns Over Reverse Discrimination and Labor-Labor Conflicts

[Asia Economy Reporter Kiho Sung] It has been revealed that most companies involved in similar lawsuits following the Supreme Court ruling that Hyundai Wia must directly employ in-house subcontractor employees have lost their cases. Companies that had won in the first trial before the Hyundai Wia ruling in July last year have seen the decisions reversed in the second trial in favor of the workers. If the companies’ losses are confirmed, they will face the burden of directly employing up to thousands of subcontractor employees and the associated additional costs. Moreover, the lawsuits could expand beyond production workers to include dispatched workers in service and support roles, deepening corporate concerns.

Cases of Winning in First Trial but Losing in Second Trial Emerge... Risk of Direct Employment for Up to Thousands

According to the industry on the 15th, out of a total of 12 labor status confirmation lawsuits this year involving Samsung Electronics, Hyundai Motor Company, POSCO, Hyundai Glovis, and Korea GM, it was confirmed that the companies lost 8 cases.

Notably, there were two cases where the companies won in the first trial but had the verdict overturned in the second trial. In the lawsuit filed by repair technicians from Samsung Electronics’ service subcontractors, the company won in the first trial, but the ruling was reversed in the second trial held in January. Similarly, in POSCO’s third direct employment lawsuit, the second trial ruled in favor of the workers, contrary to the first trial’s outcome. Both second trial rulings came after the Supreme Court’s July ruling that Hyundai Wia must directly employ subcontracted irregular workers. This indicates that the Supreme Court is gradually broadening the scope of direct employment. If the companies currently involved in lawsuits lose, they will face the situation of having to directly employ up to thousands of subcontractor employees.

The business community argues that bearing the cost burden of direct employment amid various adverse conditions such as global uncertainties will inevitably worsen management. They particularly contend that it is practically impossible to directly employ all subcontractor employees.

An executive from a major corporation pointed out, "Emphasizing unconditional direct employment could negatively impact employment," adding, "Issues of fairness with existing regular employees and potential employment reductions due to litigation concerns could occur, so institutional improvements must come first."

Four Companies Losing up to Second Trial Face Additional Annual Costs of 3 Trillion Won if Supreme Court Also Rules Against Them

The reason major manufacturing companies are anxious about the Supreme Court’s Hyundai Wia direct employment ruling and similar lawsuits is the enormous labor costs involved. If the four major companies currently facing direct employment lawsuits all lose, labor costs alone are estimated to approach 3 trillion won. There are concerns that additional follow-up lawsuits, combined with the global economic downturn, could deal a fatal blow to companies.

According to the industry, Hyundai Motor Company, Kia, POSCO, Hyundai Steel, and Korea GM are awaiting Supreme Court rulings on labor status confirmation lawsuits requiring direct employment of irregular workers. Notably, Hyundai Motor Company, Kia, Hyundai Steel, and Korea GM have lost in both the first and second trials. Except for POSCO’s third lawsuit first trial, workers have won up to the second trial in all four lawsuits from the first to the fourth.

Since the Supreme Court ruling on Hyundai Wia in July last year, manufacturing companies have feared the aftermath. If they lose at the Supreme Court level, companies will have to directly employ up to thousands of irregular workers belonging to subcontractors. If the four major companies?Hyundai Motor Company, Kia, POSCO, and Hyundai Steel?lose all direct employment lawsuits, the cost is estimated to approach 3 trillion won annually.

The scale of irregular employees claimed by each company’s labor union is largest at POSCO with 18,000, followed by Hyundai Steel with 7,000, Hyundai Motor Company with 2,000 to 3,000, and Kia with 800 to 900. Based on last year’s average annual salary per person for each company, the estimated labor costs are ▲POSCO 1.962 trillion won ▲Hyundai Steel 665 billion won ▲Hyundai Motor Company 240 billion won ▲Kia 85.9 billion won, totaling 2.9529 trillion won. Across the entire industry, this cost is expected to snowball.

In fact, Hyundai Motor Company experienced a major change in 2010 when the Supreme Court ruled in favor of workers in a case involving direct employment of in-house subcontractor production workers. This was the first case where Hyundai Motor Company’s subcontracted dispatched labor was deemed illegal, requiring direct employment of irregular workers. Subsequently, Hyundai Motor Company directly employed 4,000 workers starting in 2015, followed by 1,400 in 2016, 600 in 2017, totaling 9,179 by 2020.

During this process, Hyundai Motor Company’s burden of labor costs and other expenses increased further. Assuming an annual salary of 94 million won per employee (based on 2012), it is estimated that the company has paid nearly 863 billion won solely for direct employment. Considering bonuses, welfare, and settlement payments arising from lawsuits, the total cost is expected to approach 1 trillion won.

The business community points out that besides the financial losses to companies, the court rulings create a structure where other workers suffer. Last year at Hyundai Steel, labor conflicts arose between unions over the direct employment of subcontractor employees. Members of the Korean Confederation of Trade Unions opposed the hiring method for irregular workers, while members of the Federation of Korean Trade Unions accepted the hiring. Additionally, regular workers who joined through competition voiced concerns about unfair hiring conditions compared to themselves. Due to this, when the Hyundai Steel irregular workers’ branch occupied the control center, employees issued a statement demanding their evacuation.

There are also concerns that Korea applies overly strict standards to manufacturing dispatch work compared to global norms. Domestic dispatch laws prohibit dispatch in manufacturing and limit it to 32 types of work based on specialized knowledge, skills, and nature of tasks. Dispatch periods are limited to a maximum of two years. Unlike Korea, major advanced countries such as Germany, Japan, the UK, and the US allow dispatched labor in virtually all types of work, including manufacturing. Jongseon Hong, head of the Labor Standards Policy Team at the Korea Employers Federation, stated, "Germany and Japan recognize subcontracting and contracting themselves to enhance industrial competitiveness," adding, "Our standards are stricter compared to advanced countries, so more flexible judgment is needed."

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