Samsung affiliates have completed the payment of retroactive retirement benefits to current and former employees, in accordance with a Supreme Court ruling that mandates the inclusion of the Target Incentive (TAI) in the calculation of average wages. This resolution, which involves one-time costs ranging from hundreds of millions to billions of won, is expected to contribute to improved second-quarter results for Samsung affiliates.
According to industry sources, Samsung Electronics, along with Samsung Electro-Mechanics, Samsung Display, Samsung SDI, and Samsung E&A, has completed the payment of retroactive retirement benefits calculated based on the inclusion of TAI in average wages as of last month.
This follows a Supreme Court ruling in January, which determined that TAI must be included in the calculation of average wages in a lawsuit filed by 15 former Samsung Electronics employees. The court ruled that since the TAI payment criteria are predetermined and regularly paid, they are closely related to the provision of labor.
Following the ruling, major affiliates like Samsung Electronics initiated the recalculation and additional payment procedures for retirement benefits. Payments for retroactive amounts were made to employees who retired after January 2023, when the statute of limitations for retirement benefit claims was still in effect.
Samsung affiliates proactively reflected the additional burden of retirement benefits resulting from the ruling in their first-quarter results. Samsung Electronics accounted for approximately 531.6 billion won as past labor costs, while Samsung Electro-Mechanics, Samsung SDI, and Samsung E&A set aside 71.4 billion won, 41.6 billion won, and 37.1 billion won, respectively. These past labor costs include the impact of the ruling on defined benefit retirement plans.
With the elimination of significant one-time costs, Samsung affiliates are expected to see a larger improvement in their second-quarter results, particularly in key profitability indicators such as operating profit and net income.
Samsung SDI, which has been facing losses due to a downturn in the battery market, is anticipated to benefit from the removal of one-time costs, aiding its recovery. As demand for electric vehicles slows and uncertainties in U.S. policies persist, the hundreds of millions of won in one-time costs reflected in the first quarter will no longer be a factor in the second quarter. Similarly, Samsung Electro-Mechanics is expected to see improved results due to the elimination of one-time costs, alongside increased demand for AI servers, multilayer ceramic capacitors (MLCCs) for automotive applications, and high-value semiconductor substrates.
An industry insider noted, "After the Supreme Court ruling, affiliates largely reflected retirement benefit-related costs in the first quarter and completed the actual payment procedures, significantly reducing related uncertainties. With the removal of large one-time costs starting in the second quarter, the recovery of each company's core business will determine the extent of performance improvement."
* This article has been translated by AI.
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