[Exclusive] Following Hyundai, Kia Also Faces 'Impi-je' Lawsuit... Will Retiree Mass Litigation Continue?

77 Kia Retired Executives Face 3.8 Billion Won Compensation Lawsuit
Supreme Court Recognizes 'Collective Consent Right' Impact
Second 'Impeje' Lawsuit Following Hyundai Motor

Seventy-seven retired executive employees of Kia have filed a lawsuit seeking approximately 3.8 billion KRW in damages, claiming that the company’s employment rules, which apply only to executives, treated them unfairly in terms of wages and allowances, constituting a tort under civil law.

Following the Supreme Court’s plenary session ruling in May last year that “employment rule changes without workers’ consent cannot be made for reasons of social appropriateness,” reversing its previous stance after 45 years, this is the second damages claim lawsuit filed after retired executives of Hyundai Motor Company initiated similar litigation.

According to the legal community on the 8th, 77 retired Kia executives filed a lawsuit on the 5th at the Seoul Central District Court, 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 demanded payment of the wage difference and the difference in annual and monthly leave allowances amounting to 50 million KRW plus interest, following the implementation of the wage peak system.

Kia Motors headquarters building in Seocho-gu, Seoul. Photo by Hyunmin Kim kimhyun81@

The initial claim amount totals 3.85 billion KRW, and the amount is expected to increase later. The 77 retired Kia executives who filed the lawsuit were born in 1963 and retired in December last year, and it is known that lawsuits from retired executives born in 1962 and 1961 will also be filed subsequently.

Previously, Kia separately established so-called “executive employee employment rules” around 2004, which applied only to executives at the manager level or higher. 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 applicable only to executives, ▲ did not obtain consent through collective decision-making methods of 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 “civil tort.” They also argue that Kia should pay damages equivalent to the difference in wages and welfare benefits, such as annual and monthly leave allowances, calculated as if the separately established executive employment rules had not been applied.

This lawsuit is the second filed after the Supreme Court’s plenary session ruling in May last year that generally prohibits unfavorable changes to employment rules without the consent of the majority of workers. Previously, the Supreme Court had issued multiple precedents recognizing the validity of changed employment rules if there was “socially reasonable justification,” even if consent was not obtained. However, in May last year, it overturned these precedents 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 the workers, such changes have no effect.”

Ryu Jae-yul, a lawyer from Law Firm Joongshim representing the plaintiffs, explained, “In Kia’s case, the executive employment rules were established and the wage peak system introduced in the same manner and circumstances as Hyundai Motor Company, so the issues are identical to those in the damages claim lawsuit filed by retired Hyundai executives at the end of December last year.”

He added, “First, we are claiming damages equivalent to up to 10 years of wage differences per worker, and even if the plaintiffs’ claims are not accepted, we have provisionally claimed wage differences within the three-year statute of limitations for wage claims. Since about 100 executives retire from Kia each year, the potential number of lawsuit participants is expected to be significant.”

In response, Kia stated, “We will have to wait for the court’s judgment.”

Meanwhile, 32 retired Hyundai executives filed a similar lawsuit against the company in December last year, seeking approximately 1.6 billion KRW in damages for similar reasons.