Stock Trading and M&As Added to Negotiation Agendas... Yellow Envelope Act Complicates Corporate Calculations

Many Negotiation Agendas Remain Unspecified
Legal Disputes Expected to Intensify Case by Case

With the implementation of the 'Yellow Envelope Act (Amendment to the Trade Union and Labor Relations Adjustment Act)', both subcontractor labor unions and principal company labor unions are actively beginning to demand negotiations with principal companies. When the negotiation agenda is broad, it becomes difficult to determine the employer status, and as applications for separation of bargaining units increase, companies are facing growing challenges.

On The First Day of Implementation, 407 Subcontractors Made Requests

According to the Ministry of Employment and Labor, on March 10, the day the Yellow Envelope Act came into effect, 407 subcontractor unions, branches, and chapters demanded negotiations with 221 principal company worksites. On that day, only five principal employers—Hanwha Ocean, POSCO, Coupang CLS, Busan Transportation Corporation, and Hwaseong City—publicly announced their intention to negotiate.

It has been reported from the field that, in many cases, the negotiation agenda was presented in general terms with the intent to supplement it later, or was not specified at all. There have also been instances where a principal company’s public announcement of negotiation requests and a subcontractor union’s application for separation of the bargaining unit were submitted simultaneously.

"Mixed Negotiation Requests Should Be Addressed by Agenda"

When a principal company is responsible for workplace safety measures for its employees, it is more likely to be recognized as a negotiation subject. However, experts point out that the assessment could differ depending on the specifics of each case.

Lee Kwangsun (35th Judicial Research and Training Institute class), attorney at Yulchon, stated, "In situations like in-house subcontracting, where facilities are shared, it is highly likely to be recognized as a subject for negotiation." He added, "If all actions in accordance with the Occupational Safety and Health Act or the Serious Accidents Punishment Act are regarded as evidence of a principal company's substantial control, this could conflict with Ministry of Employment and Labor guidelines that consider work instructions under such laws as exceptions. Therefore, the assessment should be made on a case-by-case basis."

There are opinions that mixed negotiation requests should be addressed by each agenda item, while also taking into account the potential for future disputes. Attorney Lee said, "If a subcontractor union raises a new agenda item during negotiations, the company may refuse on the grounds that it is not the employer. However, if the union claims this is an unfair labor practice and proceeds with a labor dispute, the legitimacy of such actions will ultimately likely be determined by the court."

On the first day of the law’s implementation, there were 31 cases in which subcontractor unions and others applied to the Labor Relations Commission for 'separation of bargaining units.' Kim Sangmin (37th class), attorney at Bae, Kim & Lee, explained, "Applications for separation of bargaining units are being filed immediately, and companies are struggling to respond to these cases." Attorney Kim added, "Cases involving separation of bargaining units could become the first step in determining employer status, and if bargaining units are separated, the negotiation structure becomes more complex and the burden of negotiation increases." He explained that companies need to review response strategies not only for the employer status regarding negotiation agendas, but also for the legitimacy of the bargaining units themselves.

Kwon Younghwan (3rd Bar Examination), attorney at Jipyung, said, "From the company's perspective, consolidating bargaining units allows for unified negotiation procedures, but if consensus is not reached and a strike occurs, it could lead to larger-scale collective action."

Disputes are also expected in the process of determining the representative union for negotiations. Attorney Kwon said, "Conflicts of interest over leadership among competing unions may cause differences of opinion on whether to merge or separate bargaining units."

The Ministry of Employment and Labor has clarified in its manual that 'management decisions for business operations,' such as mergers, splits, transfers, or sales with the purpose of corporate organizational change, are not subjects of collective bargaining. However, in practice, these issues are being raised as negotiation agendas in the field.

Kim Jongsu (37th class), attorney at Sejong, explained, "Unions at companies facing imminent M&A are claiming that reassignments or department consolidations are expected, and are demanding that the company consult with or obtain the union's consent to ensure employment stability."

Seo Hayan, Legal Newspaper Reporter

※This article is based on content supplied by Law Times.

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