Korea GM Retirees Lose Wage Lawsuit in 2nd Trial "Non-Filing Agreement Valid"

First Instance Deemed Non-Prosecution Agreement Invalid
Second Instance Recognizes Validity and Overturns Verdict

Seoul High Court, Seocho-gu, Seoul. / Photo by Moon Honam munonam@

[Asia Economy Reporter Kim Daehyun] Over 2,000 retirees of Korea GM filed a lawsuit against the company for average wage claims but lost in the appellate court, overturning the first-instance ruling in their favor. The so-called "non-prosecution agreement," which states that retirees will not raise civil or criminal objections even if severance pay is delayed, was judged to be valid.

According to the court on the 13th, the Seoul High Court Civil Division 1 (Presiding Judge Jeon Ji-won) announced yesterday in the appeal trial of the 4.4 billion KRW wage claim lawsuit filed by over 2,000 Korea GM retirees against the company, "All plaintiffs' claims are dismissed." Dismissal means the case is concluded without substantive judgment due to lack of procedural requirements.

The appellate court stated, "It is difficult to view the non-prosecution agreement in this case as a prior waiver of severance pay merely because there was some difference between the timing of the voluntary retirement agreement in practical retirement procedures and the actual payment of severance pay," adding, "Considering that an average of 160 million KRW was additionally paid as retirement consolation money excluding statutory severance pay, etc."

Furthermore, the court added, "Considering that the defendant appears to have delayed payment partially during the process of a large number of employees retiring en masse, it is difficult to conclude that the non-prosecution agreement including delayed damages is invalid."

Previously, over 9,000 people including Mr. A filed a lawsuit claiming that the company did not include pension insurance premiums (40,000 KRW per month) and holiday gift expenses (300,000 KRW annually) in the average wage during severance pay settlement. They also claimed delayed interest payments, arguing that severance pay for retirees in 2018 was delayed. They additionally claimed delayed damages on performance bonuses (4.5 million KRW per person) in the same year.

The first-instance court ruled in favor of the plaintiffs, ordering payment of a total of about 6.84 billion KRW plus delayed interest. It also ordered recalculation of severance pay including holiday gift expenses in the average wage and payment of the difference after deducting the severance pay actually received by retirees.

The first-instance court particularly did not recognize the validity of the "non-prosecution agreement" pledge received by Korea GM from voluntary retirement applicants in 2018.

It ruled, "At the time some plaintiffs wrote voluntary retirement applications, it was uncertain whether the defendant would approve and confirm them as voluntary retirement candidates," and "Even if it is broadly seen as a non-prosecution agreement, it constitutes a prior waiver of claims, violating mandatory laws such as the Labor Standards Act and the Employee Retirement Benefit Security Act, and is therefore invalid."

Korea GM appealed regarding over 2,000 people who signed the non-prosecution agreement pledge, and in the second trial, the validity of the non-prosecution agreement was recognized, reversing the judgment.

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