'200 Billion Won Wage Lawsuit' Approaching in a Week... Kumho Tire on the Brink of a Storm

Afternoon of the 16th Gwangju High Court Remand Trial Verdict
Business and Local Groups "Must Consider Company Situation"

[Asia Economy Reporter Seong Giho] The final verdict on Kumho Tire's ordinary wage lawsuit, which could amount to up to 200 billion KRW, is just a week away. If Kumho Tire loses, the resulting unmanageable debt could threaten the company's very existence, causing significant repercussions.

According to the legal and business circles on the 9th, the Civil Division 3 of the Gwangju High Court is scheduled to deliver its ruling on the retrial of the wage lawsuit filed by five current and former Kumho Tire employees at 2 p.m. on the 16th.

This lawsuit began when the five employees claimed that the regular bonuses from 2013 should have been included in the ordinary wage, but the company excluded them when calculating the ordinary wage and paying allowances.

The company argued that bonuses cannot be considered ordinary wages because they lack the characteristics of compensation for labor or fixedness. They also contended that additional allowance claims are impossible since the labor-management collective agreement had finalized the terms regarding ordinary wages.

The first trial in 2016 concluded with a partial victory for the workers. However, in the 2017 second trial, the company's argument based on the principle of good faith?that the claimed amount could jeopardize the company's survival?was accepted, resulting in a win for the company.

The Supreme Court ruled in favor of the workers. In March last year, the Supreme Court overturned the previous ruling, stating that it was difficult to be convinced that additional wage payments would cause significant managerial difficulties for the company, and sent the case back to the Gwangju High Court.

Although only five employees are involved in this lawsuit, it is expected to influence a separate lawsuit filed by 3,000 Kumho Tire union members. Industry estimates suggest that the amount the company may have to bear could reach up to 200 billion KRW.

If the contingent liability of 200 billion KRW occurs as the market expects, Kumho Tire will face a critical survival juncture. Kumho Tire has about 1 trillion KRW in debt maturing by the end of next year. Its cash holdings are less than 100 billion KRW.

Industry insiders express concerns that Kumho Tire could face a default situation due to worsening liquidity and, in the worst case, may again enter a workout or court receivership crisis.

Business circles and regional economic organizations are increasingly urging the court to make a wise judgment. The Gwangju and Jeonnam Federation of Employers stated, "Considering Kumho Tire's severe difficulties to date, the upcoming short-term debt of about 1 trillion KRW, and the uncertainties in the domestic and international business environment," they requested, "Please make a wise judgment that allows Kumho Tire and its workers to coexist in the long term."

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