Supreme Court Remands Hyundai Rotem 'Compliance Strike' Case... "Cannot Punish Unusual Refusal of Overtime Work"

Supreme Court in Seocho-dong, Seoul.

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] The Supreme Court has ruled that if workers refuse overtime or holiday work that the company has not customarily or habitually required, their refusal to work extra hours following the labor union's directives, known as a 'law-abiding struggle,' cannot be considered a violation of the Labor Union Act.

The Supreme Court's 3rd Division (Presiding Justice Lee Heung-gu) announced on the 10th that it overturned the lower court's ruling, which had sentenced six Hyundai Rotem union officials, including Mr. A, to suspended prison terms and fines on charges of violating the Labor Union Act and obstructing business, and remanded the case to the Changwon District Court.

The court stated, "The company has conducted overtime and holiday work only after obtaining prior consent from the union and, when necessary, receiving applications from workers; it cannot be concluded that overtime or holiday work was customarily or habitually performed on specific days," adding, "Therefore, even if overtime or holiday work was not performed according to the union's directives during the collective bargaining period in this case, it cannot be regarded as a collective refusal of customary overtime or holiday work amounting to a labor dispute."

Furthermore, the court explained, "Therefore, since the defendants cannot be held jointly responsible on the premise that union members engaged in a labor dispute, the lower court's judgment finding them guilty of violating the Labor Union Act due to refusal of overtime and holiday work misapplied the legal principles concerning refusal of overtime and holiday work and labor disputes, which affected the judgment, and thus the ruling is overturned and remanded."

Mr. A and others were accused of deciding and executing labor disputes involving about 350 union members from the defense industry department through the union's dispute countermeasure committee when collective bargaining in 2013 did not proceed smoothly.

Following the dispute countermeasure committee's decision, Hyundai Rotem workers engaged in partial strikes, refusal of overtime work, and refusal of holiday special work 41 times from July to September of that year.

The issue is that Hyundai Rotem is designated as a major defense contractor under the Defense Industry Act.

Article 41, Paragraph 2 of the Labor Union Act (Restrictions and Prohibitions on Labor Disputes) stipulates that "workers engaged in power, water supply, and primarily the production of defense materials at major defense contractors designated under the Defense Industry Act may not engage in labor disputes, and the scope of workers primarily engaged in the production of defense materials shall be determined by Presidential Decree," thereby restricting labor disputes by workers in defense industries.

Previously, the first and second trials judged that refusal of overtime and holiday work constituted a labor dispute violating the Labor Union Act. Accordingly, Mr. A was sentenced to six months imprisonment with one year probation, and other defendants were fined between 2 million and 5 million won.

However, the Supreme Court concluded that Hyundai Rotem workers' 'law-abiding struggle' did not constitute a labor dispute.

The court noted, "The lower court assumed that even if overtime work is conducted by mutual agreement, if workers are incited to collectively refuse customary overtime work, thereby disrupting normal company operations, it should be regarded as a labor dispute, and judged that the defendants' refusal of overtime and holiday work together with union members constituted a labor dispute."

The court added, "The Labor Union Act imposes certain restrictions on labor disputes, requiring that their purpose, methods, and procedures not violate laws or social order, and that union members do not engage in disputes not led by the union. In particular, workers engaged in power, water supply, and primarily the production of defense materials at major defense contractors designated under the Defense Industry Act are prohibited from engaging in labor disputes, and violations are subject to the severest criminal penalties under the Labor Union Act."

It continued, "Considering the strict regulatory framework for such labor disputes and the intent of Article 33, Paragraph 1 of the Constitution, which guarantees labor rights as fundamental rights, whether acts such as collective refusal of overtime work, which both disrupt employer operations and constitute workers' exercise of rights, qualify as labor disputes under the Labor Union Act must be strictly and restrictively judged by comprehensively considering the collective agreement or employment rules of the workplace, the manner in which workers consent to overtime work, and various practices and circumstances surrounding labor relations. The same applies to refusal of holiday work.

The court explained, "The collective agreement between the company and the union stipulates that overtime and holiday work shall be conducted with prior union consent, with prescribed additional wages paid, and that no disadvantageous treatment shall be imposed for refusal to work overtime or holidays. In this workplace, overtime and holiday work were not designated on specific days in advance but were conducted by recruiting applicants through supervisors or team leaders on the morning of the day for overtime and usually two days in advance for holiday work."

It added, "The proportion of workers participating in such overtime or holiday work was about 70 to 80%, and during wage collective bargaining, when the union issued directives to refuse overtime and holiday work, the company sometimes did not recruit applicants for overtime or holiday work at all."

The court concluded, "Considering these facts in light of the legal principles, it is difficult to conclude that the company customarily or habitually conducted overtime or holiday work on specific days, having only conducted such work with prior union consent and worker applications as needed. Therefore, even if overtime or holiday work was not performed according to union directives during the collective bargaining period in this case, it cannot be regarded that union members collectively refused customary overtime or holiday work to constitute a labor dispute."

This content was produced with the assistance of AI translation services.