KT to Appeal Second Trial on 'Retirement Age Extension Wage Peak System'... Workers Discontent with First Trial Loss

[Asia Economy Reporter Kim Daehyun] KT's 'retirement age extension type wage peak system' (a method that reduces wages from a certain age in exchange for extending the retirement age), introduced in 2015, is set to undergo a second trial.

According to the court on the 5th, over 1,300 KT workers and the bereaved families of deceased employees recently filed an appeal with the Civil Division 48 of the Seoul Central District Court (Presiding Judge Lee Giseon) against the first trial's ruling, which dismissed the plaintiffs' claims.

They are demanding the return of wages cut due to the introduction of the wage peak system. Shin Insu, a lawyer from the law firm Soheon representing the workers, stated, "The specific details and issues will proceed according to the appellate trial procedures. We will do our best in the trial."

In 2015, KT decided through labor-management agreement to implement a wage peak system that reduces wages by 10% annually starting at age 56 in exchange for extending the retirement age. KT workers filed a lawsuit claiming that wages were forcibly cut by 10-40% due to the wage peak system, which they say was concluded behind closed doors, and are seeking compensation for the reduced salaries.

However, the first trial ruled on the 16th of last month that "more was paid to workers in total wages, and the labor-management agreement cannot be invalidated simply because it did not go through a union general meeting resolution," dismissing all claims of the plaintiffs. The court added, "Since the wage peak system was implemented in connection with the extension of the retirement age, the extension itself constitutes the most important compensation against wage reduction," and stated, "It cannot be easily concluded that the wage peak system in this case constitutes unreasonable age discrimination solely because there was no explicit reduction measure related to workload, etc."

This case is the largest lawsuit since the Supreme Court ruled the retirement age guarantee type (maintenance type) wage peak system of the former Electronics and Telecommunications Research Institute (now Korea Electronics Technology Institute) as 'invalid.' On May 26, the Supreme Court emphasized that "not all wage peak systems are invalid" while ruling invalidity, and presented criteria for judging the validity of wage peak systems, including ▲the legitimacy and necessity of the introduction purpose ▲the extent and duration of actual wage reduction ▲appropriateness of the target (compensation) measures ▲whether the reduced funds were used for the intended purpose.

Although both the retirement age extension type and the retirement age guarantee type reduce wages from a certain age, the former guarantees employment until retirement, while the latter rehires for a certain period after retirement. The Korea Electronics Technology Institute's system did not extend the existing retirement age, nor did it change job content or reduce workload.

The appellate trial of the KT case is expected to proceed focusing on the criteria presented in the Supreme Court's Korea Electronics Technology Institute ruling. The first trial court also stated, "The Supreme Court's legal principles pertain to the so-called 'retirement age maintenance type wage peak system,' but they can serve as a reference standard for cases like this 'retirement age extension type wage peak system,'" effectively applying the Supreme Court's criteria to this case.

Im Dongchae, a partner lawyer at the law firm I&NS, analyzed, "(The first trial of the KT case) distinguished between the retirement age extension type and the retirement age maintenance type. In other words, it clearly stated that the retirement age extension itself is the most important compensation against wage reduction, i.e., there is a target measure." He advised workers preparing for wage peak system-related lawsuits or companies, "From a corporate perspective, it is necessary to check whether the introduction of the wage peak system constitutes a 'disadvantageous change' in employment rules, and if so, whether procedures such as obtaining consent from a labor union organized by the majority of workers were followed."