Hyundai Motor union to appeal ordinary wage ruling

Hyundai Motor’s labor union said Wednesday that it will appeal against a court ruling that limits the scope of bonuses that can be included as “ordinary wages.”

In a statement, the union said the ruling made Friday was “illogical” and “biased” in favor of management.

The verdict from the Seoul Central District Court ruled that only a regularly paid daily-counted bonus can be regarded as part of ordinary wages.

It dismissed the union’s claim that all kinds of bonuses paid periodically — including transport, vacation stipends and cash gifts given ahead of traditional national holidays — should be counted as ordinary wages.

Under the ruling, only two of the 23 plaintiffs will be paid three years of outstanding bonuses retroactively — about two million won ($1,850) each. The plaintiffs were collectively seeking 800 million won.

“The first ruling only sided with a theory made by management,” a union spokesman said. “The ruling was illogical and biased. We cannot accept this.”

The definition of ordinary wages is crucial for both the union and management as it is the basis for the calculation of overtime pay, severance payments and other wages.

The dispute at the country’s biggest carmaker proved that the Supreme Court’s guideline on the issue drawn in December 2013 does not work properly. The top court’s guideline suggests that ordinary salaries should include periodic payments to workers, but experts say it did not specify what could qualify for inclusion.

Labor experts claim that enacting a concrete law on the issue is the most efficient way to iron out the controversy clearly.

But lawmakers have put it on the backburner for more than a year due to a pile of other labor issues they feel are more pressing, including those related to temporary workers and youth unemployment.

It remains to be seen how long the dispute will last since the automaker and its union last year agreed to discuss the wage issue by the end of March, regardless of any court ruling.

The company said last week it’s seeking to introduce a performance-based wage system to reduce labor costs. The firm currently uses a seniority-based system, which raises wages automatically each year, regardless of hourly production.

“As agreed with labor, we will come up with a new wage system that can replace the current one by March,” said Hyundai Motor Vice Chairman Yoon Yeo-chul.

Meanwhile, following the Friday ruling, Moody’s Investors Service said the verdict is credit positive for the world’s fifth-largest carmaker.

Citing the ruling, Chris Park, a Moody’s senior vice president, forecast that any future increase in wages as a result of the ruling will be “manageable.”