Labor unions in Korea will soon be able to legally strike against corporate restructuring and layoffs. Management decisions such as mergers and acquisitions will also effectively fall within the scope of union strike actions. However, only subcontractor unions under the control of primary contractors, such as in-house subcontractors, will be able to engage in collective bargaining with the primary contractor's management.
The Ministry of Employment and Labor announced Thursday that it will open a public comment period from that day through January 15 next year for its "Interpretive Guidelines for Article 2 of the Revised Trade Union Act." The guidelines provide specific judgment and interpretation standards for Clauses 2 (employer) and 5 (labor dispute) of the revised Trade Union Act Articles 2 and 3, commonly known as the "Yellow Envelope Law."
The revised Clause 2 of Article 2 of the Trade Union Act expands the scope of employers subject to collective bargaining, allowing subcontractor unions to negotiate with primary contractor management. Under current law, bargaining between primary contractor management and subcontractor unions without a direct employment contract relationship is generally not permitted. However, the clause referring to "a position to substantially and specifically control or determine" working conditions, which refers to primary contractors, lacked detailed explanation.
In the interpretive guidelines, the ministry further explained the "position" clause as "structural control over working conditions." Structural control refers to a state where primary contractor management has authority to determine subcontractors' workforce deployment, working hours, and work methods. For example, if a subcontractor's shift system operates according to the primary contractor's shift schedule to the extent that working hour systems are interconnected, this can be viewed as structural control. The ministry stated that "incorporation into primary contractor's business" and "economic dependency," which have appeared in court precedents, can also be recognized as structural control.
However, the ministry determined that wages are in principle not a subject that subcontractor unions can collectively bargain with primary contractor management. This is because wages should be determined by the subcontractor management with whom the subcontractor union has an employment contract. Additionally, general contracting agreements and work performed under such contracts are not all recognized as structural control. "Delivery deadlines, quality requirements, negotiation of transaction terms, and demands for work performance in general contracting relationships cannot be viewed as structural control," a ministry official explained. This means that structural control must first be proven before bargaining obligations between primary contractor management and subcontractor unions arise.
The ministry drew a clear line that collective bargaining itself between primary contractor management and subcontractor unions does not constitute illegal worker dispatch. Illegal dispatch is determined by whether primary contractor managers directed and commanded subcontractor workers as if they were primary contractor employees. This standard is similar to the criteria for determining whether a primary contractor qualifies as an employer of subcontractor unions. This was the background for concerns that "a primary contractor responding to subcontractor union bargaining is essentially admitting to illegal dispatch." A ministry official explained, "The interpretive guidelines and dispatch are based on different laws—the Trade Union Act and the Worker Dispatch Act, respectively. The revised Trade Union Act judges the entire group of workers, not individual working conditions like in dispatch cases."
The revised Clause 5 of Article 2 defines the scope of labor disputes for all unions, not just subcontractor unions. Clause 5 was revised to newly include grounds such as layoffs that were previously not recognized as labor disputes. However, like Clause 2, Clause 5 also required interpretation as the legal text lacked specific explanation.
The ministry interpreted the clause "management decisions that affect working conditions" added to Clause 5 by separating "impact on working conditions" and "management decisions." Management decisions such as corporate investment, mergers, splits, sales, and transfers are in principle not subjects for collective bargaining. However, these decisions can become bargaining subjects if they impact working conditions during implementation. For example, if layoffs or reassignments due to restructuring occur during a merger process, the merger itself becomes a bargaining subject. Additionally, unions can demand bargaining if they objectively prove the possibility of layoffs or restructuring. The ministry plans to revise its existing administrative interpretation that layoffs cannot be subjects of bargaining in line with the Trade Union Act revision.
Clause 5 newly added "worker status" as an example of working condition decisions that can be subject to labor disputes. Previously, only wages, working hours, welfare, and dismissal were specified as examples. The ministry cited conversion of non-regular workers to regular status, disciplinary and promotion systems, and retirement age extension as examples of bargaining subjects related to worker status. However, disputes over individual union member dismissals such as demands for reinstatement of dismissed workers, or cases infringing on personnel authority such as promotion complaints, were not recognized as bargaining subjects.
In the interpretive guidelines, the ministry drew a line that labor disputes do not extend from interest disputes to rights disputes. It reaffirmed the basic principle that labor disputes should be interest disputes where labor and management can reach new agreements. Whether rights disputes can be recognized as labor disputes was one of the contentious points surrounding the revised Trade Union Act. "Rights disputes such as settlement of unpaid wages, reinstatement of dismissed workers, and implementation of collective agreements should be resolved through judicial procedures," a ministry official said. However, the ministry interpreted that labor disputes are possible for rights disputes if they involve violations of collective agreements containing provisions on wages, working hours, break times, leave, and safety and health.
The ministry plans to finalize the guidelines after gathering opinions from labor and management and various sectors during the public comment period. Vice Minister of Employment and Labor Kwon Chang-jun said, "The revised Trade Union Act aims to resolve situations where dialogue itself is illegal, break the vicious cycle of excessive damage claims and extreme struggles, and create new labor-management relations."
