Labor-management conflict over performance bonuses at SK hynix Inc. is showing no signs of resolution. The key issue lies in the differing interpretations of the agreement – the union insists that 10 percent of operating profit should be fully distributed as bonuses while the management claims it is simply a guideline for calculating the bonus pool.

If the union’s demand to allocate 10 percent of operating profit is fully accepted, based on this year’s expected operating profit of 30 trillion won ($21.5 billion), the bonus pool would total about 3 trillion won.

With roughly 30,000 employees, this equates to an average of 100 million won per person.

The management has proposed raising the bonus cap from 1,000 percent to 1,700 percent of base salary. It also suggested distributing half of any remaining funds in the form of pensions or savings plans.

It also expressed flexibility in adjusting the payment cap or any excess distribution.

However, the gap between the two sides remains wide.

The disagreement stems from a 2021 agreement between labor and management that states “10 percent of operating profit will be used as the bonus pool.”

Until now, bonuses were capped at 1,000 percent depending on the company’s performance, and there were no clear rules on how to distribute funds beyond that cap.

At the heart of the current conflict is the company’s record-breaking earnings.

SK hynix reported 23.47 trillion won in operating profit last year and is expected to reach 30 trillion won this year.

As employee expectations rise, management argues that a clear payout cap is necessary.

Even under the initially proposed 1,700 percent plan, that would amount to 85 percent of an annual salary – meaning an employee with a 100 million won salary could receive 85 million won.

“Diverting company funds toward investments or fixed costs goes against the spirit of the agreement,” the union said.

Some, however, warn that distributing the full 10 percent would inevitably affect shareholder returns and future investments.

As the company faces large-scale cash outflows for infrastructure expansion and overseas investments, insiders noted that a strategic approach to resource allocation is essential.

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