Only back pay and statutory retirement benefits on offer — no consolation allowance

Workers say money owed regardless of resignation is being used as a bargaining chip

Sales at roughly 30% of target as financial strain deepens

A Homeplus store in Seoul sits quiet on Sunday. [Yonhap]
A Homeplus store in Seoul sits quiet on Sunday. [Yonhap]

Internal resistance is mounting at Homeplus over a voluntary redundancy program that offers workers only their unpaid wages and statutory retirement benefits — with no consolation allowance. The offer has drawn sharp criticism from employees and unions alike, coming roughly a month after the court-supervised rehabilitation plan was approved and as the company's ongoing sale process has yet to attract a single buyer.

Homeplus began accepting voluntary redundancy applications Wednesday, the first such program since the rehabilitation plan was approved on Sept. 2. The company said the move was prompted by a sharp reduction in operating stores — from 126 before rehabilitation proceedings began to 67 — which has left up to half of its workforce on paid leave. Applications will be accepted through Oct. 22, with departures taking effect Oct. 31.

The central grievance is the absence of a consolation allowance. The company's offer consists solely of a lump-sum payment on Nov. 14 covering unpaid wages, a chuseok bonus and statutory retirement pay. The terms have sparked considerable anger internally. "They've turned money they were obligated to pay anyway into a condition of the resignation deal," one Homeplus employee said. "People inside are taking this very seriously."

The union has taken an equally hard line. The Homeplus chapter of the Mart Industry Union said in a statement that unpaid wages and bonuses are money the company must pay regardless of whether an employee resigns, and that the retirement benefit is simply what the law requires. "This is not voluntary redundancy — it is a recruitment drive for resignations dangled with withheld wages, and a signal that the rehabilitation plan is coming apart," the union said. The general union also plans to take up the issue at a delegate assembly to be held soon.

Under current labor law, including the Labor Standards Act, consolation allowances are not legally required in voluntary or recommended resignations. In practice, however, companies typically offer separate allowances in large-scale redundancy programs to encourage voluntary departures and smooth labor-management negotiations. When Homeplus announced a voluntary redundancy program in June for senior-level staff at 37 stores slated for closure, the package included three months' additional retirement pay and a consolation allowance under an asset-liquidation support scheme. That program was ultimately canceled due to funding problems after applications surged.

The decision to proceed without a consolation allowance is widely seen as a reflection of Homeplus's deepening financial difficulties. Sales at its 67 operating stores have fallen sharply, dropping to around 30 percent of the company's own targets. The chain appeared to be gaining traction when it posted single-day sales of 10.63 billion won ($7.94 million) on its reopening day on Aug. 13, but it missed a chance to build on that momentum during the chuseok holiday in September and the October long weekend after failing to resolve delays in supplier payments. The departure of major in-store tenants such as CJ Olive Young and Daiso has also been cited as a factor weakening its competitiveness.

The workforce reduction is closely tied to the ongoing sale process, as Homeplus must cut fixed costs — including labor — to restore business viability. Last month the company put up for sale the real estate of 19 closed stores along with its hypermarket business, including its headquarters and online operations, but has yet to find a buyer. Some observers have raised the possibility of a piecemeal sale if a single-package deal falls through. Homeplus's rehabilitation plan does include a "good company and bad company" strategy, under which a separate entity would be formed around the stronger parts of the business for sale purposes.

Homeplus employed 9,121 workers as of September, based on national pension enrollment data, with the number of people whose livelihoods depend on the company rising further when suppliers and partner firms are included. Against that backdrop, voices within Homeplus have been calling for political intervention. The mart union urged that a state-backed financial institution commit to an acquisition first — with price and employment conditions attached — before opening a public bidding process.

A Homeplus store in Seoul is quiet on Sunday. [Yonhap]
A Homeplus store in Seoul is quiet on Sunday. [Yonhap]

soho0902@heraldcorp.com