GM Daewoo fined for illegal use of dispatch workers

14.03.2013

The Korean Supreme Court fined Ex-GM Daewoo, subsidiary of the General Motors Company, President for the illegal use of dispatch workers. This decision should set an important precedent to protect workers from exploitation.

The Supreme Court has upheld a ruling that GM Daewoo illegally used workers hired from subcontractors at its assembly lines. A 2010 Supreme Court decision declared the practice illegal at Hyundai following tough campaigning by IndustriALL Global Union’s affiliate the Korean Metal Workers’ Union (KMWU) that organizes irregular workers in the sector. The latest judicial ruling follows that major KMWU victory and hands down criminal liability and punishment in the form of fines. 

After an investigation, the Employment and Labour Ministry also found that a Korean retailer K-Mart illegally used dispatch workers. These decisions should put the brakes on the unfair labour practice by other companies throughout South Korea. The Court also determined that both the manufacturer and the business owner of the partner company have the same degree of criminal liability.

On 28 February the Supreme Court upheld the decision of the appeals court. The court had ruled that David Nick Reilly, the former president of GM Daewoo Motors who had been indicted on charges of violating the Act on the Protection of Temporary Agency Workers, should pay a fine of 7 million won (US$6,457). Fines of 3 to 4 million were also upheld for six other defendants who had been tried on the same charges as Reilly, including a man surnamed Kim who is president of a partner company to GM Daewoo.

Irregular employees receive a fraction of what their regular co-workers make and are the first to be laid off when the economy becomes fragile. Korea has a very high number of irregular workers, and many of them are employed by subcontractors to work for the prime contractor.

Regardless of the fact that it is forbidden for workers to be dispatched in the direct assembly lines of manufacturers, companies in the industry have been using illegal dispatch workers by abusing legal loopholes through subcontracting. Now that the Supreme Court has set a precedent for criminal prosecution of business owners, it is expected that there will be changes in such industry practices.