SOUTH KOREA Trends and Developments Contributed by: Sang Hoon Lee and William Kim, Lee & Ko
arrangements to demonstrate the absence of direction and supervision, particularly for non- traditional workers, to mitigate the risk of reclas - sification disputes. Broadening “employer” status The amendment also expands the definition of “employer” to include individuals who, despite not being party to an employment contract, sub - stantially control or determine employees’ work - ing conditions. This change could implicate prin - cipal contractors in multi-tiered subcontracting arrangements, holding them liable as employers for collective bargaining or imposing restrictions on their use of replacement labour during indus - trial actions. For companies, particularly those in industries that rely on subcontractors, this necessitates a strategic review of their business processes. Minimising direct control over subcontractor employees and clearly delineating operational responsibilities can help reduce the risk of being deemed a de facto employer. Broader scope of labour disputes The Yellow Envelope Law seeks to expand the definition of “labour dispute” under the TULRAA. Currently, a labour dispute arises from disagree - ments over the determination of working condi - tions (eg, wages, hours or dismissals) where no further agreement can be reached. The proposed amendment simplifies this to disagreements ”regarding working conditions”, encompassing both interest disputes (involving the formation of new conditions) and rights disputes (involving the enforcement of existing conditions). This broader scope means disputes over unpaid wages, collective agreement enforcement or unfair labour practices could now qualify as labour disputes. Companies must prepare for
an increase in disputes not only during collec - tive bargaining but also in the context of existing agreements. Implementing robust compliance programmes and risk mitigation strategies will be crucial to managing this expanded exposure. Limitations on trade union liability The proposed amendments to Article 3 of the TULRAA introduce significant changes to the lia - bility framework for trade unions and their mem- bers. Currently, employers cannot claim dam - ages for losses from lawful industrial actions or collective bargaining. However, unlawful actions may result in liability, as affirmed by Supreme Court decisions. The Yellow Envelope Law proposes: • extending liability exemptions to all union activities, not just collective bargaining and industrial actions; • exempting unions and workers from liabil - ity for unavoidable damages while resisting unlawful employer acts; • requiring individualised fault and contribution assessments for liable parties; and • allowing employers to waive damage claims against unions or workers. These changes could embolden unions to pur - sue more assertive action, anticipating greater protection from liability. Employers will face a higher burden to prove individual fault in damage claims, moving away from the joint tortfeasor framework. To navigate this, businesses should meticulously document union activities and indi - vidual involvement during disputes, ensuring compliance with lawful industrial action require - ments to avoid triggering exemptions.
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