Mando loses wage suit, ordered to back-pay employees

2017.11.09 14:30:02 | 2017.11.09 16:12:38
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Employees of Korean automotive parts maker Mando Corp. became the latest to expect back pay as a series of lawsuits over overdue wage claims rule in favor of workers under the pro-labor government of President Moon Jae-in.

A Seoul High Court on Wednesday overturned the lower court ruling and agreed with the workers in their claims that the bonus paid every even-numbered month should be deemed “regular.” But it disagreed with the argument that bonuses paid on holidays are regular.

If the ruling is upheld in the highest court, Mando would have to back-pay 1.6 billion won ($1.44 million) to its employees. Its one-time cost could spike to 200 billion won.

Shares of Mando closed Thursday up 5.8 percent at 319,000 won on profit-taking after retreating 5 percent on Wednesday.

Kia Motors had to set aside reserves of nearly 1 trillion won that caused a negative figure on its third-quarter bottom line after a higher court partially agreed with workers and ordered the management to back-pay 422.3 billion won to employees.

A number of manufacturers have been losing court battles that had been sparked by a Supreme Court ruling in 2013 that did not agree with the government’s base salary definition and extended the scope by including bonuses and allowances that are “regular, universal (or paid to every employee), and fixed" in the base salary. An increase in base wage leads to a higher monthly paycheck and bigger severance pay.

Mando plans to appeal at the Supreme Court. Given the company’s low cash flow, the company’s balance sheet could take a hit on the spike in labor costs.

By Lee Seung-hoon and Kim Hyo-jin

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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