A district court ruled against a Hyundai Motor collective bargaining agreement which includes a provision that promises to hire a family member of an employee who dies due to an industrial accident or injury.
On Thursday, the Ulsan court concluded that the clause intrudes on the intrinsic right of employers to choose personnel.
The court said that clauses in collective bargaining agreement can be nullified if they go against social norms.
"Workers need to be protected. But such protection isn't applicable to successive generations of employees," it said.
The ruling came after a case filed by the bereaved family members of a male Hyundai Motor worker who died of lung cancer in 2011, two years after he retired after working for 30 years as a thermal engineer there.
The families received confirmation from Korea Workers' Compensation and Service that the death of the worker was caused by an industrial injury.
After this, three family members of the deceased worker demanded that Hyundai Motor hire one of the children of the late worker in accordance with the terms reached in the collective bargaining agreement.
The company refused to do this, insisting that the worker retired from his job in 2009 and that he was not a union member when he died because he died two years after leaving the company.
The court said the company must compensate the family in accordance with the law because the worker's death was due to an industrial injury. However, it rejected the succession of employment clause, saying that the practice is not acceptable.