110 Retired Executive Employees File 3.3 Billion Won Compensation Lawsuit Against Kia

Aftermath of Supreme Court's Recognition of "Collective Consent Rights"
Kia Faces Third Lawsuit Over Wage Peak System

One hundred and ten retired executive employees of Kia have filed a lawsuit claiming damages worth approximately 3.3 billion KRW, arguing that Kia’s employment rules, which apply only to executives and resulted in unfavorable treatment regarding wages and allowances, constitute a tort under civil law. The amount claimed is expected to increase in the future.

Kia Motors Headquarters, Seocho-gu, Seoul. Photo by Kang Jin-hyung

Previously, 77 and 102 retired Kia executives filed similar damage claims on February 5 and 15 of last year, respectively. Following the Supreme Court plenary session ruling in May 2023, which changed the longstanding position after 45 years by stating that employment rule changes cannot be made without workers’ consent due to social reasonableness, related lawsuits have been continuously filed.

According to the legal community on the 31st, 110 retired Kia executives filed a damage claim lawsuit at the Seoul Central District Court on the 25th, stating that "Kia’s violation of Article 94, Paragraph 1 of the Labor Standards Act and discriminatory acts against executive employees constitute a civil tort," and demanding payment of the wage difference and accrued interest amounting to 30 million KRW related to the implementation of the wage peak system and annual leave allowances. The 110 retired executives who filed the lawsuit were born in 1964 and retired in December last year.

Earlier, around 2004, Kia separately established so-called "executive employee employment rules" that apply only to managerial-level employees and above. Around 2015, Kia introduced and implemented the wage peak system within these executive employment rules.

The plaintiffs argue that simply because they were executive employees, Kia ▲ separately established employment rules applying only to executives, ▲ did not obtain consent through collective decision-making by workers, and ▲ introduced the wage peak system a few years after establishing the executive employment rules, discriminating against the plaintiffs based on age without reasonable grounds. They claim these actions by the defendant constitute a "tort under civil law." They also argue that Kia should pay damages equivalent to the difference in wages and welfare benefits, such as annual leave allowances, calculated as if the separately established executive employment rules had not been applied.

Since the Supreme Court plenary session ruling in May 2023, which stated that unfavorable changes to employment rules without the consent of the majority of workers are generally prohibited, related lawsuits have been steadily filed. Previously, the Supreme Court had issued multiple precedents recognizing the validity of changed employment rules without workers’ consent if there was "socially reasonable justification," but in May 2023, it overturned this position after 45 years.

At that time, the Supreme Court ruled, "If there is no collective consent from workers regarding changes to employment rules unfavorable to them, it violates the proviso of Article 94, Paragraph 1 of the Labor Standards Act, and unless there are special circumstances indicating abuse of collective consent rights by workers, such changes have no effect."

Ryu Jae-yul, a lawyer at Law Firm Joongsim representing the plaintiffs, stated, "Considering that the first trial for the preceding case began on March 7 and it usually takes several years to reach a final conclusion, it is expected that such lawsuits will continue to be filed annually." He added, "Rather than having the company engage in legal disputes to reach a conclusion, it would be more desirable to resolve the issue amicably by revising the employment rules through consultation with current employees."

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