Court finds all Hyundai in-house subcontracting illegal

Posted on : 2014-09-19 16:05 KST Modified on : 2019-10-19 20:29 KST
Some legal experts now say charges could be brought against Hyundai executives for their use of subcontractor labor
 delegate of the Ulsan Hyundai Motor Factory 1 branch of the Korean Metal Workers’ Union (left) with Park Hyun-jae
delegate of the Ulsan Hyundai Motor Factory 1 branch of the Korean Metal Workers’ Union (left) with Park Hyun-jae

By Jeon Jong-hwi, Kim Seon-sik and Park Seung-heon, staff reporters

In a verdict rendered on Sept. 18, the Seoul Central District Court concluded that all of the in-house subcontracting at Hyundai Motor was illegal. For the past 20 years since the early 1990s, automobile manufacturers in South Korea have used in-house subcontracting to conceal the reality of workers’ employment status. Now the court has found that these contractor workers were effectively the same as regular workers.

 embrace outside Seoul Central District Court in Seocho district
embrace outside Seoul Central District Court in Seocho district

The most significant aspect of the ruling is the conclusion that there is no such thing as legal subcontract work on the current automobile manufacturing line. When the Supreme Court ordered courts in July 2010 to retry the case of Choi Byeong-seung, an in-house subcontract worker at Hyundai Motor, it concluded that Choi was a regular worker at Hyundai Motor. In support of this judgment, the court noted that the plaintiffs had been working on the design line which involved a conveyer belt and that they had been working alongside Hyundai Motor regular workers on the line.

In the subsequent case, Hyundai Motor had argued that there was no evidence of illegal dispatching on the rest of its production lines where regular workers and irregular workers were not interspersed, but the court flatly rejected the company’s argument on Thursday.

In fact, the court ruled that in-house subcontract work was illegal dispatching in every phase of automobile manufacturing, from welding the frame to just before the vehicle is delivered to the final user. The ruling applies not only to the main processes involving the car body, painting, and pressing, but also to production management (delivering parts to the production line), sub-assembly of engines and transmissions, and loading completed cars on ships for export.

“Hyundai Motor argued that the court should recognize differences in illegal dispatching for each manufacturing process and phase, but the court concluded that these differences were not significant. The court recognized that subcontract work was illegal dispatching in every process in car manufacturing even when regular and irregular workers were not mixed together,” said Kim Tae-uk, the lawyer who represented the workers in the lawsuit.

The court’s decision on Thursday was not wholly unexpected. In a number of similar lawsuits that have been filed since the Supreme Court remanded the Choi case to the lower court in 2010, courts have returned a string of consistent verdicts. Seven in-house subcontractor workers from Hyundai Motor’s Asan factory were found by Seoul High Court to have been illegally dispatched and are now awaiting the decision of the Supreme Court, while four in-house subcontract workers from Ssangyong Motor received a similar verdict in the Pyeongtaek Local Court.

Interpreted broadly, the court’s ruling can be seen as implying that in-house subcontracting on production lines, whatever form it may take, is likely to be illegal dispatching, not only in car production but in manufacturing facilities of all kinds. The Act on the Protection of Dispatched Workers stipulates that dispatched workers may be used only in 32 industries, and it explicitly forbids their use in direct production lines in the manufacturing industry.

“The court concluded that if there is a connection between the work of Hyundai Motor workers and the in-house subcontractor workers, the subcontracting cannot be legal. It is likely that the ruling will affect all kinds of industries, not only the manufacturing industry but also the service industry, where similar issues have been raised recently,” said Yun Ae-rim, law professor at Korea National Open University.

While labor activists welcomed the fact that the court recognized the employment status of all of the plaintiffs who had filed the lawsuit, they felt that it came too late. This is not only because the judgment was made four years after the lawsuit was filed in Nov. 2010. It’s also because 10 years have passed since 2004, when the Ministry of Labor concluded in a probe of working conditions at Hyundai Motor that all 9,300 of its manufacturing processes involved illegal dispatching. The prosecutors helped prolong the illegal dispatching situation when they decided not to prosecute Hyundai Motor in 2005 even after the Ministry submitted its opinion that the company should be indicted.

While the decision will likely be appealed, the court’s ruling that all of the manufacturing processes at Hyundai Motor constitute illegal dispatching could increase public pressure to prosecute Hyundai chairman Chung Mong-koo and other executives. In-house subcontractor workers at Hyundai Motor have continued to push for the prosecution of the management for illegal dispatching, but the prosecutors have declined to indict them each time, claiming that they could not prove that the crimes were intentional.

The Dispatch Act states that a business owner who violates the law by sending or receiving dispatch workers is subject to three years in prison or a fine of up to 30 million won (US$28,743). In 2013, law school professors and lawyers held a press conference calling on the prosecutors to bring charges against Chung.

“The court has confirmed that not one or two but around 900 people have been illegally dispatched. The fact that a civil court made a decision on the employment relationship on the grounds of substantial evidence demonstrates that all of the production processes involve illegal dispatching. This means the prosecutors should carry out an investigation and issue an indictment,” said Kwon Young-guk, a lawyer.

One unanswered question is how the decision will affect the new round of hiring at Hyundai Motor, which is taking place according to an agreement reached in August by Hyundai Motor, the Asan Chapter of In-House Subcontract Workers and the Jeonju Chapter of In-House Subcontract Workers. In advance of the decision, around 290 newly hired workers had already withdrawn their lawsuit.

“Regardless of the lower court’s decision, we will carry out the special hiring agreement for in-house subcontract workers reached in August. Moving forward, we will find a fundamental solution to the issue of in-house subcontract workers by continuing this round of hiring. By 2015, we will hire 4,000 in-house subcontract workers as directly managed company technicians,” Hyundai Motor said on Thursday.

 former leader of the Ulsan chapter of the Hyundai Motor Irregular Workers‘ Union
former leader of the Ulsan chapter of the Hyundai Motor Irregular Workers‘ Union

 

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