Samsung Electronics labor and management entered post-mediation talks on the 11th. With a general strike set for the 21st, this is effectively the last negotiation. If mediation breaks down, the matter goes to court, because Samsung Electronics filed for an injunction to "ban illegal industrial action" against the National Samsung Electronics Labor Union.
according to legal sources, recent Supreme Court rulings have repeatedly declined to recognize management performance bonuses as wages, leading to analysis that it will be difficult to establish the legitimacy of the union's strike.
according to legal sources, on the 11th the Suwon District Court will hold a second hearing on the 13th for the injunction case Samsung Electronics filed against the union. The court is said to be planning to reach a conclusion before the general strike date on the 21st.
At the heart of the dispute is performance bonuses. The union is demanding the removal of the performance bonus cap and payment of 15% of annual operating profit as performance bonuses. Based on this year's Samsung Electronics annual operating profit forecast of 30 trillion won, that would total about 4.5 trillion won. In the semiconductor institutional sector, a performance bonus close to 600 million won per person would also be possible. The company, however, said it would "maintain top-of-industry compensation," but it cannot accept removing the performance bonus cap.
◇ "Performance bonuses are not wages"… Supreme Court precedent could sway case
The key question is whether the demand for performance bonuses qualifies as a legitimate purpose for industrial action. For a union strike to be deemed legitimate, its purpose must be the maintenance or improvement of working conditions. However, many in legal circles interpret performance bonuses based on excess profits as falling heavily within management decision-making, making them different from ordinary wages.
In fact, on Jan. 29 the Supreme Court distinguished between the "Target Achievement Incentive (TAI)" and the "Over-Profit Incentive (OPI)" in a suit that Samsung Electronics retirees brought against the company. The TAI, paid based on semiannual target achievement, can be partly managed and controlled by workers and thus may qualify as wages, but the OPI, paid once a year from a pool of corporate excess profits, is difficult to view as wages.
The Supreme Court viewed the OPI as determined by a mix of factors beyond the provision of labor, including capital scale, expense, market conditions, and management judgment. The same reasoning appeared in a severance pay suit filed by SK hynix retirees in Feb.
An attorney who requested anonymity said, "It is true that, given recent precedents, the likelihood of finding that demands for performance bonuses fall within the purpose of a strike is low."
◇ Samsung: "If semiconductor processes stop, it's dangerous"… scope of maintaining safety facilities at issue
The semiconductor industry's unique characteristics are also a factor. Under the current Trade Union and Labor Relations Adjustment Act, acts that halt or obstruct the maintenance and operation of safety and protective facilities during industrial action are prohibited. This means that management of toxic gases and chemicals used in semiconductor processes and work to prevent wafer degradation must be maintained even during a strike.
Samsung Electronics reportedly emphasized these points as well during the first hearing on the 29th of last month. The union, on the other hand, said "management has not specifically presented the scope of safety duties to be maintained and the staffing," adding that it is "directing and supervising union members to avoid illegal acts."
If the strike materializes, concerns over production disruptions could grow, raising the possibility that the government will invoke its emergency adjustment authority. Under the Trade Union and Labor Relations Adjustment Act, if the scale of industrial action is large or is likely to have a serious impact on the national economy, the Minister of the Ministry of Employment and Labor (MOEL) may decide on emergency adjustment.
However, there have not been many actual cases of invoking emergency adjustment authority. Only four times in history: the 1969 Daehan Shipbuilding strike, the 1993 Hyundai Motor union strike, and the 2005 Asiana Airlines and Korean Air Lines pilots' union strikes. For this reason, observers inside and outside legal circles also say the likelihood of invoking it in this case is not high.
A legal community source said, "If a Samsung Electronics strike materializes, the impact on the national economy and industry at large would be significant, so the possibility that the government will move to emergency adjustment cannot be ruled out," adding, "If emergency adjustment is invoked, the union must halt industrial action and go through the mediation procedures of the Central Labor Relations Commission."