Kia Faces Lawsuit from 18,000 Employees over Ordinary Wages... Will the Dispute Continue?

"Demand for Payment of Regular Wages Including Weekly Holiday Allowance"
Kia Sets Aside 108.9 Billion Won in Provisions for Regular Wage Lawsuits

Approximately 18,000 members of the Kia labor union recently filed a lawsuit against the company, demanding payment of omitted regular wages that were unpaid. Since the Supreme Court's ruling at the end of last year expanding the scope of regular wages, workers have been winning similar lawsuits one after another. There are concerns that disputes over regular wages will spread following the Kia lawsuit.

According to industry sources on the 13th, the Kia Motors branch under the Korean Metal Workers' Union received litigation authorization applications from branch members in Soha, Hwaseong, Gwangju, and maintenance departments, and filed a lawsuit at the end of last month representing a total of 18,503 members.

Kia Motors Factory in Sohari, Gwangmyeong-si, Gyeonggi-do

The key issue in this lawsuit is whether various statutory allowances such as overtime, night, holiday work allowances, and unused annual leave allowances should be considered and applied as regular wages. It is reported that Kia management has been paying statutory holidays at the basic daily wage. The union argues, "All statutory allowances, including overtime and holiday work, annual leave allowances, weekly holiday allowances, and statutory holidays, should be normalized and paid by adding the basic salary, regular allowances, and regular bonuses."

The Supreme Court previously changed its precedent by ruling that among the criteria of 'regularity, uniformity, and fixity' used to determine whether various allowances received by workers should be included in regular wages, fixity is not a reasonable standard. Accordingly, holiday bonuses and vacation expenses have been included in regular wages.

The Kia lawsuit is attracting attention because it was filed amid a series of worker victories in similar lawsuits following recent Supreme Court precedents.

In January, former and current employees of SeAH Besteel filed a lawsuit against the company demanding that regular bonuses be included in regular wages to calculate allowances and severance pay. The Supreme Court reaffirmed the existing precedent that conditional bonuses qualify as regular wages. In addition, the Supreme Court ruled in favor of workers in lawsuits involving the Korea Occupational Safety and Health Agency, Korea Technology Finance Corporation, and IBK Industrial Bank of Korea.

If the union wins this lawsuit, there are concerns that Kia will bear a significant financial burden. As of the end of last year, Kia had set aside 108.9 billion won in provisions related to regular wage lawsuits.

Yonhap News

A variable factor is that the Supreme Court limited the application of its precedent to regular wage calculations from the date of the ruling onward. It is expected that the lawsuit filed by the Kia union will separately consider whether the precedent should be applied retroactively. However, from the union's perspective, even if they lose the lawsuit, they could use the litigation as leverage in wage negotiations.

Hyundai Motor, which is approaching collective bargaining, is also showing signs that regular wages will be a hot issue. The Hyundai Motor union previously stated, "We will secure the rights of union members by reviewing items not previously included in regular wages such as weekly holiday allowances, Labor Day, and used annual leave, including parts that were insufficient in the 2019 agreement."

In 2019, Hyundai Motor management and the union agreed to include only 600% out of 750% of the regular bonus in regular wages. Due to the Supreme Court precedent, the remaining 150% can now also be recognized as regular wages. A Hyundai Motor union official said, "We plan to discuss matters related to regular wages during this year's collective bargaining."