The government has moved to curb strikes demanding a fixed share of corporate profits as performance pay. While it also excluded management decisions such as building new plants from the scope of labor disputes, it left worker reassignment open as a bargaining item — leaving unions room to effectively slow corporate investment.
The Ministry of Employment and Labor announced the guidelines on the 3rd, setting out how disputes over performance pay are to be handled under the revised Trade Union Act, also known as the Yellow Envelope Act. Under the guidelines, demands that companies set aside a fixed percentage of revenue, operating profit or net profit as a performance pay pool are excluded from mandatory bargaining. The ministry said corporate profits are also used for research and development, capital investment and dividends, and are tied to the interests of third parties such as shareholders and creditors. Demands for performance pay set as a percentage of base pay or annual salary, or as a fixed amount, remain subject to bargaining.
Demands to withdraw or block decisions on building or relocating plants, investing overseas, selling or acquiring businesses, or adopting new technologies such as artificial intelligence are in principle also outside mandatory bargaining. But once such plans move past the announcement stage and workforce plans take shape, changes in working conditions can be objectively expected — and at that point the matter becomes subject to bargaining.
Some critics say that because large investments in areas such as semiconductors and AI involve worker reassignment as part of carrying out the investment itself, leaving reassignment open to dispute effectively allows unions to weigh in on corporate investment decisions. Employment and Labor Minister Kim Young-hoon said the guidelines are "a standard meant to raise predictability in the workplace, prevent disputes and encourage dialogue."
