Supreme Court: No duty to bargain with subcontractor union

Ruling overturns labor commission decision recognizing employer status

KEF calls for clearer employer definition, narrower scope of labor disputes

The headquarters of the Korea Employers Federation [Herald DB]
The headquarters of the Korea Employers Federation [Herald DB]

The Korea Employers Federation said the Supreme Court's decision to overturn a National Labor Relations Commission ruling — one that had served as a key basis for the Yellow Envelope Act, the revised Trade Union Act — has heightened the need for supplementary legislation.

In a statement released Friday, the federation urged the government and the National Assembly to clarify the definition of "employer" in line with the Supreme Court's ruling and to reduce confusion in the workplace. It also called for legislation that would exclude high-level management decisions — such as personnel and business authority — from the scope of labor disputes subject to collective bargaining.

On Thursday, the Supreme Court overturned a lower court ruling that had found CJ Logistics guilty of an unfair labor practice for refusing collective bargaining with delivery workers in 2020, and remanded the case to the Seoul High Court. The court declined to recognize an employment contract relationship between CJ Logistics and the delivery workers, ruling that CJ Logistics could not be considered their employer.

The federation said the Supreme Court had determined that collective bargaining presupposes an explicit or implied employment contract relationship, and that a primary contractor with no such relationship with a subcontractor's union is not a party to collective bargaining. It added that while the ruling concerned events predating the revised Trade Union Act, it carried significant weight because the National Labor Relations Commission decision and lower court rulings in the case had served as core justifications for the amended law.

The federation further noted that the revised Trade Union Act had changed the basis for triggering a collective bargaining obligation to "substantive control," following the labor commission's decision. The Supreme Court's reaffirmation that the basis for such an obligation lies in an "explicit or implied employment contract" had made the case for supplementary legislation even stronger, it said.

The dispute began in March 2020, when the National Delivery Workers' Union, made up of parcel delivery workers, demanded collective bargaining but was refused by CJ Logistics. The union filed a complaint with a regional labor commission, which sided with CJ Logistics, but the National Labor Relations Commission reversed that decision on appeal, finding that an unfair labor practice had occurred.

That National Labor Relations Commission ruling became a key basis for the revised labor law. It emerged alongside a June 2022 strike by a subcontractor union at Daewoo Shipbuilding and Marine Engineering affiliated with the Korean Confederation of Trade Unions, which prompted simultaneous calls to limit unions' liability for damages from illegal strikes and to allow subcontract workers to bargain directly with primary contractors.

Earlier this year, however, the Supreme Court made clear in the HD Hyundai Heavy case that a primary contractor's status as an employer for collective bargaining purposes could not be recognized for incidents that occurred before the revised Trade Union Act took effect. The court upheld a 1986 precedent setting the standard as whether a primary contractor had entered into an explicit or implied employment contract relationship with workers — one aimed at directing and supervising their work and paying their wages.

Applying the same legal principle to the CJ Logistics case, the Supreme Court overturned the lower court ruling that had recognized a collective bargaining obligation. The court said it could not recognize an explicit or implied employment contract relationship between CJ Logistics and the delivery workers at its distribution outlets, and therefore could not find that CJ Logistics bore a duty to engage in collective bargaining with them under the former Trade Union Act.


eyre@heraldcorp.com