Court rulings are diverging in a string of legal fights over whether prime contractors must bargain with unions at their subcontractors, a dispute that has followed the entry into force of South Korea's revised Trade Union Act, widely known as the "yellow envelope law." Courts have sided with the National Labor Relations Commission on purely procedural duties to post notices, while backing companies on the separation of bargaining units, a step that reshapes the actual structure of negotiations.
The Seoul Administrative Court's 13th Division, presided over by Judge Jin Hyun-sup, on the 1st rejected an application by Hanwha Ocean (042660) for a stay of execution against the National Labor Relations Commission, according to the Korean Metal Workers' Union on the 2nd.
The case had drawn attention as the first lawsuit filed after the revised law took effect. Hanwha Ocean contested a commission ruling ordering it to post notice of a bargaining demand from workers employed by Wellive, a subcontractor that handles in-house catering, commuter bus operations and facility management, and sought a stay of execution along with its lawsuit. The court said the applicant had not shown that it faced a risk of harm that would be difficult to remedy, nor an urgent need to suspend the order to prevent such harm.
Courts had already upheld the commission's findings in earlier stay applications brought by construction companies. The Seoul Administrative Court's 3rd Division, presided over by Judge Ho Sung-ho, rejected an application by Kukdong Engineering & Construction on the 16th of last month, and the same court's 11th Division, presided over by Judge Kim Jun-young, rejected an application by Jungheung Construction on the 17th.
All of those cases turned on whether corrective orders from the commission requiring employers to notify their workplaces of bargaining demands by subcontractor unions were lawful. Under the current Trade Union Act, an employer that receives a demand for collective bargaining from a union must post notice of that demand at the workplace for seven days as part of the process of consolidating bargaining channels. In all three cases, the courts found that complying with the posting requirement does not immediately create an obligation for the prime contractor to accept collective bargaining or conclude a collective agreement. Companies prevailed, however, on the separation of bargaining units, an issue that would institutionalize bargaining with subcontractor unions. Separation of bargaining units is a system under which labor relations commissions divide bargaining channels, citing grounds such as wide gaps in working conditions. It allows a subcontractor union to hold independent bargaining rights with the prime contractor rather than being grouped with the prime contractor's union of permanent employees.
The Seoul Administrative Court's 14th Division, presided over by Judge Lee Sang-deok, on the 18th of last month granted a stay of execution in a suit by POSCO seeking to overturn the commission's review decision on separating bargaining units. The same division ruled in favor of management the same day in a case brought by Donghee Auto on the same grounds. The commission's decisions on the two companies are suspended until a ruling on the merits.
