South Korean Labor Ministry Issues Guidelines Limiting Mandatory Bargaining Scope

The South Korean Ministry of Employment and Labor issued new guidelines on Thursday stating that demands for performance bonuses tied to a fixed percentage of company profits are not mandatory subjects of collective bargaining. The guidelines clarify the Trade Union and Labor Relations Adjustment Act, which took effect in March and expanded bargaining rights for subcontracted workers. According to the ministry, profit linked bonuses could be voluntary subjects of bargaining, but mandatory requirements for them would violate shareholders' rights and a company's freedom to conduct business.

The guidelines also specify that certain management decisions, such as the introduction of AI and robots, the sale or acquisition of businesses, and the establishment of overseas facilities, do not constitute mandatory bargaining issues. Specifically, the ministry noted that Samsung Electronics' plans to build new semiconductor plants in the southwestern region are not mandatory subjects of negotiation because the impact on working conditions remains uncertain. However, the ministry clarified that these issues would become mandatory if the company carries out personnel restructuring for the relocation.

Vice Minister of Employment and Labor Kwon Chang-jun stated that the move is intended to provide concrete standards for resolving disputes and enhance predictability. While the guidelines take effect immediately, they do not bind courts. Some businesses have expressed concern that the standards were issued as administrative guidelines rather than an enforcement decree, leading to calls for supplementary legislation.