Bonus conflicts are spreading across industry. Not only Samsung Electronics but also the labor unions at LG Uplus, Kakao and Hyundai Motor are demanding that a set percentage of operating profit or net profit be paid as bonuses. Citing SK hynix as an example, they put bonus payouts on the bargaining table in wage and collective agreements. Recently, employees at overseas subsidiaries and even partner companies have also been calling for higher bonuses, deepening industry concerns.
Legal and accounting experts see bonuses as not constituting wages, meaning they are not mandatory bargaining items. Whether to raise bonuses is closer to a management decision or an individual contract matter, so unions are not in a position to win them through strikes or other labor disputes. Industry observers say it is unusual, both abroad and in Korea, for demands to raise bonuses to escalate into strikes.
A manufacturing industry official said, "While the method of calculating bonuses has been discussed in collective bargaining, it is hard to find a case where a union has put the bonus payout amount front and center and launched collective action like now," and added, "Because bonuses are an issue of profit distribution, not wages, they have not been viewed as a subject of negotiation. This year, unlike in past years, the conflict is spreading and emerging as the biggest labor-management risk."
◇ Bonus conflicts spreading across industry
Labor and management at Samsung Electronics held a second post-mediation meeting at the National Labor Relations Commission (NLRC) at the Government Sejong Complex starting at 10 a.m. on the 12th and discussed the matter for 17 hours but failed to reach an agreement. Even mediation reattempted by the NLRC with both sides' consent broke down, and the Samsung Electronics union plans to launch an 18-day general strike starting on the 21st. The union is demanding that bonuses be funded with 15% of operating profit and that the cap be abolished and institutionalized. Management, however, says institutionalizing bonuses is effectively impossible. While it can increase one-time compensation, it will not upend the principles for operating bonuses.
Unions at other corporations have also begun demanding bonus payouts along similar lines. The Samsung Biologics union argued for allocating 20% of operating profit to bonuses and abolishing the cap, and held a first five-day general strike from the 1st. It is now engaged in an indefinite work-to-rule campaign, refusing overtime and holiday work.
Bonus conflicts are also unfolding in the information and communications technology and platform sectors. The LG Uplus union demanded a 35-hour workweek and 30% of operating profit as bonuses. Five unions at Kakao entities — including Kakao headquarters, Kakao Pay, Kakao Enterprise, DK Techin and XLGAMES — filed for mediation with the Gyeonggi Regional Labor Relations Commission on the 7th. If they fail to reach a deal during the mediation period, they could move to strike after a vote of union members. The Kakao union is said to be seeking bonuses equal to at least 13% of operating profit.
The bonus conflict is appearing not only in regular labor-management bargaining but also across the primary–subcontractor structure. At a kickoff meeting for this year's wage and collective bargaining on the 6th, the Hyundai Motor union demanded that bonuses equal to 30% of last year's net profit be paid to all employees as well as partner company staff. The Kia union is also pressing for bonuses equal to 30% of operating profit.
Workers at partner companies at SK hynix's Cheongju business site held a press briefing on the 30th of last month and demanded direct bargaining with the original contractor, SK hynix, saying, "Stop discriminatory bonus payouts." They argued, "While paying employees annual salaries and bonuses amounting to hundreds of millions of won, they gave subcontracted workers only 5 million to 6 million won in shared growth incentives. Even though we created results together, subcontracted workers are being treated like expendables."
Bonus conflicts are also being observed at the China business sites of Samsung Electronics and SK hynix. Local employees at Samsung Electronics' Xi'an semiconductor plant and SK hynix's Wuxi semiconductor plant have reportedly demanded higher bonuses. Samsung Electronics and SK hynix operate bonus systems tailored to each country's conditions, but local employees, after seeing the level of headquarters bonuses and union moves on portals, appear to be pushing for "higher compensation."
◇ "Bonuses are profit distribution, not a subject for wage talks"
Industry analysts say these union demands for higher bonuses cannot be a subject of bargaining. The Supreme Court has already ruled that bonuses are not wages, so they cannot serve as grounds for strikes or other labor actions.
In a recent lawsuit filed by former employees of Samsung Electronics, the Supreme Court ruled that "performance incentives (OPI, formerly PS) do not constitute average wages that serve as the basis for calculating severance pay." The court found that bonuses are not a post hoc settlement for work performed but a post hoc distribution of management performance.
Union industrial action must fundamentally aim to maintain or improve working conditions. But the current push to raise bonuses seeks to change a system of profit distribution rather than wages, making it difficult to secure legitimacy, observers say.
Lee Jeong-jun, head criminal attorney at The L Law Firm, said, "Under the Trade Union and Labor Relations Adjustment Act, wages are the core subject of labor-management bargaining and disputes, but bonuses paid depending on company results or separate agreements are hard to include in ordinary wages." He added, "If labor and management have reached agreement on core items such as wages and only the bonus issue remains, it is hard to see the bargaining as legally incomplete. In that case, just as the union may consider strikes or other actions, management can also respond through procedures prescribed by law, such as applying for labor commission mediation or a lockout."
Oh Moon-seong, a professor in the Department of Taxation and Accounting at Hanyang Women's University, said, "Because wage talks are a process for discussing wages and working conditions, bonuses can also be discussed," but added, "The issue is whether the union's demands are reasonable."
Oh also said, "Because each industry and corporation has different profit levels, cash flows, investment burdens and market conditions, the call to apply SK hynix's bonus structure across the board is absurd," and advised, "Bonuses are not just a matter for workers but an issue of profit distribution that must consider the company, shareholders and future investment funds together."