A new economic report has argued that a score of South Korean conglomerates fighting legal battles with labor unions over so-called ‘ordinary wages’ could be forced to pay out as much as 8 trillion won under the worst-case scenario.
SEOUL, Aug. 12 (Korea Bizwire) — A new economic report has argued that a score of South Korean conglomerates fighting legal battles with labor unions over so-called ‘ordinary wages’ could be forced to pay out as much as 8 trillion won under the worst-case scenario.
There are currently 35 companies involved in over 103 disputes over ordinary wages, a term used in Korea to define the wage paid regularly and indiscriminately to a worker, according to the report released by the Korea Economic Research Institute on Thursday.
Though it means each company is dealing with 2.8 cases on average, with nearly half of them pending, the lack of a clear definition of what an ordinary wage is in the eye of the law has proven controversial, spawning lawsuit after lawsuit.
As the ordinary wage defines what each worker is legally eligible to claim, which has meant bonuses in some previous cases, over six in ten of the current disputes center around the good faith principle – Article 2 Clause 1 of the Civil Code that states that exercising a right and fulfilling a duty must be done in good faith – and whether it has been infringed upon or not.
‘Fixedness’ is another measure to be considered when resolving cases involving the definition of the ordinary wage, which serves as grounds for deciding how much workers are eligible for without having to meet additional performance-based requirements.
In a 2012 ruling on a case of the ordinary wage, for instance, the Supreme Court of Korea decided that bonuses paid regularly should be considered as part of regular salary, siding with the labor union of a local bus company that filed a lawsuit.
Of the 35 companies surveyed as part of the report, 25 disclosed a speculated amount that they will be forced to cough up if they lose their pending litigation, including delay charges and retroactive pay, which amounted to a total of over 8.3 trillion won and accounted for nearly 36 percent of all personnel expenses reported by the 25 companies last year.
A new economic report has argued that a score of South Korean conglomerates fighting legal battles with labor unions over so-called ‘ordinary wages’ could be forced to pay out as much as 8 trillion won under the worst-case scenario. (Image: Yonhap)
Among the most prevalent causes of action, ‘the discrepancy between the government and the judicial branch’s interpretation of what the ordinary wage is’ accounted for over 40 percent, followed by ‘the lack of detailed guidelines for the good faith principle’, which accounted for 28.4 percent.
When asked about solutions, over three in ten respondents said ‘a legislated definition of the ordinary wage’, while others argued for detailed guidelines outlining ways to uphold the good faith principle.
“It is urgent for lawmakers to come up with a legal definition for the ordinary wage, as well as measures outlining the good faith principle in detail. When determining whether the good faith principle was breached or not, other factors such as market environment and future investment, apart from the company’s financial metrics, should also be considered,” said Yu Hwan-ik, the head of the department of policy at the Korea Economic Research Institute.
Hyunsu Yim (hyunsu@koreabizwire.com)
