Labor unions in South Korea will now be able to strike against restructuring and layoffs that occur during overseas investments, mergers, spin-offs, transfers and sales of companies.
Subcontractor unions under "structural control" of a parent company, such as in-house subcontractors, will also be able to engage in collective bargaining with the parent company's management. The emergence of this new parent-subcontractor bargaining system, which was impossible before the implementation of the so-called Yellow Envelope Act (amendments to Articles 2 and 3 of the Trade Union Act), is expected to inevitably cause labor-management conflicts and on-site confusion.
The Ministry of Employment and Labor announced Thursday that it will publicly notify the "Interpretation Guidelines for Revised Trade Union Act Article 2" from that day until January 15 next year. The interpretation guidelines contain specific criteria for judgment and interpretation of provisions 2 (employer) and 5 (labor dispute) in the amendments to Articles 2 and 3 of the Trade Union Act.
The ministry determined that if a parent company is recognized as exercising "structural control" with authority to decide personnel operation, working hours and work methods over a subcontractor, the subcontractor's union can engage in collective bargaining with the parent company's management. Accordingly, most in-house subcontractor unions are expected to gain bargaining rights with parent companies. However, subcontractor unions cannot negotiate wages with parent companies as parent company unions do.
The ministry views that business management decisions such as investment, merger, spin-off, sale and transfer are in principle not subject to collective bargaining. However, it determined that job reassignments resulting from layoffs and restructuring that occur when implementing these management decisions are subject to bargaining. The ministry also plans to change its administrative interpretation to recognize layoffs as a bargaining subject. Negotiations between labor and management to demand the establishment of a system for converting non-regular workers to regular positions have also become possible.
The business community is concerned that corporate management decisions could become targets for a series of strikes. "If personnel deployment issues become subject to collective bargaining, can proper industry restructuring be achieved?" questioned an official from the petrochemical industry.
Meanwhile, the National Labor Relations Commission issued a "suspension of mediation" decision Thursday in a case where subcontractor unions of Hyundai Steel and Hanwha Ocean (042660.KS) filed for mediation demanding the parent companies respond to bargaining requests. As a result, the subcontractor unions have secured legitimate dispute rights.
