The Korea Enterprises Federation (KEF) has issued a special recommendation to its roughly 4,200 member companies, stating that "institutionalizing performance-based bonuses does not fall under the scope of collective bargaining," as union demands for "bonuses equal to N% of operating profit" spread. With labor-management agreements at SK hynix and Samsung Electronics raising the prospect that corporate performance-sharing could become a "new normal," the federation moved to put on the brakes, saying employers should not engage in collective bargaining on the matter.
In a "Special Recommendation for the Business Community on Union Demands for Sharing Corporate Profits" distributed to member companies on Sunday, the KEF stressed that "companies have no legal obligation to comply with union demands to share corporate profits." It added, "It must be made clear that strikes and other industrial actions carried out by unions with the primary purpose of sharing corporate profits may constitute illegal industrial action." Under the Trade Union Act, mandatory subjects of collective bargaining are limited to "working conditions such as wages, working hours, welfare, dismissal, and workers' status and other treatment," and the sharing of corporate profits does not fall under these categories, according to the federation.
The KEF also made clear that "it must be unequivocally stated that monies of a nature that distribute corporate management performance, such as operating profit, do not constitute wages." It noted that, according to the Supreme Court's consistent rulings, operating profit cannot be regarded as compensation for labor because it is more heavily influenced by external conditions that are difficult to control beyond labor. However, the KEF's position is that the labor sector regards the sharing of operating profit and similar measures as a kind of wage that must naturally be paid.
The KEF appealed that "performance-based bonus systems should be operated reasonably based on corporate sustainability and the principle of performance-based reward." The federation pointed out that "profits should be used for investment, employment, and research and development for corporate sustainability and future competitiveness," adding that "unions demanding the preemptive distribution of profits could result in restricting shareholder rights."
