A South Korean court on Thursday partially sided with the union of Kia Motors Corp. in its lawsuit against the management demanding overdue wages by counting in bonuses and other incentives as base salary, a move that could stoke similar legal actions across industrial sites in Korea and deliver a blow to employers who are under multiple whammies under the pro-labor government of President Moon Jae-in.

In the closely-watched court ruling, the bench ordered Kia Motors management to back-pay 422.3 billion won ($374.4 million) in three-year dues to 27,424 salaried workers by identifying regular bonuses and meal allowances as part of the fixed salary, which is 38.7 percent of the 1.93 trillion won demanded by the union.

The court did not find daily dues for overtime work, which took up the bulk of their claims, as fixed salary.

Under the court interpretation of base salary, Kia’s extra payout to salaried workers could near 1 trillion won, not 422.3 billion won, the company said in a disclosure statement. The one-time loss reserve could be factored in the third-quarter statement, it said.

Shares of Kia Motors finished 3.5 percent down at 35,450 won.

At the same time, the court rejected the management’s appeal to the “good-faith exception,” which cited business troubles should the company come under heavier labor costs amid sluggish sales. Management has an obligation to pay what is due to its workers, said the court, especially when the company generated a sizable net income from 2008 to 2015, the period for which the union has asked for unpaid wages.

Kia Motors said it will appeal.

The first trial ruling that delivered partial victory for the union in its efforts to broaden the definition of base salary will likely have a huge impact on the labor front.

Currently 115 companies, including Kia Motors’ bigger affiliate Hyundai Motor Co., are engaged in similar court battles.

According to a 2013 report from Korea Employers’ Federation, the extra payroll could stretch to 38 trillion won if bonuses are included in base salary.

The Kia case was first filed in 2011 when 27,424 union workers demanded the company to include regular bonuses, meal allowances and daily expenses as part of a base pay used to calculate overtime, severance pay and other payments. In 2014, 13 representative union members filed another suit to extend the limitation period of the case, which expires in three years.

The Korean Automobile Manufacturers Association (KAMA) that represents the country’s five automakers threatened to take their manufacturing sites abroad if labor costs shoot up due to the new legal interpretation of base salary in Korea.

Kia Motors grumbled that the extra burden could devastate its balance sheet at a time when sales in China this year have more than halved from last year.

By Lee Seung-hoon

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