KT 'Retirement Extension Type Wage Peak System' Lawsuit Appeal... Workers Claim "Secret Agreement and Discrimination"

A representative from the KT Labor Rights Center is speaking at the "Age Discrimination KT Wage Peak System Victims Testimony Conference" held at the National Human Rights Commission in Jung-gu, Seoul, on July 14. [Photo by Yonhap News]

[Asia Economy Reporter Kim Daehyun] In the first appellate trial of the lawsuit disputing the validity of KT’s “retirement age extension-type wage peak system” introduced in 2015, the workers and the company engaged in intense legal arguments.

On the 12th, the Seoul High Court Civil Division 1 (Presiding Judge Jeon Ji-won) held the first hearing of the wage claim lawsuit appeal filed by about 700 current and former KT employees.

In court that day, the workers’ representative reiterated that the wage peak system, secretly concluded between labor and management, is invalid, stating, “There is a fundamental question of whether wages can be cut without the workers’ knowledge.”

He also appealed, “The Supreme Court stated that ‘the use of the funds reduced by the wage peak system should also be a criterion for judging its validity.’ Thousands of employees were forced out, and the remaining employees had their wages cut. Meanwhile, 48 executives signed new labor contracts for three years after retirement, hardly coming to work but taking 41 billion won in wages. Please examine whether this wage peak system is just and equitable.”

On the other hand, the company’s representative denied knowing about any procedural violations during the wage peak system agreement process. He argued that it is wrong to hold the company responsible for problems that occurred within the union. He also claimed that considering the simultaneous extension of the retirement age and the reduction rate, the wage peak system did not cause disadvantages to the workers severe enough to invalidate it. The court set the next hearing for July 23.

The KT wage peak system at issue corresponds to the retirement age extension-type wage peak system, which most companies adopted in 2016 following the amendment of the Elderly Employment Act to extend the retirement age to 60 and restructure the wage system. This system reduces wages from a certain age while extending the retirement age. Although wages are cut from a certain age, the method of guaranteeing employment until retirement age is called “retirement age guaranteed type,” and the method of reemploying for a certain period after retirement is called “employment extension type.”

Initially, about 1,300 workers participated as plaintiffs in this case, but after losing the first trial in June, hundreds gave up on the appeal. Also, while one panel handled all these cases in the first trial, in the appeal, two panels are handling the cases separately by filing time, with about 700 and 130 people respectively. The first hearing for the appeal of the 130 people will be held on the 28th under the Seoul High Court Civil Division 15 (Presiding Judge Yoon Gang-yeol).

In 2015, KT decided through labor-management agreement to implement a wage peak system that cuts wages by 10% annually from age 56 in exchange for extending the retirement age. The KT workers filed a lawsuit demanding the return of wages cut by 10-40% due to the wage peak system secretly concluded in a closed room.

The first trial did not accept all the workers’ claims. It ruled that “a labor-management agreement cannot be invalidated simply because it did not go through a union general meeting resolution,” and “since the wage peak system was implemented in connection with the retirement age extension, the extension itself is the most important compensation for the wage reduction.” It also stated, “The absence of explicit workload reduction measures alone cannot lead to the conclusion that the wage peak system constitutes unreasonable age discrimination.”

Earlier, in May, the Supreme Court ruled the retirement age guaranteed (maintenance type) wage peak system of the former Electronics and Telecommunications Research Institute (now Korea Electronics Technology Institute) as invalid. The Korea Electronics Technology Institute’s system did not extend the existing retirement age, and there was no change in job content or reduction in workload.

The Supreme Court emphasized that “not all wage peak systems are invalid,” and presented criteria for judging the validity of wage peak systems, including ▲the legitimacy and necessity of the introduction purpose ▲the extent and duration of actual wage reduction ▲appropriateness of compensation measures ▲whether the reduced funds were used for the intended purpose.

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