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Posted : 2013-02-28 17:26
Updated : 2013-02-28 17:26

GM Korea's use of workers from subcontractors ruled illegal

By Kang Hyun-kyung

The Supreme Court upheld Thursday a high court ruling that GM Korea (formerly GM-Daewoo) illegally used workers originally hired from subcontractor firms to its assembly lines.

The ruling is expected to have a significant impact on the auto industry because domestic automakers have, for a long time, relied on this practice as a means of reducing labor costs and laying off workers more easily when there are reduced orders.

The court confirmed fines issued against Nick Riley, former CEO of GM Korea, and six others for their involvement in the irregular hiring practices. The six others are mostly from GM Korea's subcontractor firms.

Riley was slapped with a 7 million won ($6,460) fine, four others with 4 million won and the remaining two with 3 million won.

"It's hiring constitutes a violation of the law that bans illegally using workers from subcontractor firms," the ruling stated.

Riley was deemed responsible for illegally hiring 843 unskilled workers from GM-Daewoo's six subcontractor companies from December 2003 to January 2005.

The latest ruling is expected to force automakers to discontinue the prevalent practice.

This is the second time that the nation's top court has ruled against the use of workers from subcontractor firms by a parent automaker. In July, 2010, the top court also made an identical ruling against the illegal practice at the nation's largest automaker, Hyundai Motor.

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