It has been a month since the revised Trade Union and Labor Relations Adjustment Act took effect, and we are well aware of the concerns and worries of business owners running corporations. It may be difficult to eliminate all uncertainty 100%, but I hope today's briefing can at least ease some of the confusion on the ground.
On the 8th at the Korea Federation of Small and Medium Enterprises in Yeouido, Seoul. The voice of Jeong Jang-seok, assistant director of the Ministry of Employment and Labor (MOEL)'s Labor-Management Relations Legislation Division, carried both caution and tension. A session was arranged to explain the expansion of employer status and the bargaining procedures, the core of the revised Trade Union and Labor Relations Adjustment Act, commonly called the "the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers." A considerable number of HR and labor managers gathered. It showed where the top on-site concerns lie one month after the revised law took effect.
◇ Rather than whether orders were given, the yardstick is whether one "holds decision-making power"
At the briefing, Assistant Director Jeong made clear that the standard for determining an employer has shifted from the traditional focus on the employment contract relationship to a focus on "substantive control."
Jeong explained, It is not that everyone becomes an employer simply because they influence working conditions; what matters is that one is seen as an employer within the scope of those working conditions.
This means the prime contractor bears bargaining responsibility only for specific working conditions it can substantively control or decide. In other words, employer status is not uniformly recognized at the level of corporations; it can be assessed separately by individual working-condition items such as working hours, wages, and safety equipment.
The government's criteria for determining employer status center on "structural control," while also examining "organizational integration" and "economic dependence."
Jeong explained, Even if direct instructions are not given, if detailed work manuals or automated systems effectively determine how work is carried out, this can be viewed as structural control. For example, when the subcontractor's working hours are effectively fixed by the prime contractor's production plan, or when subcontracted workers' workloads are tied to the departure times of logistics vehicles, those are representative cases.
In addition, when a subcontractor operates as one production process together with the prime contractor's workers, that constitutes "organizational integration," and when most sales depend on the prime contractor or freedom to choose clients is restricted, those factors weigh toward "economic dependence."
Jeong added that where production is carried out with independent facilities outside the prime contractor's business sites, such as in volume-based contracts or delivery-type outsourcing, the likelihood of structural control is relatively low. Likewise, directives at the level of general workplace management—such as observing cafeteria hours or managing access security—are difficult to see as factors for determining employer status.
◇ Wages are in principle the subcontractor's responsibility, with exceptions when unit prices are controlled
The area that drew the most attention on the ground was wages.
The government's position is that, in principle, wages are formed within the contractual relationship between the subcontractor as employer and the worker, making it hard to recognize employer status for the prime contractor. However, exceptions exist.
Jeong explained, If labor cost unit prices or wage increase rates are effectively designed within the prime contractor's delivery unit price structure, that can be considered when determining employer status.
In other words, whether there is control over the "structure that determines wages," rather than over the wages themselves, can serve as the criterion.
Another concern for corporations is whether the prime contractor's agreeing to bargain could be interpreted as acknowledging illegal dispatch.
On this, Jeong drew a line. He explained, The employer determination under the Trade Union and Labor Relations Adjustment Act is about the duty to engage in collective bargaining, while the employer determination under the Act on the Protection, etc., of Dispatched Workers is about a relationship of subordination in use. We interpret that the act of an extra-contractual employer exchanging data or reaching agreements to fulfill a bargaining duty is not considered evidence of illegal dispatch.
◇ When you receive a demand to bargain, you must start with a "7-day notice"
The most important practical point regarding bargaining procedures is "notice." Jeong emphasized, The existing single bargaining channel procedure applies as is to bargaining between the prime contractor and the subcontractor's union. This is not optional; it is a mandatory rule that must be followed.
When the prime contractor receives a demand to bargain from a subcontractor's union, it must post a notice of the bargaining demand for seven days from the date of receipt in places where subcontracted workers can see it, such as company bulletin boards, the intranet, and break areas.
In particular, the government explained that even if employer status is not clear, if there is a possibility it could be recognized, giving broad notice can reduce disputes over invalid bargaining due to procedural defects.
A demand to bargain being received does not mean collective bargaining begins immediately. After the notice, the so-called single-channel procedure must first be completed, including confirming participating unions and designating the bargaining representative union.
Conversely, if a subcontractor's union demands separate bargaining without going through the single-channel procedure, the prime contractor may refuse, and that does not constitute an unfair labor practice.
◇ Refusing to give notice leads to labor commission corrective orders; noncompliance may be criminally punishable
To reduce on-site confusion in the early stages of implementation, the government is operating a "Collective Bargaining Determination Support Committee" within the Ministry of Employment and Labor (MOEL).
Jeong said, If whether employer status is recognized is uncertain, you can request the committee's advice and receive support under an established framework.
If the prime contractor refuses to give notice of the bargaining demand, the subcontractor's union may apply to the labor commission for correction. If, after the labor commission recognizes employer status and orders notice, the prime contractor fails to comply without just cause, it may be subject to criminal punishment for unfair labor practices.
Jeong said, Agenda items for which the prime contractor's employer status is recognized are mandatory subjects of bargaining, but other items can be decided autonomously by labor and management. In the end, who holds the substantive decision-making power over working hours, wage standards, and safety equipment budgets will be the starting point for all determinations.
He added, The core of the revised Trade Union and Labor Relations Adjustment Act is not that the scope of employers was uniformly expanded, but that the standard for determining employers shifted from a focus on contractual relationships to a focus on the structure by which working conditions are decided.