The Supreme Court upheld the workers' hands in a 630 billion won ordinary wage lawsuit filed by Hyundai Heavy Industries workers against the management.
The 3rd division of the Supreme Court (Chief Justice Kim Jae-hyung) returned the case to the Busan High Court today, breaking the original ruling that the plaintiff lost the appeal in the appeals court for a wage claim filed against the company by 10 workers, including worker A of Hyundai Heavy Industries, today.
This is the Supreme Court's decision after 9 years since the filing of the lawsuit in 2012.
The history of ordinary wage litigation… From general corporations to public corporations, 'litigation turmoil'
In simple terms, ordinary wages are wages that the company must pay to workers on a regular and fixed basis.
It is usually represented by a monthly salary, and this includes hourly, daily, or weekly wages, which have different titles depending on the payment cycle.
In addition, regular wages include money that the company pays on a regular basis, such as job allowances.
On the other hand, there is an argument that money whose payment is determined based on work performance and its size should not be included in the ordinary wage.
A typical example is a bonus or performance bonus, commonly referred to as a 'bonus'.
This is because bonuses do not have the three characteristics of regularity, uniformity, and fixedness that determine the scope of ordinary wages.
However, the labor community argues that such bonuses should be included in the ordinary wage.
The logic is that if regular bonuses are paid to workers on a regular and fixed basis, they are included in the ordinary wage.
As the size of the ordinary wage increases, the size of various allowances to be paid by the company, including holiday pay, annual paid vacation pay, and other allowances, has been rejected by the business community.
As the ordinary wage increases, the workers get more money and the company has to pay more, so the difference in positions was obvious.
It is estimated that about 200 of companies with 100 or more employees have filed lawsuits for ordinary wages since 2013, when the controversy over ordinary wages began in earnest.
The lawsuit continued not only in general companies but also in public companies.
At that time, the labor community also predicted that if the government loses the ordinary wage lawsuit between public corporations and public institutions, an additional budget of about 10 trillion won would be incurred.
The Korea Employers Federation also estimated that in 2015, the additional wage burden of companies due to the inclusion of regular wages in bonuses would reach 38 trillion won.
The 'principle of good faith' emerged as a major issue... mixed judgments
The first time the standard was set in the controversy over ordinary wages, which is the biggest concern of the labor and business circles, was the Supreme Court decision in 2013 by the Supreme Court. At that time, the Supreme Court defined three characteristics of ordinary wages.
First, regularity, meaning 'characteristic of being continuously paid at regular intervals', uniformity meaning 'characteristic of being paid to all workers who meet certain conditions such as working experience', and 'determining payment regardless of additional conditions such as performance' fixed as the standard for ordinary wages. Therefore, if it is judged that these three conditions are satisfied, such as bonuses paid by each company, they are included in the ordinary wage.
However, with this decision, the Supreme Court established the 'principle of good faith' as another standard for judging ordinary wages.
If the scope of ordinary wages is expanded and the amount of wages to be paid to workers increases, which causes serious business difficulties to the company, it is not necessary to pay them.
The 'principle of good faith' is a civil law principle that requires parties to a legal relationship to act in good faith and sincerity in exercising their rights so as not to violate the trust of the other party.
In other words, if the very existence of the company is endangered, there is a clause that there is no obligation to pay.
Since the Supreme Court ruling, companies that are obliged to pay retroactively to their workers according to the increased ordinary wages have been trying to prove 'management difficulties'.
It was at this point that the judgments of the courts were mixed in the ordinary wage lawsuits that were held in courts across the country.
In the process of judging whether the management's logic of appealing for difficulties in management meets the standards based on the principle of good faith, mixed judgments were made one after another by the courts.
This was also the case with the Hyundai Heavy Industries lawsuit.
9 years of litigation over 630 billion won… 1 win 1 loss in 1st and 2nd trial
Hyundai Heavy Industries workers filed a lawsuit against the company in 2012 asking them to include regular bonuses in their ordinary wages. Hyundai Heavy Industries has paid a bonus of 100% every two months and has been paying 800% of bonuses per year including year-end and New Year’s Day and Chuseok holidays. The company has requested the employees to provide a retroactive payment for this.
The first trial court ruled in favor of Hyundai Heavy Industries workers. The court ruled that "the management situation of the company deteriorated due to low profitability, the strong won, and the emergence of competing companies such as Chinese shipyards." . Immediately after the ruling, the industry estimated that the retroactive amount of the regular wage for 4 years and 6 months to go to 38,000 Hyundai Heavy Industries workers would reach 630 billion won.
However, the judgment of the second trial court was different. The second trial court recognized that 700% of bonuses, excluding holiday bonuses, should be included in the ordinary wage, but ruled that the retroactive wage was not required.
The court said, "The plaintiffs' request for additional payment of unpaid statutory allowances by including bonuses in their ordinary wages is far exceeding the wage level agreed by labor and management. It is unacceptable in light of the notions of justice and equity, as it jeopardizes the existence of the company,” he said.
If the company pays 630 billion won retroactively, the management difficulties it will face are a violation of the 'principle of good faith and good faith'.
Supreme Court "If there is a possibility of overcoming it, it should not be easy to reject workers' claims"
The litigation battle over the 600 billion won additional wage was concluded with the victory of the workers according to today's Supreme Court ruling.
Hyundai Heavy Industries' labor-management litigation has received a lot of attention from the labor and business circles in that the Supreme Court decides on the standard for retroactive payment among the ongoing litigation on ordinary wages.
The court evaluated that it was meaningful in that it presented the criteria for judging the 'principle of good faith' in making this judgment.
When judging whether the 'principle of good faith' was violated, the Supreme Court said, "We have presented specific criteria for judging not only temporary business deterioration but also the possibility of predicting or overcoming business difficulties, continuity, profitability, and business difficulties." I did.
▲ Hyundai Heavy Industries' union holding a press conference in front of the Supreme Court today (16th) to welcome the ruling on ordinary wages
The court also expressed a view consistent with the previous Supreme Court ruling that a more careful and strict judgment should be made on whether workers' claims for additional allowances based on the inclusion of ordinary wages truly endanger the existence of a company.
The court said, "Even if a company is temporarily facing difficulties in management, if it had made a reasonable and objective business prediction, it would have been possible to foresee such a deterioration in its business condition." We should not easily reject workers' compensation claims based on the principle of good faith."
This Supreme Court decision, made after 9 years, is expected to affect other ordinary wage lawsuits currently in progress or to be filed in the future.
Some analysts say that companies are under a burden to present the evidence and prospects for business deterioration in a more sophisticated and persuasive manner.