The first labor union since Samsung SDS was founded has officially launched. The move is seen as stemming from internal turmoil over a recent overhaul of the performance bonus system. Observers say labor-management conflict over compensation system changes is likely to intensify.
According to the industry on July 6, the Samsung Group supra-company labor union's Samsung SDS chapter issued a launch declaration that day and began accepting membership applications. It is the first time a union has been established at Samsung SDS since its founding. Nearly 2,000 employees joined within two hours of the launch.
Conflict over the overhaul of the performance bonus system is cited as the backdrop for the launch of the Samsung SDS union. Samsung SDS is pushing a plan to scrap the existing cash performance incentive (PI) and revamp the bonus system to grant company stock based on 20% of annual salary. A member vote is underway, and the company has extended the voting period, originally scheduled to end on May 29, to July 7.
Employees opposing the overhaul said the company is revamping the bonus system without sufficient explanation or adequate input from members. They are raising concerns that 70% of the performance calculation criteria are tied to external indicators such as the company's stock price and the industry index, and that the existing performance incentive is excluded from severance pay calculations. Some employees are pushing back, saying the company is pressuring them to vote in favor.
Kwon O-gyeong, head of the supra-company union's Samsung SDS chapter, said, "It was hard to accept that the personnel system overhaul, including the abolition of the PI system and changes to performance bonus criteria, was pushed unilaterally without sufficient explanation," and added, "We wanted a transparent and fair performance evaluation process, but the company severely shook members' trust."
Kwon said, "Mistrust among members over the voting process itself has grown," and added, "If necessary, we will file for an injunction to stop disadvantageous changes to the rules of employment, and we will also bring a suit seeking to nullify the vote over acts of vote pressure and the extension of the voting deadline."
The union set core goals that include protecting employee rights and interests, establishing a fair evaluation and compensation system, and strengthening communication with the company. With employee complaints surfacing over the recent overhaul of the performance compensation system, the union is expected to speak out in earnest for improvements to the compensation framework and work environment.
Samsung SDS currently has about 11,000 employees. The union plans to secure more than 5,500 members in total to become the majority union.