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Labor law revision shakes the three pillars of collective bargaining

Published: 10 Dec. 2025, 00:04

Kim Deok-ho

The author is a professor at Sungkyunkwan University's Graduate School of Governance.

Following the revision of Article 2 of the Labor Union Act, concerns are growing over the enforcement decree recently put forward for public review at the National Assembly. The revision seeks to redefine who counts as an employer and to restructure the framework of labor management bargaining from the ground up. Having served as the regional chair of labor commissions in Seoul and Incheon, the writer notes that the proposal falls short in legal coherence, feasibility in the field and its impact on industrial competitiveness. When the scope of employers, bargaining units and bargaining subjects are expanded simultaneously, conflicts on the ground will become more complex and further destabilize the labor market.

Members of the Korean Confederation of Trade Unions, celebrate with Progressive Party members after the National Assembly passed the amendment to the Labor Union and Labor Relations Adjustment Act, known as the Yellow Envelope Bill, during a plenary session on Aug. 24. [YONHAP]

The enforcement decree applies the revised legal principle that a “primary contractor is also an employer” to the existing procedure for unifying bargaining channels. Yet, the system introduced in July 2011 was designed on the premise of “one workplace, one employer.” Now that the definition of employer is divided between primary and subcontracting firms, the decree attempts to fit a dual structure into a single-track system. As a result, it is unclear which party should bargain over which issue, and both primary and subcontracting firms may end up negotiating redundantly over the same dispute. This risks more labor conflict and unnecessary litigation.

When the National Assembly amended the law in 2010 and introduced a multiple union system the following year, the core intent was to maintain order in collective bargaining by unifying the bargaining channel. The new decree, however, undermines that principle. It lists various models for dividing bargaining units — by subcontractor, by job type, even across all subcontractors — and presents these exceptions as if they were default rules. This directly contradicts the legislative intent in 2010, when lawmakers described the unified channel as “a central device for stabilizing bargaining order.”

The criteria for separating bargaining units are also overly vague, referring to concepts such as “adequacy of interest representation,” “potential for conflict among unions” and “risk of distorting labor relations.” Such abstract standards could lead to inconsistent decisions across regions or cases. Expanding discretionary authority without clear criteria is highly risky.

The procedure for determining employer status is equally unrealistic. Working conditions in subcontracting firms — wages, hours, welfare — vary widely. Treating all subcontracting employees as belonging to a single employer based solely on “substantial control” exercised by the primary contractor does not reflect reality. If a subcontractor’s union bargains with the primary contractor and talks break down, the subcontractor — the actual employer — may have no role but still suffer the consequences. A system in which responsibility and authority are misaligned cannot function properly.

The proposed “committee for determining employer status” may also compromise the independence of labor commission adjudicators. Labor commissions serve a quasi-judicial role. Allowing an external body to intervene in employer determinations risks harming their neutrality and expertise.

The most overlooked issue in the entire amendment is the expansion of subjects for bargaining. The revised law includes within the bargaining scope any “disagreement over managerial decisions that affect working conditions.” This means that key business strategies — automation of facilities, organizational restructuring, relocation of plants and digital transformation — could all be placed on the bargaining table. If unions oppose such plans, companies may be unable to make essential decisions. Countries such as Japan and Germany clearly exclude the core areas of managerial authority from bargaining. Yet, Korea now allows a broader range.

The problem becomes even more serious where primary subcontractor structures are involved. If a primary contractor must bargain simultaneously with multiple subcontractor unions, long-term strategies such as technological upgrades or process innovation may not even begin. And if a subcontractor subject to a collective agreement closes or loses its contract, it is unclear how the agreement’s terms would be applied. The decree offers no answers to such basic questions.

Representatives of management and labor at Hyundai Motor hold the opening session for this year’s wage and collective bargaining talks at the company’s Ulsan plant on June 18. [HYUNDAI MOTOR]

Despite the far-reaching implications for the bargaining structure, public discussion has been limited. The law has already changed, but the enforcement decree and government guidelines must now be drafted with far more precision. Many in the field argue for greater care, noting that the current design resembles a situation in which “a father who once managed only his children’s allowance is suddenly responsible for children next door.” The structure has simply been misaligned.

Ultimately, Korea must directly address fundamental issues involving the bargaining framework, labor flexibility, wage systems and the primary subcontractor structure. The Economic, Social and Labor Council should provide the arena for such debate. Revising the decree without structural discussion will only deepen confusion, and the cost will fall on future generations. Now is the time to begin a genuine social dialogue.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.