CONTENTS
- 1. Collective Bargaining | Recent Developments and Institutional Change
- - Expansion of the Employer Concept and the Need for a Corporate Response
- 2. Collective Bargaining | Concept and Legal Significance
- - Constitutional Basis
- - Relevant Provisions of the Trade Union Act
- 3. Collective Bargaining | Parties and Bargaining Structure
- - Bargaining Subjects and the Employer's Duty to Bargain
- 4. Collective Bargaining | Procedure and the Multi-Union Bargaining Structure
- - Multi-Union Bargaining Structure
- 5. Collective Bargaining | Points Companies Should Review
- - Review Checklist
- - Response Strategy of the Daeryun Law Firm Corporate Legal Group
1. Collective Bargaining | Recent Developments and Institutional Change
The amended Trade Union and Labor Relations Adjustment Act of 2026 (commonly known as the Yellow Envelope Act) has taken effect, and interest in the collective bargaining system has grown considerably.
The amendment is widely regarded as a change that may reshape the concept of the employer and the structure of collective bargaining.
In practice, bargaining demands from subcontractor unions directed at the workplaces of prime contractors rose sharply in the days immediately following the law's effective date.
According to the Ministry of Employment and Labor, within the first two days, 453 subcontractor unions (with roughly 98,000 members) demanded collective bargaining from 248 prime-contractor workplaces.
Some companies have already announced the bargaining demands and begun the collective bargaining process, while other workplaces are expected to undergo a review of employer status or a determination by the Labor Relations Commission.
Expansion of the Employer Concept and the Need for a Corporate Response
The amendment has brought the scope of a prime contractor's employer liability where it has a substantial influence on working conditions to the forefront as a key issue.
In indirect employment structures in particular, whether a prime contractor that affects the working conditions of subcontractor workers can be held responsible for collective bargaining may become an important benchmark in future labor disputes.
Related Labor Relations Commission proceedings, such as applications to separate the bargaining unit, are also increasing, and related cases have been filed from the earliest days of the law's implementation.
Because recent legislative change raises the prospect that the structure and reach of collective bargaining may broaden, companies should gain an accurate understanding of the applicable legal standards and the evolving system.
2. Collective Bargaining | Concept and Legal Significance
Collective bargaining refers to the process by which a trade union negotiates with an employer or employers' association over working conditions such as wages, working hours, and welfare benefits, and reaches an agreement.
Rather than having individual workers negotiate directly with the employer, it is a system through which a large number of workers determine their working conditions collectively through a trade union.
Constitutional Basis
The Constitution of the Republic of Korea expressly guarantees the right to collective bargaining.
Article 33 of the Constitution of the Republic of Korea
(1) To improve their working conditions, workers shall have the right to independent association, collective bargaining, and collective action.
(2) Workers who are public officials shall have the right to association, collective bargaining, and collective action only as prescribed by law.
(3) The right to collective action of workers employed by major defense industry enterprises prescribed by law may be restricted or denied as prescribed by law.
Article 33(1) of the Constitution sets out the three labor rights, and the right to collective bargaining is regarded as a core right for improving working conditions.
Relevant Provisions of the Trade Union Act
The collective bargaining system is set out in detail in the Trade Union and Labor Relations Adjustment Act.
The representative of a trade union shall have the authority to bargain with an employer or employers' association and to conclude a collective agreement on behalf of the trade union or its members.
(2) The representative of the bargaining representative trade union determined under Article 29-2 (hereinafter referred to as the "bargaining representative trade union") shall have the authority to bargain with the employer and to conclude a collective agreement on behalf of all trade unions or members that have demanded bargaining.
(3) A person delegated authority over bargaining or the conclusion of a collective agreement by a trade union, an employer, or an employers' association may exercise that authority within the scope delegated, on behalf of the trade union, employer, or employers' association.
(4) Where a trade union, an employer, or an employers' association has delegated authority over bargaining or the conclusion of a collective agreement under paragraph (3), it shall notify the other party of that fact.
(1) A trade union, an employer, or an employers' association shall bargain and conclude a collective agreement in good faith and with sincerity, and shall not abuse such authority.
(2) A trade union, an employer, or an employers' association shall not refuse or neglect bargaining or the conclusion of a collective agreement without justifiable reason.
(3) The State and local governments shall support the parties to labor relations in autonomously choosing among various bargaining methods, such as bargaining by enterprise, industry, or region, and shall endeavor to promote the resulting collective bargaining.
(1) An employer shall not engage in any of the following acts (hereinafter referred to as "不當勞動行爲"):
.
.
3. Refusing or neglecting, without justifiable reason, to conclude a collective agreement or otherwise to engage in collective bargaining with the representative of a trade union or a person delegated by the trade union
3. Collective Bargaining | Parties and Bargaining Structure
Under Article 29 of the Trade Union Act, a trade union representative has the authority to bargain with the employer and to conclude a collective agreement on behalf of the union or its members.
This means that collective bargaining is a collective negotiation conducted through the trade union rather than by individual workers.
The trade union representative exercises the bargaining right on behalf of the members and conducts negotiations with the employer.
The counterpart in collective bargaining is the employer or an employers' association.
The following parties are generally recognized as the employer.
• The person responsible for managing the business
• A person with substantial authority to determine working conditions
When a trade union makes a bargaining demand, the employer has a duty to take part in bargaining in good faith.
Bargaining Subjects and the Employer's Duty to Bargain
Collective bargaining primarily addresses matters relating to working conditions.
Bargaining Subject | Details |
Wages | Base pay, allowances |
Working Hours | Working hours, rest periods |
Welfare Benefits | Welfare programs |
Employment Conditions | Personnel and employment-related programs |
Article 30 of the Trade Union Act imposes a duty to bargain in good faith on both labor and management, so the employer may not refuse or delay collective bargaining without justifiable reason.
Article 81(3) of the Trade Union Act further defines refusing or neglecting collective bargaining without justifiable reason as an unfair labor practice.
A violation may result in imprisonment for up to 2 years or a fine of up to 20 million won.
4. Collective Bargaining | Procedure and the Multi-Union Bargaining Structure
Collective bargaining generally proceeds through the following steps.
When making a bargaining demand, the trade union notifies the employer of the desired date and time, location, agenda, and representatives for bargaining.
Multi-Union Bargaining Structure
Stage | Details |
Stage 1 | The trade unions autonomously determine a bargaining representative |
Stage 2 | A majority union serves as representative |
Stage 3 | If no union holds a majority, a joint representative delegation is formed |
5. Collective Bargaining | Points Companies Should Review
When a trade union makes a bargaining demand, a company may find itself required to review its legal obligations and the applicable procedures.
In the wake of the recent amendment to the Trade Union Act, new legal issues have emerged, including employer liability within indirect employment structures, the scope of a prime contractor's bargaining responsibility, and applications to separate the bargaining unit.
In such circumstances, depending on how a company responds to the bargaining demand and whether it advances the process, the matter may lead to a finding of an unfair labor practice or to a dispute before the Labor Relations Commission.
For this reason, a company should confirm the relevant legal standards and procedures, and review its bargaining structure and response strategy, well before a bargaining demand arises.
Review Checklist
Items to Review |
|---|
Whether the trade union's bargaining demand followed the proper procedure |
Review of the scope of employers subject to the bargaining demand and their bargaining responsibility |
Distinguishing between working-condition matters subject to bargaining and matters of management prerogative |
Whether unification of the bargaining channel applies at a workplace with multiple unions |
Confirmation of the procedure for determining the bargaining representative trade union |
Review of whether refusing or delaying collective bargaining may constitute an unfair labor practice |
The possibility of Labor Relations Commission proceedings, such as an application to separate the bargaining unit |
Whether the prime contractor is recognized as an employer, and review of the indirect employment structure |
Response Strategy of the Daeryun Law Firm Corporate Legal Group
The Daeryun Law Firm Corporate Legal Group reviews the legal issues surrounding collective bargaining on a comprehensive basis, taking into account a company's labor relations environment and business structure.
When a bargaining demand arises, a task force of 1 to 20 corporate attorneys, labor attorneys, and accountants is assembled to provide legal responses tailored to the company's situation, including assessing employer status, reviewing bargaining subjects, developing a bargaining strategy, and handling Labor Relations Commission proceedings.
The group also reviews, in advance, the legal risks arising from recent changes in labor relations, such as indirect employment structures, the allocation of responsibility between prime contractors and subcontractors, and multi-union bargaining structures, and supports the company in managing its labor relations.
If you need a legal review or a response strategy in connection with collective bargaining, you can arrange a consultation through 🔗corporate attorney legal consultation booking.
