SEOUL, KOREA - The Supreme Court ruled that bonus pay must be considered part of normal wages if it is paid regularly to workers.

 

The ruling in favor of workers will affect, among others, the bottom line of major auto makers such as Hyundai Motor and Kia Motors. Industry analysts, however, said the effect has already been factored in in their share prices.

 

Korea Investment & Securities analyst Suh Sung-moon said on December 19, "The Supreme Court justices said yesterday in the case raised by the workers of KB Auto Tech that regular bunuses must be included in normal wages but must be restricted to be applied retroactively. With this decision, Hyundai and Kia could avoid the worst-case scenario."

 

Many analysts said that the Supreme Court verdict that the company has no obligation for three years of back pay based on the broader interpretation of normal wages will eliminate the worst fear held thus far by the employers. Lawsuits raised by workers against Hyundai Motor and Kia Motors are currently pending at district court level.

 

Meritz Securities analyst Kim Joon-seong said, "The litigation currently at lower court level will last at least two to three years to be resolved. That means the possible effect on overall wages would be felt after 2016 and the impact of the latest ruling on the companies' financial performance would be minimal."