Hyundai Motor Co., South Korea's top automaker, called a court ruling Friday on its wages a "partial victory," saying it is meaningful as a "benchmark" to resolve the years-long controversy on the issue.
In March 2013, 23 members of the union at the country's second-largest conglomerate filed a suit to demand that the management include bonuses, transportation and vacation stipends as part of ordinary wages and that this guideline be applied retroactively for three years.
A Seoul court ruled that Hyundai Motor should count regular bonuses paid to only two of the plaintiffs. Bonuses paid to the 21 other plaintiffs lacked regularity and thus do not count, it said.
A court ruling in favor of the unionists would have cost Hyundai Motor trillions of won. Experts estimate that the ruling, if it takes effect, will reduce the amount to around 11 billion won (US$10.19 million).
It also smoothens the path for the automaker to go ahead with its large-scale 81 trillion won investment plan spanning over the next four years to build facilities and develop technologies.
Since the two plaintiffs represent 5,700 employees who came from Hyundai Motor Service, which was consolidated with Hyundai Motor Co. back in late 1990s, all of them could be eligible to receive additional pay. The number accounts for just 11 percent of Hyundai Motor's 50,000-strong union.
"The ruling is meaningful given that it could provide a benchmark to resolve the earlier controversy surrounding the ordinary wage," a Hyundai Motor official said on condition of anonymity.
"Moving away from the ineffective seniority-based pay structure, we need to place our focus on coming up with a globally competitive advanced wage system."
Hyundai Motor's labor union said the court's decision was "disappointing," adding that it will decide whether to appeal the ruling after discussions with its members.
Controversy over the ordinary pay issue flared up after the Supreme Court ruled late in 2013 that bonuses should be viewed as part of a worker's standard wages if given on a regular, uniform and periodic basis.
The ordinary wage refers to a fixed amount paid regularly to an employee, and it is used as the basis for calculating employee benefits, such as overtime pay, paid annual leave, severance pay and other allowances.
The business community has been watching the ruling closely since it could provide a direction for similar debate going on at many other businesses, which could face a sharp increase in salaries that they have to pay their workers.
The Federation of Korean Industries, a major business lobby group comprised of large conglomerates, welcomed the court ruling, saying that it provided a clear-cut decision on the issue and would help stop similar lawsuits.
It still expressed concerns that the ruling could cause fresh confrontation and conflict among workers since it applices to only some of the workers.
Shares of Hyundai Motor closed at 171,000 won, down 2.01 percent from a day earlier, underperforming the benchmark KOSPI's 1.36 percent drop. (Yonhap)
