The Supreme Court has rejected a collective bargaining demand from HD Hyundai Heavy Industries' in-house subcontractor union, refusing to recognize the prime contractor's bargaining obligation. On the 21st, the Supreme Court's full bench upheld the lower court's ruling against the plaintiff in the appeal of a collective bargaining lawsuit filed by the in-house subcontractor branch of the Korean Metal Workers' Union's Hyundai Heavy Industries chapter against HD Hyundai Heavy Industries. The subcontractor union filed the suit against the prime contractor in 2017, arguing that HD Hyundai Heavy Industries was in a position to substantially control and determine working conditions. After the ruling, the Korean Metal Workers' Union criticized the decision as "running counter to the purpose of the revised Trade Union Act (Yellow Envelope Law)."
Because this case concerned a 2016 collective bargaining demand, the old Trade Union Act applied rather than the Yellow Envelope Law. Applying the previous law, the court determined that a prime contractor has no obligation to engage in collective bargaining with a subcontractor union absent an employment contract relationship. However, analysts say the Supreme Court signaled its intent to continue applying a strict definition of "employer" status to prime contractors going forward. The bench stated that "since refusing collective bargaining can be subject to criminal punishment, the concept of employer needs to be interpreted strictly under the principle of nulla poena sine lege." If a prime contractor's employer status is recognized under the Trade Union Act and it still refuses to bargain, it can face criminal punishment.
The current Yellow Envelope Law has been criticized as so ambiguous that even the Prime Minister has mentioned the need to clarify the scope of "employer." The definition of employer is excessively expansive and lacks predictability, while government guidelines have been interpreted differently, compounding confusion in the field. Currently, the Labor Relations Commission rules on the employer status of prime contractors, but ultimately the courts will have the final say. This has raised concerns that the Yellow Envelope Law will fuel legal disputes between labor and management.
To make matters worse, in the aftermath of the Samsung Electronics union dispute, demands by subcontractors for performance bonuses from prime contractors are spreading across the board to SK hynix, Hyundai Motor and HD Hyundai Heavy Industries. The ruling party and government bear heavy responsibility for enacting the law before laying the groundwork. Despite this, the government keeps repeating irresponsible remarks along the lines of "wait until court precedents accumulate." The National Assembly and government must now move quickly to enact supplementary legislation that clearly defines the scope of employers and workers, bargaining procedures and the requirements for industrial action. The longer this is delayed, the more uncertainty grows for corporate management through labor-management conflicts and lawsuits, and the harder industrial sites will be hit.
