Aftermath of Kumho Tire's Ordinary Wage Lawsuit... Other Companies Are Also Shaking

Hyundai Heavy Industries Faces Lawsuits Worth Up to 700 Billion Won
Renault Korea and POSCO Also Preparing for Ordinary Wage Lawsuits

[Asia Economy Reporter Seong Giho] Kumho Tire has partially lost in the retrial of the ordinary wage case, drawing attention to how the related ruling will affect the entire industrial sector. In particular, since other companies such as Hyundai Heavy Industries are also conducting similar wage lawsuits, there is a high possibility that this ruling will influence the outcomes of other companies' trials.

According to the industry on the 16th, the case most similar to Kumho Tire's concluded this time is Hyundai Heavy Industries' ordinary wage payment lawsuit.

In the industry, although the exact amount will be estimated once Hyundai Heavy Industries' retrial is completed, if they lose the lawsuit, the retroactive ordinary wage payment is estimated to reach approximately 600 billion to a maximum of 700 billion KRW.

The lawsuit began in 2012 when Hyundai Heavy Industries workers claimed the difference in past payments such as legally recalculated overtime pay and severance pay by including all bonuses in the ordinary wage.

In the first trial in 2015, 800% of the bonuses were fully recognized as ordinary wages. Furthermore, the principle of good faith (Shinui Principle) claimed by Hyundai Heavy Industries was not accepted, and it was judged that retroactive payment for three years of wages must also be made.

In the second trial the following year, Hyundai Heavy Industries won as the court ruled that the fixed nature of bonuses was not recognized and thus could not be included in the ordinary wage. The reversal in the second trial considered Hyundai Heavy Industries' severe management deterioration, which recorded an operating loss of 1.5401 trillion KRW at the time.

However, in December last year, the Supreme Court overturned the second trial's judgment again and sent the case back to the Busan High Court, where the lawsuit is ongoing.

Additionally, the Renault Korea Motors labor union filed a wage lawsuit in August at the Busan District Court demanding payment of damages for improperly calculated ordinary wages, seeking compensation ranging from 2 million to 10 million KRW per union member for about 1,700 members.

POSCO, which recently lost a status confirmation lawsuit filed by a subcontractor worker, is also facing the risk of an ordinary wage lawsuit. The Metalworkers' Union POSCO branch is proceeding with an ordinary wage lawsuit against the company. The branch claims that ▲400% of bonuses ▲200% of performance bonuses and other bonuses ▲allowances for resident and maintenance personnel ▲self-development support funds should be included in the ordinary wage, and recruited the first group of ordinary wage lawsuit participants until July.

There are also cases where unions and retirees clash over ordinary wage lawsuits. Hyundai Motor retirees recently won a first trial lawsuit against the Hyundai Motor labor union, demanding that the encouragement money received from the company in exchange for withdrawing the ordinary wage lawsuit be paid to retirees as well.

The Hyundai Motor union withdrew the lawsuit ahead of the 2019 Supreme Court ruling on the ordinary wage lawsuit. Instead, union members received 15 shares of employee stock ownership and encouragement money (settlement money) ranging from 2 million to 6 million KRW per person. Subsequently, after six years since the lawsuit was filed, labor and management reached an agreement to withdraw related lawsuits and include regular bonuses as ordinary wages. Retirees then filed a lawsuit against the company and union, arguing that the 2019 settlement payment, which targeted only active union members, constituted an illegal act.

The business community expresses concern that the Kumho Tire ordinary wage lawsuit will affect the numerous lawsuits pending at other companies. A business official appealed, saying, "The result of the Kumho Tire lawsuit will serve as a judgment standard for other companies conducting similar lawsuits," and added, "We hope the court will carefully consider the companies' management conditions and the current economic situation in its judgment."

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