HD Hyundai Heavy Industries has been confirmed by the Supreme Court to have no obligation to engage in collective bargaining with a subcontractor union. The court upheld existing legal principles under the labor union law prior to its amendment, which expanded the definition of employers.
On May 21, the Supreme Court's full bench, led by Justice Oh Kyung-mi, upheld the lower court's ruling that dismissed a lawsuit filed by the subcontractor union of the Hyundai Heavy Industries branch of the Korean Metal Workers' Union. This decision comes 7 years and 6 months after the appeals court's ruling.
The subcontractor union had requested collective bargaining with HD Hyundai Heavy Industries regarding the protection of union activities from April 11 to May 20, 2016. However, the company rejected the request, arguing that it was not the employer of the workers at the subcontractor and therefore not obligated to engage in collective bargaining. In response, the union filed a lawsuit demanding that the company fulfill its bargaining obligations.
Both the first and second trials concluded that there was no explicit or implicit employment relationship between the defendant and the workers at the subcontractor, thus ruling that HD Hyundai Heavy Industries did not have a bargaining obligation toward the union.
The Supreme Court's review focused on whether to maintain the previous legal principles regarding the scope of 'employers obligated to bargain' under the old labor union law, specifically Article 2.
Article 2, Clause 2 of the labor union law defines an employer as a business owner, a manager responsible for business operations, or anyone acting on behalf of the business concerning its workers. The law was amended last September, often referred to as the 'Yellow Envelope Law,' to include individuals who, even if not parties to the employment contract, can substantially and concretely control or determine the working conditions of employees.
The Supreme Court stated, "Since there is no explicit or implicit employment relationship between the defendant and the workers at the subcontractor, the lower court's determination that the defendant does not qualify as an employer obligated to bargain is not in violation of logical and experiential principles, nor does it misinterpret the legal principles regarding employers and collective bargaining under the old labor union law."
The court emphasized that the previous legal principles regarding employers obligated to bargain under the old labor union law should be maintained as valid. The Supreme Court had previously ruled in 1986 that an employer with a bargaining obligation is one who has an explicit or implicit employment relationship with workers, directing and supervising them while providing wages in return for their labor.
The court further explained that the wording of Article 2, Clause 2 of the old labor union law does not allow for the interpretation that all concepts of 'employers' defined in the labor union law include those who can substantially and concretely control or determine the working conditions of employees, even if they are not parties to the employment contract.
Additionally, the court noted that Article 90 of the labor union law imposes criminal penalties of up to two years in prison or fines of up to 20 million won for unfair labor practices, and that the criteria for unfair labor practices related to refusal to bargain include the requirement of being an 'employer obligated to bargain,' necessitating a strict interpretation of this concept under the principle of legality.
However, Justices Lee Heung-gu, Oh Kyung-mi, Shin Sook-hee, and Ma Yong-joo expressed dissent, arguing that previous case law should be changed. They pointed out that considering the legislative intent of the old labor union law, which guarantees workers' rights to collective bargaining and aims to improve working conditions and the economic and social status of workers, a contractor should be deemed an employer obligated to bargain with the union of subcontracted workers if they can substantially and concretely control or determine the working conditions, barring exceptional circumstances.
* This article has been translated by AI.
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