"Pay Us More Severance" – Wave of Lawsuits by Former Samsung Electronics Employees, SK hynix Cases Also Looming

Following a Supreme Court of Korea ruling that Samsung Electronics' "target incentives" must be included in the average wage used to calculate severance pay, a series of follow-up lawsuits with similar facts and legal issues is reportedly being filed.

According to legal sources on the 5th, 22 former employees of Samsung Electronics recently filed a lawsuit with the Seoul Central District Court against Samsung Electronics, seeking unpaid severance pay in the form of management performance bonuses.
This lawsuit was filed by retirees in similar circumstances after the Supreme Court of Korea recently ruled that Samsung Electronics' "target incentives" are part of the average wage and therefore must be reflected in severance pay calculations.
On January 29, the Supreme Court of Korea overturned a lower court ruling that had rejected a severance claim by 15 former Samsung Electronics employees and remanded the case to the Suwon High Court. The former employees had argued that the company calculated their severance based on an average wage that excluded target incentives and performance incentives, collectively referred to as management performance bonuses, and sued in June 2019 to recover the unpaid portion.
The courts of first and second instance had sided with Samsung Electronics, reasoning that neither the target nor performance incentives constituted consideration for work or were closely linked to work. However, the Supreme Court of Korea found that, at least for the target incentives, the payment criteria were predetermined and the payments were continuous and regular compensation for labor. On that basis, it recognized them as wages and held that they must be included in the average wage.

Workers at other companies in similar situations are now rushing to join lawsuits in the wake of the ruling. Because the statute of limitations on wage claims is only three years, swift action is needed. The National Samsung Electronics Labor Union, known by its Korean acronym Jeonsamno, has begun preparing large-scale follow-up lawsuits and is working to expand participation.
Jeonsamno stated, "We plan to hold working-level consultations to file a group lawsuit on behalf of retirees within the past three years and those who switched from a defined benefit (DB) retirement pension plan to a defined contribution (DC) plan," adding, "Non-union members who wish to join the lawsuit will be able to participate simply by signing up on our website as non-voting members, without paying union dues."
Lawyer Park Chang-han of A-Pro Law Firm, who led the recent victory at the Supreme Court of Korea, predicted that the ruling could also apply to other companies with similar wage structures. In fact, lawsuits over severance pay filed by workers at SK hynix, HD Hyundai Heavy Industries and others, in addition to Samsung Electronics, are currently pending before the Supreme Court of Korea.
Park explained, "In light of the imminent expiration of the statute of limitations, we first filed a complaint with the Seoul Central District Court on behalf of 22 former Samsung Electronics employees," and added, "We are currently in ongoing consultations with workers at several companies outside the Samsung Group and plan to respond proactively by filing lawsuits in stages."
bng@fnnews.com Kim Hee-sun Reporter