Korean labor law: Understanding the Multiple Union System & the Bargaining Representative Union

Korean labor law: Understanding the Multiple Union System & the Bargaining Representative Union

Bongsoo Jung / KangNam Labor Law Firm

I. Understanding the Multiple Union System

 Generally in the Multiple Union System, only the largest labor union representing more than half of a company’s union members will engage in collective bargaining and collective contracting as the bargaining representative union, and has the duty to represent the minority labor unions fairly. Since this Multiple Union System was implemented on July 1, 2011, many changes have occurred in labor relations between employers and the labor unions, both positive and negative. The positive changes include guaranteeing the right to multiple labor unions in one company where employees are free to join the one they like, and even establish their own. The negative changes include the weakening of industrial unions as they are now splintered and must choose a bargaining representative union to represent all of them in each workplace or business unit. Some companies have taken advantage of this change by subsidizing or otherwise supporting company-friendly labor unions to the point where they obtain the majority of union membership. In such situations, the existing combative and unfriendly labor unions find themselves generally powerless as they become minority labor unions that have lost their right to bargain and take action collectively.

This loss of union power has resulted in petitions being filed with the Constitutional Court, claiming employers have violated the bargaining representative system. However, the Constitutional Court ruled that the system of determining the bargaining representative union is constitutional and declared the following: “Article 29-2 of the Labor Union Act regulates that the system for determining the bargaining representative union was designed to solve potential issues in the following areas: In cases where there are two or more labor unions coexisting in a business or workplace, as these labor unions exercise their bargaining rights respectively, problems that realistically be anticipated include: hostility between those labor unions or disputes between the labor unions and the company; an increase in the costs associated with collective bargaining due to having to repeat negotiations in the same bargaining areas; management difficulties in preparing multiple collective agreements; and unreasonable differences arising out of the application of different working conditions for members of different unions who are all providing the same or similar work. The system of determining a bargaining representative union as mentioned above has resulted in restrictions of the collective bargaining rights of minority labor unions not selected as the representative union, requiring certain safeguards to minimize these restrictions. One of the safeguards introduced was the duty of fair representation stipulated in Article 29-4 of the Labor Union Act. This was designed to prevent discrimination against: a) minority labor unions not selected as the representative union (and who had participated in determining the bargaining representative unions) or b) their members by assigning the bargaining representative union and employer the duty of fair representation.” (Constitutional Court decision on April 24, 2012, 2011hunma338)

The following explains relevant laws and their application, and the duty of fair representation.

II. Determining the Bargaining Representative Union

1. The right of collective bargaining  

(1) Principle: If there are two or more labor unions which are established or joined by workers in a business or workplace, regardless of the type of organization, the labor unions shall determine the bargaining representative union before beginning collective bargaining. The bargaining representative labor union shall have the authority to collectively bargain and conclude a collective agreement with the employer on behalf of all labor unions or union members that requested collective bargaining. A labor union, if there is a collective agreement in the business or workplace concerned, may begin requesting collective bargaining with the employer three months before the expiration date of the existing collective agreement. Provided that if there are two collective agreements or more, the labor union may begin to request bargaining with the employer three months before the expiration date of whichever collective agreement expires soonest.[1] In cases where there is only one labor union in the business or workplace, whether the employer shall take the procedure for determining bargaining representative union or not can be a controversial issue to consider. If there is evidently only one labor union existing in the business or workplace, the labor union does not have to go through the procedure. However, although the employer knows that there is only one labor union in the business or workplace concerned, as some employees may join industry-level or regional labor unions, the employer shall demand determination of the bargaining representative union through the procedure for determining the bargaining channel. This will avoid any problems if another labor union was established during the bargaining process or if the fact that another labor union was in existence during the bargaining period becomes confirmed later, perhaps after the employer has concluded a collective agreement with the current labor union.[2]

 (2) Exceptions:

1) Separate bargaining: This shall not apply if the employer consents not to undergo the procedure for determining the bargaining channel within the period (14 days) during which the bargaining representative union can be determined autonomously (Article 29-2 of the Labor Union Act);

 2) Decision on dividing bargaining unit: The unit for which the bargaining representative union shall be determined shall be a business or workplace. However, if it is deemed necessary to divide the bargaining unit given the considerable disparity in working conditions, employment status, bargaining practices, etc., in a business or workplace, the Labor Relations Commission may decide to divide the bargaining unit at the request of either or both of the parties to the labor relationship (Article 29-3 of the Act).

2. Procedure for Determining the Bargaining Representative Union

Determination of the bargaining representative union shall be a step-by-step process (Article 29-2 of the Act).

(1) All labor unions participating in the procedure for determining the bargaining representative union shall autonomously determine the bargaining representative union within 14 days.

(2) If the bargaining representative union is not determined within the 14-day period, the labor union composed of a majority of the members of all labor unions participating in the procedure for determining the bargaining representative union shall become the bargaining representative union.

(3) All labor unions participating in the procedure for determining the bargaining representative union, if failing to determine the bargaining representative union, shall jointly organize a bargaining representative team and then begin collective bargaining with the employer. In this case, labor unions eligible to participate in the joint bargaining representative team shall be those whose members make up not less than 10/100 of the members of all labor unions participating in the procedure for determining the bargaining representative union.

(4) If agreement fails to be reached on the organization of the joint bargaining representative team, the Labor Relations Commission may decide in consideration of the proportions of union members at the request of the labor union(s) concerned.

  The following restrictions shall apply to labor unions not participating in the procedure for determining the bargaining representative union: they cannot request collective bargaining; they cannot apply to the Labor Relations Commission for mediation of labor disputes; industrial action undertaken by such unions cannot be justified as legitimate actions; they cannot seek remedy from the Labor Relations Commission for violation of the fair representation duty. 

3. Duty of Fair Representation

The bargaining representative union and the employer shall have the duty of fair representation, which is to treat fairly and avoid discriminating against members of minority labor unions, participating in the procedure for determining the bargaining channel, or the labor unions themselves, without reasonable grounds. If the bargaining representative union and employer engage in discrimination, the affected labor union(s) may request the Labor Relations Commission to remedy such discrimination within three months from the date on which the act is committed. If the Labor Relations Commission recognizes that there has been discrimination without reasonable grounds, it shall issue an order to remedy such discrimination (Article 29-4 of the Act). One example of the failure to uphold the duty of fair representation is when a bargaining representative union paid union officers from a minor union a much lower rate for paid time-off hours than officers from their own union (Seoul Administrative Court ruling on April 25, 2013, 2012guhap35498).

III. Practical Application for Organizations with Multiple Unions

The following are important practical questions related to the bargaining channel system.

1. Question from the private sector

“My company has multiple unions: 60 employees belong to the company-based labor union while another 50 employees belong to the port industry labor union. Today, we received a request for collective bargaining for 2014 wages from the port industry labor union. My company has already concluded a collective bargaining agreement with the company-based labor union after going through the procedure to determine the bargaining representative union when there was a request for collective bargaining in May 2013. At that time, the port industry labor union did not participate in the procedure to determine the bargaining representative union. In this situation, does the company have to respond favorably to the port industry union’s demand for collective bargaining?”  

èResponse: The company-based labor union will continue to have authority as the bargaining representative union since your company determined the bargaining representative union after the procedure to decide the bargaining channel in May 2013. Accordingly, the port industry labor union cannot request collective bargaining during the effective period of the collective agreement that the bargaining representative union contracted with the company. They may participate only in the procedure to determine the next bargaining representative union beginning three months prior to expiry of the current collective agreement, which is in May 2015. The courts have also stipulated that any union not participating in the procedure to determine the bargaining representative union has no right to request collective bargaining. (Related reference: Article 29-2 of the Act, Gwangju Appellate Court ruling on August 16, 2011, 2010ra131).

2. Question from the public sector

 “In the Seoul City government at present, the Public Service Workers’ Union is composed of full-time employees who are not public servants. This public service workers’ union has a membership of 300 regular full-time workers in 6 subordinate divisions under the City government. Recently, 28 short-term contract workers in the Park Administration Office of the city has established a branch union of the Public Irregular Workers’ Labor Union and requested collective bargaining with the Park Office on April 10, 2014. Does the Park Office have to respond favorably to this request?

For reference, the City government received a demand for collective bargaining from the Public Service Workers’ Union in 2014, and on March 6, 2014 posted on the bulletin boards of its 6 subordinate workplaces for 7 days that they had requested collective bargaining. No other labor union joined in the request during the posted period. The City government accepted the Public Service Workers’ Union as the bargaining representative union and announced it to the 6 mentioned workplaces. Currently, the City government is engaged in collective bargaining with this Public Service Workers’ Union.”

è Response: The main issue in this question is whether the City government can be regarded as their employer, or whether the Park Office that hired those irregular workers is considered their independent employer. The designated unit for selection of a bargaining channel shall be “a business or workplace”. The business shall not solely be determined in terms of location, but whether that particular business is operated and managed as part of an organic structure, regardless of its location (Supreme Court ruling on February 9, 1993, 91da21381). “Business” means the company itself in operating management, while “workplace” refers to subordinate organizations in different locations. As one business entity belongs to one business, even though several workplaces and business organizations have been commissioned with partly independent management in personnel and labor management, they belong to a business entity as they are generally restricted by corporate directions and purposes. The business entity shall therefore be considered one bargaining unit representing all workplaces and business organizations. However, even though one particular workplace belongs to one business entity, if they are independently operated in personnel and labor management, accounting, and other business functions, that workplace or subordinate organization shall be regarded as one bargaining unit. 

 Since a bargaining representative union has been determined through the proper procedure according to Article 29-2 of the Labor Union Act, the City government can reject the request for collective bargaining from the 2nd labor union with justifiable grounds. In this case, the 2nd labor union can participate in the procedure for determining the bargaining representative union in two years.

IV. Conclusion

As multiple unions have been allowed at one workplace, the bargaining representative union system was introduced as a restriction against undue complications arising from multiple bargaining requests, different working conditions inside one company, intense struggles between labor unions, and inter-union splits. Some companies have been able to successfully defeat the hostile and combative nature of their majority labor unions through the exclusive bargaining representative union in this Multiple Union System, but in this author’s opinion, these are exceptions that have developed in the course of adopting the Multiple Union System. If companies and unions clearly understand and respect the bargaining representative union’s duty of fair representation to protect the rights of minor labor unions involved in bargaining representative union selection, all labor unions can be protected equally in accordance with the size of their membership. This would allow the Multiple Union System to be viewed as a way of helping the members of any union, and promote a more active involvement in varying labor unions representing their interests.     

[1] Labor Union Act: Article 29-2 (Procedure for Determining Bargaining Representative Union); Article 29 (Authority to Bargain & Make Agreements); and Enforcement Decree: Article 14-2 (Timing & Method for Demands to Bargain by Labor Unions)

[2] Guidelines from the Ministry of Employment & Labor: A Manual for Multiple Unions (Dec. 2010)