Hyundai Motor Co., South Korea's largest automaker, said Tuesday it has reached a tentative agreement with its labor union on this year's pay increase 119 days after the start of negotiations.

On Wednesday, the labor union plans to hold a vote on whether to approve the agreement signed late Monday at the carmaker's main production plant in Ulsan, located 414 kilometers southeast of Seoul.

Under the agreement, unionized workers and management will set up a special pay system and standard wage reform committee that will tackle the tricky issue of clarifying to what extent regular bonuses should be considered part of a worker's regular salary.

The issue took prominence after the Supreme Court ruled late last year that all types of bonuses, if given uniformly and regularly to workers, must be viewed as being part of standard pay.

Many companies, including Hyundai Motor, have been reluctant to include bonuses as part of the standard pay because it would raise overtime allowances and severance pay.

The two sides also agreed to raise basic monthly salaries by 98,000 won (US$93), and give workers 300 percent bonuses and a further lump sum of 5 million won. The two sides reached an understanding on a one-time 150 percent bonus to reflect Hyundai cars meeting initial quality standard ratings.

Besides these monetary awards, workers will be given 3.7 million won each for meeting production output targets this year, and 200,000 won in gift certificates. Management, moreover, said it will extend the retirement age from 59 to 60.

Both sides said every effort will be made to increase output to make up for disruptions caused by partial walkouts in the past.

The company, the flagship of Hyundai Motor Group, the world's fifth-largest automotive conglomerate, said the total amount of lump bonuses and wage hikes given to workers for successfully concluding this year's collective bargaining talks is not as large as in the past.

"This reflects unfavorable exchange rates that have eaten into the company's profits and other challenges facing the company," a Hyundai insider said. He added that there was a consensus that current unfavorable circumstances facing the company, and the country as a whole, required joint efforts to resolve.

The carmaker's operating profit this year has fallen 13.6 percent compared with the year before. Hyundai Motor has struggled to hold onto its market share in the face of stiff competition from imports.

Union leaders and management concurred on adopting the back-to-back, two-shift workday system starting on March 2016 as originally agreed upon. The change is regarded as an improvement in working conditions for workers.

Management, on the other hand, did not accept calls by union workers to reinstate people fired for carrying out illegal strikes, stressing that there is a need to set a clear example.

The carmaker claimed that the latest talks marked a milestone in the country's often volatile management-labor relations because the tentative agreement set a guideline for the future.

"The pack outlines a system, whereby workers will be given large bonuses and wage hikes if the company generates profits, while taking home less if corporate earnings fall short of expectations," the source said.

Hyundai Motor's shares that got off to a strong start following the tentative wage agreement, lost some ground, but managed to close at 190,500 won, up 0.53 percent or 1,000 won from the previous session. Hyundai Motor has taken a beating on the local bourse after it signed a contract to buy property in southern Seoul for a steep 10.55 trillion won earlier in the month. (Yonhap)