Ex-GM Korea CEO found guilty of illegally outsourcing labor

Kazem was sentenced to eight months in prison and a two-year probation, while GM Korea was slapped with a 30 million won ($24,260) fine, according to the Incheon District Court. Four former and current executives of GM Korea and 13 CEOs of subcontractors who illegally outsourced their workers to the company were also found guilty on the same charges. The four current and former GM Korea executives were fined 7 million won each, and the subcontractor CEOs fined between 2 million - 5 million won.

The court said in its ruling that the contractual nature between GM Korea and subcontractors was “illegal outsourcing,” unlike the company’s claim that it received workers as part of subcontracting.

The court statement added that GM Korea outsourced its work to temporary workers, who had no expertise or advanced technical skills to assist the company in other capacities. However, the company instructed these temporary workers to do similar tasks as factory employees.

According to labor law, if a company hires subcontract workers from a third party, it cannot give any direct instructions to them unlike in outsourcing, said Cho Hyuck-jin, a researcher at the Korea Labor Institute.

“Also, car manufacturing is not categorized as an industry sector where a company can outsource its work to other companies,” said Cho.

But industry insiders argue that the current labor law does not reflect the car manufacturing industry’s need for a large number of temporary workers for its demanding production schedules.

“In order to operate car production facilities, companies need to outsource thousands of workers. It takes a huge cost to give all of them permanent positions,” a source told The Korea Herald on condition of anonymity. “The government should have some leniency on the manufacturing sector’s employment practice.”

“We express regret about the court ruling. The company is considering taking further legal actions,” said a GM Korea official, declining to mention whether it will bring the case to the appellate court.

In July 2019, five of GM Korea’s executives including Kazem were charged with illegally outsourcing workers for its three factories in Incheon, South Gyeongsang Province and North Jeolla Province from Sep. 2017 to Dec. 2021.

It is still facing several civil suits from subcontracted workers who worked for GM during that period.

Following an almost five-year stay in Korea as the country chief, Kazem was relocated to China in June last year to serve as vice president of SAIC GM, GM’s Chinese headquarters.