A representative from the KT Labor Rights Center is speaking at the "Age Discrimination KT Wage Peak System Victims Testimony Conference" held at the National Human Rights Commission in Jung-gu, Seoul, on July 14. [Image source=Yonhap News]
[Asia Economy Reporter Kim Daehyun] The appellate court ruling on the validity of KT's 'retirement age extension-type wage peak system,' introduced in 2015, will be announced in January next year.
According to the court on the 29th, the Seoul High Court Civil Division 1 (Presiding Judges Jeon Ji-won, Lee Jae-chan, Kim Young-jin) scheduled the appellate hearing date for the wage claim lawsuit filed by approximately 700 current and former KT employees for January 18 of the following year.
The workers' side argued in their final appellate statement that the wage peak system was "not intended for wage adjustment for elderly workers but for forced retirement." They particularly pointed out that contrary to the company's explanation that "the wage peak system was introduced due to urgent management reasons at the time," executives received high salaries in the form of advisory roles.
The workers' side stated, "One-third of all employees retired, and two-thirds had their wages cut by 100%, but for 48 executives, despite not coming to work, contracts worth 40 billion won were signed over three years, and 28.7 million won was paid monthly," adding, "This is not equitable to be called 'sharing the pain.'"
On the other hand, the company argued, "It was a compensation and courtesy for previous service periods, and internal procedures must have been followed," asserting that this system is common among leading domestic companies. They added, "KT's management situation at the time was different from other companies. Please consider the pain-sharing between the company and workers," and requested, "Please also review subsequent welfare and related measures for workers."
Regarding the workers' claim that "this wage peak system, secretly concluded between a very small number of union executives and the company, is invalid in itself," the company rebutted, stating, "Since there are too many union members, opinions were received from executives legitimately elected through proper procedures," and argued that they were unaware of any procedural violations during the agreement process and that it is wrong to hold the company responsible for problems occurring within the union.
The KT wage peak system at issue in the lawsuit corresponds to the retirement age extension-type wage peak system, which most companies adopted in 2016 following the amendment of the Elderly Employment Act to extend the retirement age to 60 and restructure the wage system. This system reduces wages from a certain age while extending the retirement age. Although wages are cut from a certain age, the method of guaranteeing employment until retirement age is called 'retirement guarantee type,' and the method of re-employing for a certain period after retirement is called 'employment extension type.'
In 2015, KT decided through labor-management agreement to implement a wage peak system that cuts wages by 10% annually from age 56 in exchange for extending the retirement age. KT workers filed a lawsuit demanding the return of wages cut by 10-40% due to the wage peak system, claiming it was secretly concluded in a closed-door manner.
Initially, about 1,300 workers participated as plaintiffs in this case, but after losing the first trial in June, hundreds gave up on the appeal. Also, while one trial division handled all these cases in the first trial, in the appellate trial, two divisions are handling the cases separately by filing time, with about 700 and 130 people respectively. The appellate trial for the 130 people is being heard by the Seoul High Court Civil Division 15 (Presiding Judge Yoon Kang-yeol), and arguments are ongoing.
The first trial did not accept all the workers' claims. It ruled, "The labor-management agreement cannot be invalidated simply because it did not go through a union general meeting resolution," and stated, "Since the wage peak system was implemented in connection with the retirement age extension, the extension itself is the most important compensation for the wage reduction."
Earlier, in May, the Supreme Court ruled the retirement guarantee-type (maintenance type) wage peak system of the former Electronics and Telecommunications Research Institute (now Korea Electronics Technology Institute) as 'invalid.' The Korea Electronics Technology Institute's system did not extend the existing retirement age, and it was found that job content was not changed nor workload reduced. Subsequently, the court 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 compensation measures ▲whether the reduced funds were used for the intended purpose.
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