Supreme Court Grants Immunity for 'Illegal Strikes'... Divergent Reactions from Labor and Business Sectors

Supreme Court: "Liability for Illegal Strike Compensation Lawsuits Cannot Be the Same for Unions and Members"
Labor: "A Wake-Up Call Against Reckless Compensation Lawsuits" vs Industry: "Fundamental Restriction on Compensation Lawsuit Claims"

The Supreme Court has ruled that union members who participated in illegal strikes should, as much as possible, not be held liable for damages.

Kim Deuk-jung, head of the Metal Workers' Union Ssangyong Motor Branch (fourth from the right), along with other Metal Workers' Union officials, is smiling brightly as they leave the Supreme Court courtroom in Seoul on the morning of the 15th.
[Image source=Yonhap News]

On the 16th, legal circles both inside and outside noted that this ruling touches on the key issue of the so-called Yellow Envelope Act, which limits companies' claims for damages against striking union members. Analysts suggest that by siding with the workers, the Supreme Court has effectively acknowledged the intent of the Yellow Envelope Act to restrict individual liability of workers for collective labor actions.

This case was initially heard by the full bench of the Supreme Court in November last year, involving 13 justices including Chief Justice Kim Myung-soo, before being referred earlier this month to a smaller panel of four justices. This means all 13 justices reviewed the case. Despite this, the issuance of such a ruling indicates that a majority of the justices agreed that liability for damages should be limited as much as possible for union members involved in illegal strikes, according to reactions from the legal community.

The Supreme Court's Third Division (Presiding Justice Noh Jung-hee) overturned the appellate court's ruling, which had favored the plaintiff, Hyundai Motor Company, in its lawsuit seeking damages against four union members of the Hyundai Motor Irregular Workers Branch of the Korean Metal Workers' Union, and remanded the case to the Busan High Court.

The key issue in this case was whether the liability for damages from illegal strikes should be borne by the union as a whole or whether individual union members should be held responsible according to their degree of participation.

The Supreme Court ruled that equating the scope of liability for damages between the union, which decided and led the unlawful labor action, and individual union members could undermine the constitutional rights of workers to organize and engage in collective action. The court stated, "The extent of liability for individual union members should be determined comprehensively by considering their position and role within the union, the circumstances and degree of their participation in the labor action, and their contribution to the damages."

Accordingly, in the future, companies seeking damages for illegal strikes will likely have to prove the extent of each individual union member's involvement in the illegal strike.

The labor community welcomed the Supreme Court's ruling. The Korean Confederation of Trade Unions (KCTU) said, "This ruling clearly establishes the Supreme Court's stance to strictly limit liability for damages arising from labor disputes, fully reflecting the constitutional guarantee of the three labor rights. It will impose certain restrictions on claims for damages against individual union members or fixed cost damages during labor disputes."

The Federation of Korean Trade Unions (FKTU) also stated, "This is an important ruling that sounds a warning against indiscriminate claims for damages by management in labor disputes and confirms the legitimacy of the Yellow Envelope Act, which is currently pending before the National Assembly."

On the other hand, business groups strongly opposed the Supreme Court's ruling. The Korea Employers Federation emphasized, "In cases of joint illegal acts, it is standard practice not to individually assess the proportion of responsibility for damages borne by each joint wrongdoer. Illegal labor actions are based on the collective will of the union and its members, so each member who participates in the joint illegal act should be jointly liable for all damages caused."

They added, "It is practically impossible to individually prove each member's fault or contribution to damages in illegal labor actions. This ruling effectively restricts claims for damages arising from illegal labor actions. If this decision stands, companies suffering losses from production stoppages due to short-term illegal strikes will find it difficult to seek compensation despite clear damages."

The Federation of Korean Industries also expressed concern, stating, "This ruling limits joint liability for damages from illegal labor actions, raising concerns that protecting victims from joint illegal acts with unclear individual responsibility will become difficult. Since it will be hard to prove the scope of responsibility for each union member involved in illegal strikes, employers will have to bear the damages caused by strikes, and the only means of response?claims for damages?will be restricted."

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