South Korea limits issues for strikes over bonuses and AI
South Korea’s Ministry of Employment and Labor has issued new guidelines under which union demands for a fixed share of corporate profits to be paid as bonuses are not considered mandatory subjects of collective bargaining. The document also outlines which labor disputes may legally serve as grounds for a strike.
As The Korea Herald reports, Vice Labor Minister Kwon Chang-jun said that bonuses tied to a certain percentage of operating profit are “difficult to regard as a matter of mandatory bargaining” under the Trade Union Act. According to him, operating profit is a source of funds for exercising the rights of third parties, including shareholders and creditors, and its distribution or reduction could potentially affect their interests.
Decisions on AI and company operations
The guidelines stipulate that management decisions on introducing robots or artificial intelligence, selling or acquiring a business, establishing facilities abroad, or relocating operations are not in themselves mandatory subjects for negotiations with unions.
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However, such matters may acquire this status if the employer has already made or announced a specific plan involving changes in staffing levels and changes in working conditions can be objectively foreseen. Kwon noted that the parties may discuss management issues by mutual agreement, but an employer’s refusal to negotiate an issue outside the scope of mandatory bargaining will not be considered an unfair labor practice.
Legal uncertainty
The clarification came after business concerns over the revised Trade Union Act, known as the “Yellow Envelope Act.” The law, which took effect in March, expanded the definition of labor disputes to include certain management decisions affecting working conditions, as well as the range of companies required to negotiate with subcontractor workers.
The new guidelines apply immediately, but are administrative in nature and are not binding on courts. The ministry explained that amending the enforcement decree would require at least three months. Lawyers interviewed by local media believe that further legislative changes are needed to eliminate legal uncertainty.
