Kia Motors agrees to payout to end long-running dispute

Kia Motors has tentatively agreed to make a partial payment to workers to end a long-running, precedent-setting dispute over the calculation of wages.

The courts have ruled twice against Kia, saying that some bonuses should be considered regular pay, which has the effect of increasing overtime and severance pay and other benefits. Kia has resisted making the payments, in part arguing hardship.

The dispute dates back to 2011.

Under the agreement, the company will make good on 60 percent of the 422 billion won ($373.5 million) payment that was ordered by the Seoul High Court last month. The 422 billion won is for underpayments between August 2008 and October 2011 and includes 312.5 billion won in bonus and break payments as well as interest.

The February ruling upholds a 2017 decision by a lower court, the main difference being a slight adjustment in the total awarded. An end of October deadline was set for payment. According to the Korean Confederation of Trade Unions Kia Motor office, the deal was reached late Monday.

At issue is whether regularly-paid bonuses should be considered regular wages. Kia Motors, citing difficulties, has withheld the payments.

The workers have argued that the payments are rightfully theirs, as the bonuses should be interpreted as part of their regular salaries.

The conflict has been watched closely by workers and managements at other companies as its resolution could have a significant impact on the calculation of incomes nationwide.

In addition to the payments through October 2011, the company will be also compensating for unpaid amounts for the period from November 2011 to March 2019. The amount of the payments, to be made by the end of the month, will depend on the date of hire.

Under the agreement, those employed before Dec. 31, 2013, will be given 8 million won. Employees hired from Jan. 1, 2014, to Jan. 1, 2016, will receive 6 million won. Those hired later will receive 4 million won.

Employees promoted during this time will receive between 500,000 won and maximum 7 million won.

The payments will only go to those who drop their lawsuits against the automotive company. A vote on the agreement will be held on March 14.

“We have agreed on a practical and complete resolution to the problem surrounding regular wages and regularly-paid bonuses. This opportunity will help us overcome the current crisis in the rapidly changing automotive industry through unified efforts in ending the confusion and the extensive legal battle,” said, Kang Sang-ho, a representative of the Korean Metal Workers’ Union Kia Motors branch.

In making its decision, the union has taken into account job stability and the future of Kia Motors amid recent challenges.

The company’s revenue increased 1.2 percent last year to 54.2 trillion won, with operating profit surging 74.8 percent.

But much of the gain was a result of the low base effect as profits were low in 2017 as the company reserved against future losses as a result of the first defeat in court.

Kia Motors on Monday said it is looking into suspending production at one of its lines in China as sales have been falling in the country.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]