[Exclusive] Lotte BioLogics, internal dispute over new personnel system

Opposition to the volatility supercharging system
The company's position is that it was a misunderstanding.
“Try to strengthen communication”

Lotte BioLogics is experiencing internal strife over the new personnel system that will be implemented starting this year. There are voices among employees that the regulations, such as not paying part of the contracted salary if the performance is low, are unreasonable.

The company's position is that it was a misunderstanding that occurred during the first introduction of the system. Another reason is that communication becomes difficult as employees are physically separated. Currently, Lotte BioLogics is operating separate offices in Incheon and Seoul until the factory in Songdo, Incheon, is completed.

The controversial performance-based pay system

Lotte Biologics is implementing a new personnel system called ‘Growth Level (GL)’ starting this year. The main point is to subdivide the existing four rank system (Chief, Assistant Manager, Responsible, Senior) into six levels (GL 1 to 6). There was also a cap (upper limit) for each department to limit promotions.

What caused dissatisfaction among employees was the revised performance bonus system.

Lotte BioLogics chose to accumulate 5-10% of employees' contracted annual salary as a variable surcharge and give differentials based on performance. There are five grades in total, and the top two grades receive 110% and 120% of the accumulated points, respectively. If you save 10 million won, you will receive 11 million won or 12 million won.

The middle level receives the accumulated points back without change. The problem is the lower level. Employees who receive the bottom two grades receive minus (-) 50% and -100% of the volatility bonus, respectively. If you receive the lowest grade, 10% of your maximum contract annual salary may be lost. This is the point where employees feel unreasonable.

In response, the company explained that paying differentiated performance bonuses was a system that had been in place before. It was stated that the consent of the majority of all employees was obtained and that there were no legal problems.

Was there a procedural problem?

However, some employees said there were problems with the process of obtaining consent. Last year, Lotte BioLogics collected opinions for and against the new personnel system from employees. Employees signed for and against the bill while the human resources team watched from somewhere in Seoul. It is pointed out that the situation at the time was an uncomfortable environment where it was difficult for employees to make free decisions.

One employee said, “We also held individual interviews with employees who did not sign at this meeting to obtain their consent.”

Nam Seo-hye, a labor attorney at Daeryun Law Firm, explained, "If sufficient exchange of opinions cannot take place between workers under the supervision of the human resources team, or if it is recognized that consent was forced on workers who expressed opposition, it is considered unfair intervention and interference and cannot be considered a legitimate consent procedure."

The company emphasized that there was no coercion, such as giving disadvantages to those who opposed it. The human resources team said they were there simply to explain the system.

Separately, there are also demands for improvement in the stock option (stock purchase option) system introduced by Lotte BioLogics. The payment terms must be transparently disclosed.

Lotte BioLogics introduced a system to grant stock options through self-evaluation every year in 2023. Then, in March of last year, stock options were paid to about 100 employees for the first time. There were complaints among employees that they received less quantity than promised. However, the company maintains that it has never promised the quantity to be provided in advance.

A working environment in which communication is difficult is cited as the cause of this conflict. Currently, Lotte Biologics is building a bio campus in Songdo, Incheon. Until completion, employees are working in separate offices in Incheon and Seoul for each department. Physically, the structure makes it difficult to provide feedback on the new system smoothly.

An official from Lotte BioLogics said, "We are aware that communication is difficult due to physical reasons, etc.," and "We are working to improve this, but we will think of more ways to help employees feel the same way."

Reporter Kim Yun-hwa (kyh94@bizwatch.co.kr)

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[Exclusive] Lotte BioLogics, internal dispute over new personnel system (Shortcut)