Seven months after the revised Trade Union Act, widely known as the "Yellow Envelope Law," took effect in March, fewer than three in 10 companies say the Labor Relations Commission is handing down related rulings in line with the law and government guidelines. Companies raised concerns about side effects in bargaining and called in unison for clear standards on when a prime contractor is treated as an employer.
According to a survey on corporate perceptions of Labor Relations Commission rulings and prime-subcontractor bargaining since the revised Trade Union Act took effect, released by the Korea Enterprises Federation on the 14th, only 27.4% of companies said the commission's rulings on whether prime contractors qualify as employers were "being made in line with the law and the Ministry of Employment and Labor's interpretive guidelines." The survey covered 62 companies that had gone through commission rulings in prime-subcontractor cases since the law took effect.
By contrast, 40.3% said the rulings were "not being made in line with the law and the Ministry of Employment and Labor's interpretive guidelines," 12.9 percentage points higher than the share saying they were. The most common reason cited for this view was that the commission "uses compliance with public-law duties, such as those under the Occupational Safety and Health Act, as grounds for recognizing employer status" (52%, multiple responses allowed). Companies argue that legal duties required under the industrial safety law and similar statutes are instead being presented as evidence of employer status, expanding the burden on employers.
Other reasons included "recognizing employer status on matters that are not working conditions" (48.0%) and "recognizing employer status based on ownership of production facilities and the exercise of facility management rights" (32.0%). The report said the findings "reflect negative perceptions of the fact that, in actual commission rulings, prime contractors are being recognized as employers even on matters that are hard to view as working conditions."
Asked about problems that could arise in bargaining and mediation with subcontractor unions, companies were most worried about "unreasonable union demands covering agenda items for which employer status has not been recognized" (66.1%). Other concerns included "demands to bargain with the prime contractor over matters that should be negotiated with the subcontractor, such as wages and union activities" (43.5%), "higher bargaining costs from multiple and prolonged negotiations" (33.9%), "joint action such as solidarity strikes among subcontractor unions" (24.2%) and "objections and protests over legitimate changes to subcontractor contracts" (11.3%).
When subcontractor unions file for mediation with the commission, the biggest concern was again that mediation would "proceed with added agenda items for which employer status has not been recognized" (59.7%). Companies also pointed to the "start of mediation procedures even while a dispute over the prime contractor's employer status is still pending" (48.4%), the "termination of mediation, including suspension, even though bargaining has not been sufficient" (41.9%) and the "presentation of mediation proposals on matters over which the prime contractor has no authority to act" (32.3%).
Asked which follow-up legislation is most urgently needed to reduce turmoil in the labor market, companies most often chose "clarifying the standards for determining whether a prime contractor is an employer" (67.7%). Many also called for "excluding high-level corporate management decisions from the scope of labor disputes" (54.8%). That reflects concerns that if management decisions such as business and organizational restructuring become subject to labor disputes, companies could be constrained in making quick decisions and executing investments.
Lee Dong-keun, standing vice chairman of the Korea Enterprises Federation, said uncertainty over Labor Relations Commission rulings has persisted since the revised Trade Union Act took effect. "To reduce this confusion at industrial sites and secure predictability, rulings on whether a prime contractor is an employer must be made fairly and strictly in accordance with legal provisions and administrative guidelines, along with follow-up legislation," he said.