Survey covers 62 firms ruled on after 'yellow envelope law' took effect

66.1% fear unions will push demands beyond recognized employer scope

Calls grow to clarify standards for determining prime contractor employer status

[Provided by Korea Enterprises Federation]
[Provided by Korea Enterprises Federation]

Fewer than three in 10 companies that received labor relations commission rulings on prime contractor-subcontractor disputes after the revised Trade Union Act — commonly known as the "yellow envelope law" — took effect believe those rulings on prime contractor employer status were consistent with the law and the Ministry of Employment and Labor's interpretive guidelines, a new survey shows.

The Korea Enterprises Federation released the findings Wednesday, based on a survey of companies that had received labor relations commission rulings in prime contractor-subcontractor cases since the revised act came into force. The survey, conducted by Southernpost from Sept. 7 to Sept. 18 online and by telephone, drew responses from 62 companies.

Only 27.4 percent of respondents said the labor relations commission's rulings on prime contractor employer status were consistent with the law and the ministry's interpretive guidelines — 24.2 percent answered "mostly yes" and 3.2 percent "strongly yes." By contrast, 40.3 percent said the rulings were not consistent, a margin 12.9 percentage points higher than the share of affirmative responses.

Among the 25 companies that said the rulings were inconsistent, 52.0 percent — in a multiple-response question — cited the use of obligations under public law, such as the Occupational Safety and Health Act, as grounds for recognizing employer status. The concern is that prime contractors' legally required workplace inspection rounds or joint safety and health checks are being cited as evidence of employer status.

Other reasons cited included recognition of employer status over matters unrelated to working conditions, at 48.0 percent, and recognition based on ownership of means of production and exercise of facility management rights, as well as compliance with government guidelines and recommendations such as standard subcontracting agreements, each at 32.0 percent.

Construction workers labor at a worksite in Seoul. The construction industry has warned that the yellow envelope law could maximize management risk if subsequent regulations — including a proposed special construction safety act — compound existing concerns over labor-management conflict, on-site disruption and rising costs.
Construction workers labor at a worksite in Seoul. The construction industry has warned that the yellow envelope law could maximize management risk if subsequent regulations — including a proposed special construction safety act — compound existing concerns over labor-management conflict, on-site disruption and rising costs.

Companies also expressed serious concern about side effects during collective bargaining with subcontractor unions. The most commonly cited worry, at 66.1 percent, was unions making excessive demands that extend beyond the scope of recognized employer status. That was followed by unions pressing prime contractors on wages and union activities that should be negotiated with subcontractors, at 43.5 percent, and rising costs from multiple rounds of bargaining and prolonged negotiations, at 33.9 percent.

The Korea Enterprises Federation said cases have emerged in which, after prime contractor employer status is recognized in some occupational safety matters, unions then push during actual negotiations for items outside that recognized scope — such as wages, performance bonuses and guarantees of union activities.

Similar concerns arose regarding subcontractor unions filing for mediation with the labor relations commission. The most frequently cited issue, at 59.7 percent, was mediation proceeding to include items beyond the recognized scope of employer status. That was followed by mediation being initiated even while a dispute over prime contractor employer status remains unresolved, at 48.4 percent, and mediation being closed — through a suspension of proceedings or similar mechanism — without sufficient bargaining, at 41.9 percent. Some 32.3 percent cited the presentation of mediation proposals covering matters outside the prime contractor's authority to act on.

The federation warned that if a suspension of mediation is issued before it is determined whether the prime contractor is even a party to bargaining, unions could move to industrial action, deepening on-site disruption.

When asked to identify the most urgent legislative fix to the revised act, 67.7 percent of respondents chose clarifying the standards for determining prime contractor employer status. Excluding major management decisions from the scope of labor disputes came second at 54.8 percent, followed by explicitly prohibiting workplace occupations at 22.6 percent, removing criminal penalties for unfair labor practices at 19.4 percent, and allowing replacement workers at 14.5 percent.

The federation interpreted the results as reflecting concern that if management decisions — including investment, business restructuring and organizational changes — become subject to labor disputes, swift decision-making and investment execution could be constrained. Critics also noted ongoing confusion stemming from the Ministry of Employment and Labor's implementation guidelines, which state that business management decisions are not subject to labor disputes while also allowing that personnel transfers arising from the opening of a new factory could be.

Lee Dong-geun, standing vice chairman of the Korea Enterprises Federation, said uncertainty surrounding labor relations commission rulings has persisted since the revised act took effect. "To reduce confusion at industrial sites and secure predictability, supplementary legislation is needed alongside fair and strict rulings on prime contractor employer status in accordance with the law and administrative guidelines," he said.


eyre@heraldcorp.com