What is in this article?:
- Labor Peace on Line Again for Korean Automakers
- Bonuses in Pay Calculations Remain Sore Point
- Hyundai Workers’ New Leader Presided Over Strike-Free 2009-2011
- Talks Will Revisit Part-Time Workers’ Status
While bothand Kia forecast sluggish markets that will limit growth for 2014, and report operating and net income was down in 2013, union negotiators likely will not perceive them to be in dire straits.
Police break up rally by Hyundai auto workers days before August 2013 strike.
Korea’s five automakers all face serious competition at home and abroad and consumer apathy in some of their traditional export markets. But their gravest problems in the months ahead must be resolved in contract negotiations with their respective branches of the Korea Metal Workers Union.
Wage and collective-bargaining-agreement discussions formally launch this month. In some cases pre-negotiation discussions already are being held in efforts to work out new ground rules.
The KMWU’s wage demands this year (at, reportedly a monthly increase of 160,000 won ($153) is not excessive, based on past settlements.
But the way the basic wage is calculated could hit each automaker with an enormous bill for back wages and, at the least, a much greater increase in labor costs going forward than the simple pay-raise objective would indicate.
The KMWU is demanding a change in wage calculations consistent with a Supreme Court ruling made in December 2013, in a worker’s lawsuit filed against KB Auto Tech. The worker sued for three years of back wages, alleging the parts supplier had underpaid him by excluding bonuses and certain fringe benefits in calculating his overtime pay.
Previously, any fixed bonus with a payment interval of more than one month customarily was excluded from ordinary wages. The automakers traditionally have paid bonuses in a single lump sum, bimonthly or in some other pattern that circumvented monthly payments.
In light of the Supreme Court ruling, the KMWU now insists employers include bonuses in their basic pay calculations when negotiating new wage agreements.
The union also contends employers must recalculate past wages on this same basis and compensate all workers for any shortages going back three years, the statutory limit for an employer’s liability for unpaid wages.
However, the Korean automakers believe they can get out of doing that by arguing employee demands for back wages do not meet “good faith and trust principles,” which was vaguely included in the Supreme Court ruling as a possible defense employers could use.
It stipulates if employers could show they would have made offsetting wage or payment adjustments in other areas, while knowing bonus payments would be used in fixing the basic wage, they could then claim exemption from the back-pay demands.
The Supreme Court also ruled that if an employer could prove back payment of wages would seriously hurt the company, it could be exempted from making the retroactive adjustments.
This has left lots of litigious wiggle room. Indeed, labor lawyers are smacking their lips, anticipating much consultative work not only from the automakers, but also suppliers and virtually all Korean manufacturers.
But appeals and counter-litigation help only in cases where the court has ruled in favor of workers suing their employer for nonpayment. The Supreme Court thus far has not ruled on any case filed against any of the five automakers, and all lower-court rulings in the workers’ favor are quickly appealed to higher courts.
So with contract negotiations upcoming,, Kia, GM Korea, Samsung and Ssangyong can take little comfort from that litigious wiggle room this spring and summer.
No law prevents the auto worker unions, which all are branches of the KMWU, from making demands for back pay.
However, most employers and many analysts that follow the companies do not think the unions will make full 3-year back payments a cause celebre worthy of strong strike action.
But it is an enormous bargaining chip – or threat – even though the companies have no legal liability to make such payments unless their own cases are resolved at the highest court level in favor of the workers who launched them.