'Red Milk' Daily Dairy Why there is no compensation for consumer damage despite management's apology

■ Broadcast: YTN Radio FM 94.5 (09:00-10:00)
■ Host: Reporter Cho Tae-hyun
■ Air date: December 18, 2024 (Wednesday)
■ Lawyer Hong Se-wook

* The text below may differ from the actual broadcast content, so please check the broadcast for more accurate information.

◆ Reporter Cho Tae-hyun (hereinafter referred to as Cho Tae-hyun): Let's continue with YTN Radio Cho Tae-hyun's Live Economy Part 2. Let's point out the law issue related to the economy with this person. This week's Don't Worry Be Happy time will also be with lawyer Hong Se-wook. Please come in.

◇ Lawyer Hong Se-wook (hereinafter referred to as Hong Se-wook): Hello.

◆ Cho Tae-hyun: We just said the answer to the quiz is No. 1 parental leave and No. 2 milk candy because milk candy is made of milk. Maybe that's why I'm going to talk about milk today. A photo has become a big issue in the online community. What happened when you opened the milk carton and the red liquid came out?

◇ Hong Se-wook: It's a daily dairy sterilized milk product, and it should be white milk, but red milk came out. There were reports that people who drank without knowing this had symptoms of vomiting or abdominal pain, so it was confirmed that washing water was mixed in some milk products every day. During the production work, the cleaning solution was mixed for about a second due to a valve operation error, and about 50 products were delivered to one specific customer company.

◆ Cho Tae-hyun: I think the results of the investigation by the Ministry of Food and Drug Safety came out like this, but anyway, the wavelength was not small. As a result, it is said that daily dairying has also been taken measures, so what did you announce?

◇ Hong Se-wook: Maeil Dairy voluntarily recalled all of its products on February 16, 2025, the same production date as the product, and issued an apology under the name of Maeil Dairy's vice chairman. Every day, something happened to the dairy side that should never have happened with a single pack of milk. In order to prevent the same accident, we immediately improved the software system to block work errors and further strengthened the quality safety management system with Korea's top facilities specialized companies.

◆ Cho Tae-hyun: I think it would be more shocking because it was visually shocking than any other aftermath, but Maeil Dairy's image has been quite good so far, but I think it will be quite a hit this time. The Ministry of Food and Drug Safety also said it has taken measures to withdraw and suspend sales of the product, so what further measures do you think will continue in the future?

◇ Hong Se-wook: First of all, on the 16th, the Ministry of Food and Drug Safety conducted an on-site investigation on the Gwangju plant where the milk in question was produced through the local government, and not only the products in question were collected and inspected. As a result of the investigation, it was confirmed that the sterilizer valve was opened and mixed for one second due to the worker's mistake, so the business was suspended for one month and related products were disposed of according to the relevant law.

◆ Cho Tae-hyun: Okay. I received a one-month suspension that could hurt a little, but a one-second mistake returned to the one-month suspension. I issued an apology twice, but public opinion still seems to be not so good. Daily Dairy stock prices are also affected, right?

◇ Hong Se-wook: Yes, it seems that consumer distrust will not subside easily, but as of 10:20 a.m. on the 16th, Maeil Dairy's stock price was traded at 34,550 won, down 700 won from the previous trading day, and the stock price fell to 33,950 won during the day, close to the 52-week low. Also, yesterday, it fell to 34,450 won and closed at 34,800 won.

◆ Cho Tae-hyun: Right now, it's up 0.29% and 100 won, so trading continues at 34,900 won. I haven't recovered yet. But if you're a little worried, as I said earlier, the results of the Ministry of Food and Drug Safety investigation show that the product that has been damaged is not that big, and the aftermath is not that serious. Isn't it a problem that these things are more exaggerated than they actually are spreading through the community and creating a sense of fear among consumers?

◇ Hong Se-wook: That's a bit of a serious problem. In this case as well, if you look at the contents spread around SNS, for example, they vomited blood. And it's like Lax undiluted solution. This kind of content is also spreading. Because of that, in the case of this daily dairy industry, about 60% of this sales are milk dairy products. If this negative image leads to distrust of dairy products every day, it will probably affect sales, so I think it will be very difficult for companies.

◆ Cho Tae-hyun: I'm not saying that Dairy did well every day, but I threw up this kind of blood. Don't do this on social media. Oh, don't do such useless things in a busy society. This is also the case. When this happens, the impact on quality issue sales will be quite large. What cases have you had in the past?

◇ Hong Se-wook: First of all, it's a recent incident. You know the Qingdao beer case, right? It was this case that caused a problem after a video of a factory worker urinating beer ingredients spread.

◆ Cho Tae-hyun: It was my favorite beer.

◇ Hong Se-wook: At this time, Qingtao Beer ranked second in sales in Korea. However, this incident gave up the second place for Japanese beer companies. Also, if it's the most famous event in food history, many people will remember it, but in 1989, there was a Uji wave that made ramen with industrial iron oil, or Uji. At this time, Samyang Foods was far behind its competitor Nongshim due to the Uji wave.

◆ Cho Tae-hyun: That's when it turned upside down.

◇ Hong Se-wook: Yes, so we're almost on the verge of bankruptcy. Unfortunately, however, the case was later concluded to be innocent.

◆ Cho Tae-hyun: I guess so. These things are often happening, but I can't help but pay attention to it because it's in the mouth of consumers and they consume it directly. If these foreign substances enter the purchased food or are damaged by defective food, what is the legal way to be compensated in this case?

◇ Hong Se-wook: Yes, according to the current regulations of the Food Sanitation Act, the results of the risk assessment are to be announced for foods that may cause harm to consumers such as food poisoning. In addition, sales are prohibited, and if it is in circulation, it is regulated like this to be collected again. However, there is no regulation on compensation for damages, so consumers who have been damaged by food have no choice but to apply for damage relief to the Consumer Agency or claim civil damages. However, the reality is that such lawsuits and such damage relief application procedures are complicated, take a long time, and it is difficult to recognize the amount of compensation. However, in 2020, Rep. Sung Il-jong of the People's Power proposed an amendment to the Food Sanitation Act, which mandates businesses to subscribe to insurance or mutual aid to compensate for such food-damaged consumers, and in a way, it was a good law. But it didn't pass.

◆ Cho Tae-hyun: These essential bills don't seem to be discussed well because the National Assembly's interest is elsewhere. However, after reporting defective food, I received compensation in more amount than the purchased product. I sometimes see these stories on social media. Shouldn't we be careful?

◇ Hong Se-wook: Yes, Lotte Confectionery found bugs or bad snacks from this snack. If you do this, you file a complaint. Then Lotte will probably ship the package of snack boxes to consumers. However, in principle, the dispute resolution standard under the Basic Consumer Act is to be exchanged for the same product. It's exceptional that I send you a box of snacks at Lotte.

◆ Cho Tae-hyun: Not a typical case.

◇ Hong Se-wook: So if you ask for more compensation than what you bought from a company, you may be mistaken for a black consumer and accused of obstructing business. The principle is to exchange the same product, so I hope you pay attention to that.

◆ Cho Tae-hyun: If you speak only at the level of common sense, there will be no problems. I've met a lot of black consumers while covering them, and they don't really share common sense, so I'll move on to the next issue. This time, it's a labor law story that may be a little difficult. There will be a Supreme Court ruling tomorrow on whether conditional regular bonuses will be included in ordinary wages, what does this mean?

◇ Hong Se-wook: First of all, I have to explain what ordinary wages are, but the Labor Standards Act stipulates that ordinary wages are the amount that is set to be paid to workers for a certain amount of work or total work on a regular and uniform basis. If you look at this normal wage, it's good to memorize this. This ordinary wage requires three requirements: regularity, uniformity, and fixedness, and regularity refers to a salary if it is continuously paid at regular intervals. Simply put, when payments are continuously made at regular intervals, such as salaries. And what is uniformity is paid to all workers, not to specific workers. It's not wages if it's paid only to certain workers. And this is the fixedness, this is the additional conditions that the worker once they've provided the work, such as the achievement or the performance. Regardless of these additional conditions, fixed payments are called this fixedness, and these three requirements must be met to become wages.

◆ Cho Tae-hyun: So even if it's a bonus, if you meet these conditions on a regular basis, shouldn't you see it as a normal wage? But why does it matter if this regular bonus is included in normal wages?

◇ Hong Se-wook: You've heard of the extension allowance, the night allowance, right? Additional allowances are received when working on this extended night holiday, and the standard of this additional allowance is ordinary wages. In addition, you will receive a vacation allowance or severance pay, and the standard for calculating this amount, such as a vacation allowance, is also a normal wage.

◆ Cho Tae-hyun: Because it can be longer.

◇ Hong Se-wook: When regular bonuses are included in ordinary wages, these extension allowances increase, and school closure allowances and severance pay increase. That's why it's very important for workers.

◆ Cho Tae-hyun: Eleven years ago, it was ruled that conditional regular bonuses were not normal wages, and there was a Supreme Court ruling announced tomorrow, but tomorrow is related to two companies?

◇ Hong Se-wook: Yes, but before we explain these two cases, we need to explain the background a little bit. This regular bonus was not included in the ordinary wage until 2013. So companies have been operating companies by paying less-burdened bonuses instead of ordinary wages, which can increase extension allowances.

◆ Cho Tae-hyun: That's a kind of expedient.

◇ Hong Se-wook: That's right. However, in 2013, the Supreme Court ruled that regular bonuses were also equivalent to ordinary wages. Things have changed drastically. Regular bonuses have increased the burden on companies that have been reducing their actual wages, and there was another important issue in the 2013 Supreme Court ruling. Regular bonuses are ordinary wages, but bonuses, or conditional bonuses, which are set to be paid only to incumbent workers when bonuses are paid, are not ordinary wages. So, it was found in the 2014 ruling that the conditional bonus you mentioned earlier was not a normal wage. This is why the condition that you must be in office when paying bonuses is an additional condition referred to in the regular wage fixedness. In this way, it is judged that there is no fixedness. So, after this ruling, many companies paid regular bonuses and were in a hurry to pay bonuses on the condition that they were in office or that they would serve for a certain period of time under the rule of exclusion of payment. However, for workers, there should be no conditions for this employee to increase their wages in real terms. As a result, the lawsuit continued to be filed that this employee condition was invalid and that even regular bonuses with employee conditions should be regarded as ordinary wages.

◆ Cho Tae-hyun: Okay. But if you look at these lower courts in the past, bonuses are included in ordinary wages, and there are no consistent rulings, so what's wrong with this?

◇ Hong Se-wook: First of all, to explain a little bit of the lower court's ruling, there was a case of Seah Besteel that was conditional on being in office when the bonus was paid, and this case was judged in the first trial that it was not a normal wage because it was not fixed according to the purpose of the 2013 Supreme Court's ruling, but the Seoul High Court judged that the proposed conditional regular bonus was also a normal wage. Also, Hanwha Life Insurance is doing it today, and this case was also based on the condition that Hanwha Life Insurance is also in office when the bonus is paid. However, the first trial decided that it was not a normal wage. However, in the case of bonuses, the appeals court does not have a reasonable need to attach conditions for employees only for bonuses, unlike other basic salaries. Therefore, the conditions for employees are invalid. For that reason, it was judged to be equivalent to ordinary wages, but in the case of Hyundai Motor, there was a rule excluding payment that regular bonuses were paid only to workers who worked for more than 15 days within the standard period. However, in this case, it was also judged that both the first and second trials were not ordinary wages. But the reason for this disagreement is this 2013 Supreme Court ruling, and for companies trying to reduce their wage burden, they have no choice but to add conditions for employees according to this Supreme Court ruling, but for workers, this corporate behavior unfairly reduces the burden on companies by using the Supreme Court ruling. It is argued that it is contrary to the purpose of the Labor Standards Act by inflicting damage to workers. However, the lower court's ruling seems to be mixed as it accepts the management's position or the worker's position depending on the case, and eventually the Supreme Court seems to have come to sort out this position.

◆ Cho Tae-hyun: It certainly seems necessary if the lower courts are divided like this, but if tomorrow the Supreme Court will rule that conditional regular bonuses are included in the ordinary wage. In this case, companies will be hit hard.

◇ Hong Se-wook: According to the Korea Employers Federation, an additional 6.8 trillion won in labor costs is incurred annually. This is equivalent to labor costs that can employ more than 92,000 people per year, and as of last year, it can provide 27.94 million won per year to all young unemployed people in Korea. So, you have to turn it this way. There's a purpose to this.

◆ Cho Tae-hyun: I don't turn it this way, but I understand the purpose anyway. But is there a possibility of retroactive application?

◇ Hong Se-wook: Yes, as I mentioned earlier, ordinary wages are the basis for calculating various allowances. And the extinctive prescription for wage bonds is three years. That's why you can even charge interest for the past three years.

◆ Cho Tae-hyun: It's not retroactive legislation, but it can happen because it has a three-year extinctive prescription. From a company's point of view, it can be very hard, so let's take a look at the workers' point of view. What is the claim on the part of the workers?

◇ Hong Se-wook: Of course, the Supreme Court argued that the terms of service should be included in the ordinary wage. This is because the real income of its workers will increase, and it is natural for the worker to pay regular bonuses only to those who work on this payment base date, as I mentioned earlier, and it is unfair that employers have been paying against the purpose of this Labor Standards Act. Therefore, such a situation is not a matter that we need to consider. It seems that it will be a tense day for both labor and management to see what judgment will be made tomorrow.

◆ Cho Tae-hyun: I think I have no choice but to be nervous. This may be a bit of a conflict between the two sides, but if a company is hit like this, the benefits to workers will inevitably decrease, and we cannot ignore workers' rights and interests, and we have to see what the Supreme Court will decide. So far, I've looked at various legal issues related to the economy with lawyer Hong Se-wook. Thank you for talking today.

◇ Hong Se-wook: Yes, thank you.

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