The Supreme Court ruled that HD Hyundai Heavy Industries, as the principal company, has no obligation to respond to a bargaining request in a lawsuit filed by in-house subcontractor workers demanding collective bargaining. A union composed of in-house subcontractor workers filed the suit in 2017, and the ruling was made under the pre-amendment Trade Union and Labor Relations Adjustment Act, not the amendment that took effect in March this year (the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers).
The Supreme Court en banc panel (presiding Justice Oh Kyung-mi) on the 21st dismissed the plaintiff's appeal and affirmed the lower court ruling in the final appeal of the lawsuit for collective bargaining filed by the Hyundai Heavy Industries in-house subcontractors' chapter of the Korean Metal Workers' Union under the Korean Confederation of Trade Unions (KCTU) against Hyundai Heavy Industries.
Earlier, the subcontractors' union demanded collective bargaining in 2016, saying Hyundai Heavy Industries, the principal corporations, is in a position to substantially control and determine the working conditions of workers employed by subcontractors. When Hyundai Heavy Industries did not respond to the demand, the union filed suit in 2017.
In April 2018, the first trial dismissed the subcontractors' union's claim for collective bargaining. The first-instance court said, "It is difficult to find that there is a subordinate employment relationship to the extent that an implied employment contract relationship can be deemed to have been formed between Hyundai Heavy Industries and the in-house subcontractor workers."
The appellate court also ruled for Hyundai Heavy Industries in November 2018. The appellate judges said, "It is difficult to assess that Hyundai Heavy Industries exercised control or decision-making power over the wages of in-house subcontractor workers."
After the subcontractors' union appealed, the case went to the Supreme Court in December 2018. During the 7 years and 6 months the Supreme Court examined the case, the Trade Union and Labor Relations Adjustment Act, which had served as the basis for the lower court's finding that Hyundai Heavy Industries had no obligation to respond to the subcontractors' union's collective bargaining, was amended.
Former Article 2 of the Trade Union and Labor Relations Adjustment Act defined a "user" only as "an employer, a person in charge of the management of the business, or a person who acts for the employer with respect to matters concerning the workers of the business." The Supreme Court had held that an express or implied employment contract relationship had to exist to be deemed a user.
The yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, added language to the definition of user that "even if a person is not a party to an employment contract, a person who is in a position to substantially and specifically control or determine a worker's working conditions shall be deemed a user within that scope." Accordingly, from March this year, unions of subcontractors have been able to demand collective bargaining from principal corporations.
The majority opinion of the Supreme Court held that, in this case governed by the former Article 2 of the Trade Union and Labor Relations Adjustment Act, the existing legal doctrine on who bears the duty to engage in collective bargaining as a user is sound and should be maintained. Looking at the background of the amendment to the Trade Union and Labor Relations Adjustment Act, the National Assembly added language to Article 2 to expand the concept of user on the premise of respecting the Supreme Court's prior doctrine.
By contrast, Justices Lee Heung-gu, Oh Kyung-mi, Shin Sook-hee, and Ma Yong-ju dissented, calling for a change in precedent. They said, "If an entity is in a position to substantially and specifically control or determine working conditions, then absent special circumstances, it falls under the former Trade Union and Labor Relations Adjustment Act's definition of user that bears a duty to engage in collective bargaining with the subcontracted workers' union."
Earlier, Hyundai Heavy Industries announced that in March, when the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, took effect, the subcontractors' union demanded collective bargaining. Within a month of the law's implementation, subcontractor workers filed more than 1,000 bargaining demands against principal corporations.