South Korean court rules in favour of Hyundai Motor in wage dispute

Ruling to affect all of Hyundai's domestic workers
By Sohee Kim and Hyunjoo Jin / Reuters
||Last Updated: 01/16/2015

SEOUL (Reuters) — A South Korean court on Friday ruled broadly in favour of Hyundai Motor Co in a wage dispute with workers that could have exposed the automaker to $1 billion in additional pay annually.

The dispute came as Hyundai, the world's fifth-biggest automaker together with Kia Motors, is trying to boost production in China and Mexico to avoid higher wages and regular labour strikes in Korea.

The court ruled that Hyundai Motor did not have to include regular bonuses in base wages for over 90 per cent of its workers, a decision welcomed by the company and employer groups who feared a rise in benchmark pay rates.

"Hyundai Motor avoided the worst case scenario. This is good news for Hyundai Motor," said Suh Sung-moon, an analyst at Korea Investment & Securities.

Twenty three Hyundai Motor workers filed the suit in March 2013 saying Hyundai had miscalculated base wages and seeking unpaid overtime, allowances and severance pay.

The Seoul Central District Court ruled against 21 of the 23 claimants, representing all of Hyundai Motor's domestic employees.

Hyundai said in a statement the ruling "put an early end to the controversy over base wages".

A union spokesman said workers were considering whether to appeal. South Korea's umbrella labour union slammed the ruling as "lopsided" and "political" because it favoured powerful family-owned businesses.

Hyundai Motor shares ended down 2 per cent, broadly in line with the wider market's 1.36 per cent fall.

The base wage issue was the main issue of contention in talks between the automaker and its domestic labour union last year and sparked a partial strike in September.

The two sides had earlier agreed to discuss the issue by the end of March this year, regardless of any court ruling.

Business lobby group the Federation of Korean Industries said the ruling left open the possibility of further wage disputes in future.

"We are concerned that new conflict will emerge as the court recognised the bonuses of a very small number of workers as part of base wages," it said in a statement.

Hyundai's annual wages for workers more than doubled to 5.97 trillion won ($5.55 billion) in 2013 from a decade ago, according to regulatory filings.

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