Definitive Report - Report No 380, October 2016

Case No 3138 (Republic of Korea) - Complaint date: 18-JUN-15 - Closed

Allegations: The complainants allege that the Government promotes the revision of collective agreements in force containing clauses it deems illegal or unreasonable

1. 349. The complaint is contained in a joint communication dated 18 June 2015 from the International Trade Union Confederation (ITUC), the Korean Confederation of Trade Unions (KCTU) and the Federation of Korean Trade Unions (FKTU).
2. 350. The Government sent its observations in a communication dated 3 June 2016.
3. 351. The Republic of Korea has not ratified either the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), or the Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

A. The complainants’ allegations

1. 352. In their joint communication dated 18 June 2015, the ICTU, KCTU and FKTU allege that on 15 April 2015, the Minister of Employment and Labour announced an official plan to promote the revision of hundreds of collective bargaining agreements (CBAs) currently in force containing clauses that the Government believes are either “illegal” or “unreasonable”. The complainants point out in this respect that trade unions are not contesting the Government’s efforts to eliminate “illegal” clauses, which concern matters such as the hiring of workers through special recruitment schemes, including relatives of trade unionists, and which are being attacked by the Government as infringing upon equal rights guaranteed by the Constitution.
2. 353. With regard to the clauses deemed to be “unreasonable”, however, the complainants indicate that the Government has targeted freely negotiated clauses that provide trade unions with a voice in certain decisions of the management, including lay-offs, reshuffling and recruitment. The complainants indicate that according to the Ministry of Employment and Labour (MOEL), 29.4 per cent of 727 surveyed companies need a consent from a union before making a personnel reshuffle, while 17.2 per cent need it to dismiss workers.
3. 354. The complainants indicate that on 20 April 2015, MOEL officials began collecting CBAs from roughly 3,000 companies employing 100 or more workers nationwide with a view to determine whether they contain illegal or unreasonable clauses. According to the complainants, the MOEL plans to urge the management and the unions to voluntarily revise illegal and/or unreasonable clauses in collective agreements by the end of July 2015 and has promised to provide incentives, such as future labour–management partnership support programmes or other benefits, to those who voluntarily revise illegal or unreasonable clauses. The complainants allege that those who fail to review collective agreements by July 2015, will receive a correction order from the MOEL and those who fail to make appropriate revision of illegal clauses will be charged (although no correction orders will be issued for unreasonable clauses as they are not illegal). The MOEL is also planning to provide guidance on collective bargaining so that future collective agreements do not include illegal or unreasonable clauses.
4. 355. The complainants argue that the Government’s position that freely negotiated collective bargaining clauses requiring the management to consult with unions on personnel decisions are unreasonable is contrary to the Korean jurisprudence on collective bargaining. The complainants refer to several cases where the Supreme Court considered, regarding provisions requiring unions’ consent on disciplinary measures, that if a collective agreement contains clauses to the effect “that measures of personnel affairs taken for union officials should be agreed by the union”, any disciplinary measures taken without such agreement is in principle invalid.
5. 356. The complainants point out that it is a bedrock principle of collective bargaining that governments should not intervene to alter the content of collective agreements and refer in this respect to paragraph 215 of the 2012 General Survey of the Committee of Experts on the Application of Conventions and Recommendations, paragraphs 881, 912, 913 and 1001 of the Digest of decisions and principles of the Freedom of Association Committee, fifth (revised) edition, 2006, as well as to the following cases examined by the Committee: Nos 1897 (Japan), 1951 (Canada), 2178 (Denmark), and 2326 (Australia).
6. 357. The complainants conclude by stating that executive or legislative measures to limit the scope of collective bargaining are contrary to Convention No. 98. The complainants consider that in the present case, the Government is engaging in a public campaign to remove clauses that even the courts of the Republic of Korea have found to be legitimate subjects of bargaining. Regarding the so-called unreasonable clauses, the Government is offering incentives to encourage businesses to pressure unions to accept the modifications. The complainant considers that by urging employers not to agree to certain terms, the Government weakens the power of one party in the industrial relations system, which is an unlawful interference in free collective bargaining between the parties. The announced plan will affect upcoming negotiations at workplaces, will destroy the principle of autonomous industrial relations and threaten industrial peace.

B. The Government’s reply

1. 358. In its communication dated 3 June 2016, the Government of the Republic of Korea explains that in the Republic of Korea, fundamental labour rights, workers’ rights to association, collective bargaining, and collective action are guaranteed under the Constitution and law. Pursuant to article 33.1 of the Constitution, “to enhance working conditions, workers shall have the right to independent association, collective bargaining, and collective action”. The law based on this provision, the Trade Union and Labor Relations Adjustment Act (TULRAA), guarantees fundamental labour rights: workers may freely establish trade unions (right to association); trade unions may bargain collectively with the management on workers’ working conditions as long as it does not violate the law (right to collective bargaining); and workers may engage in collective action, including strikes, after going through the mediation process, if collective bargaining efforts have failed (right to collective action). Section 30 of the TULRAA guarantees the principle of autonomous bargaining: “a trade union and an employer or employers’ association shall bargain and make a collective agreement with each other in good faith and sincerity and shall not abuse their authority”.
2. 359. The Government emphasizes that it respects the validity of CBAs and believes that the parties may freely bargain and conclude a collective agreement on any matter they decide, including wages, working hours and other working conditions. However, freely negotiated CBAs should not violate the Constitution and the legislation in force. In this respect, section 31.3 of the TULRAA provides that the administrative authorities may issue a corrective order following the resolution made by the Labour Relations Commission regarding any unlawful provision in the CBA. Regarding the “illegal” clauses, the Government considers, for example, that CBA clauses on the preferential or special recruitment of union members’ children are illegal as they are contrary to the “principle of equality” enshrined in the Constitution and violate section 7 of the Framework Act on Employment Policy and the Employment Security Act, which guarantees equal employment opportunity. It further considers that a “single bargaining union clause” is also illegal as it is designed to prohibit the employer from bargaining with unions other than the other party in the CBA, which would be in violation of the guaranteed freedom to establish unions. In addition, any CBA which fails to meet statutory working conditions is illegal. For example, a CBA that provides that workers with a child aged “six or younger” are eligible for childcare leave would be illegal as the relevant law has been revised to include workers with a child aged “eight or younger”. Thus, all illegal clauses should be revised and it is the duty of the union and the management to do so and it is the Government’s duty, through an appropriate order pursuant to section 31.3 of the TULRAA, to lead the parties to make appropriate corrections. An aggrieved party may file an administrative complaint against a correction order.
3. 360. The Government indicates that in 2014, it commissioned the Korea Labour Institute to conduct a fact-finding survey on CBAs. The survey found that 47.0 per cent of the CBAs studied violated the Constitution by providing for a single bargaining union even after pluralism had been introduced; 30.4 per cent contained clauses on special employment for the children of retirees, violating the provision which guarantees fair employment opportunities under the Framework Act on Employment Policy; and 24.9 per cent of the CBAs surveyed were found to include clauses banning any reassignment and transfer of union members without the consent of their union.
4. 361. The Government indicates that the Supreme Court has ruled that while highly important management decisions are not subject to collective bargaining in principle, the social partners may bargain collectively and conclude collective agreements on any matter at their discretion, including those concerning management rights. The Supreme Court has also ruled that:
   • – Whether to restructure a company through lay-offs or mergers between business teams, for example, is a matter deemed highly important managerial decisions and, thus, not subject to collective bargaining in principle; however, even a matter within the employer’s management rights can be subject to collective bargaining and collective agreement by labour and management at their discretion (Supreme Court Decision 2011DU20406, etc.).
   • – If there is a clause in a CBA requiring the employer to have an “agreement” with a trade union on matters within management rights and, thus, beyond the scope of collective bargaining, that single clause should not be interpreted as the employer giving up a part of his/her management rights or having them significantly restricted; and the meaning of the “agreement” stated in the clause should be interpreted under a comprehensive examination to see if the trade union also shares management responsibilities, based on the principle that rights come with responsibilities, as well as on all the details and circumstances that led to signing such a CBA and the clause’s relationship with other clauses of the CBA (Supreme Court Decision, 2010D011030, etc.).
   • – In principle, any personnel decisions made without the approval process stipulated in the CBA are invalid. This, however, is to restrict unfair disciplinary measures against union officials, not to deny the employer’s right to take disciplinary measures, one of employers’ fundamental rights. This, thus, does not mean that the union’s approval is required in any case for the employer to exert the right to take disciplinary measures (Supreme Court, delivered on 10 June 2003, 2001Du3136 Decision).
5. 362. The Government believes that the only thing it can do against any CBA infringing on fundamental rights of the management under Korean law is to recommend or persuade the parties to autonomously improve the CBA; it is impossible for the Government to force them. It also points out that while the Committee on Freedom of Association has emphasized the principle of voluntary bargaining, it has also concluded that if the Government wants clauses in a CBA to be consistent with domestic economic policies, it may persuade the parties concerned to voluntarily consider renegotiating the CBA, without forcing them and refers in this respect to paras 933 and 1008 of the Digest, op. cit. Furthermore, the Government underlines that the complainants also agree that any illegal clauses, i.e. those that are contrary to the Constitution or law, should be corrected.
6. 363. The Government considers that the complainants describe its position inaccurately and explains in this respect its view that CBAs should be respected, in principle, unless their content is illegal. The Government further explains that it is not accurate to suggest that the Government negates the CBA clauses pursuant to which “any disciplinary measures taken against union officials should be agreed to by the trade union”. The Government argues that to the contrary, if an employer who had signed such a CBA takes disciplinary measures against a union official without any prior consent from the union, such disciplinary measures are clearly invalid. However, according to the Government, some Korean unions always oppose and obstruct employers in exercising their personnel administration and business management rights, even legitimate ones. For instance, some unions are prone to oppose any disciplinary measure, even when the employer tries to fully consult with unions and has a clear rationale for taking disciplinary measures, such as the court’s confirmation of a penalty levied against a union official for an illegal act he or she had committed. In this case, if the employer had not been allowed to take disciplinary action without unions’ consent, there would be no way for the employer to exercise his/her personnel administration rights. This is a matter of concern to the Government, as CBAs with such a clause may not only cause inefficient human resources management but also put companies’ survival at risk.
7. 364. The Government points out that trade unions may intervene with the employer’s personnel administration and business management rights in a number of ways: unions may require the employer to consult with them on matters of personnel administration (e.g. disciplinary measures, job transfer, and the reassignment of union officials or members) or matters of business management rights (e.g. whether to relocate a factory and whether to adopt a new technology); and unions may block the employer from exercising personnel administration and business management rights without their prior consent. Thus the Government believes that the scope of union intervention can be decided under CBAs without infringing on employers’ management rights regarding personnel administration and business. This is because such rights may have to do with the employees’ working conditions. For example, if a factory is relocated to another region, the employees need money for relocation and measures to help them settle into the new location. In this case, the Government believes that the employer needs to fully consult with the union or the employees, and exercise its management rights after full consultation with the union so as to build reasonable labour–management relations.
8. 365. To conclude, the Government is of the opinion that the social partners would be well advised to improve CBAs containing unreasonable clauses through voluntary bargaining. This is why the Government has been encouraging and persuading social partners to do so, believing that it would benefit both parties and help them to achieve reasonable industrial relations for their mutual growth. The Government does not consider it illegal to require an employer to have an advance consultation with unions before exercising personnel administration and business management rights; rather the Government promotes consultation in accordance with the Act on the Promotion of Worker Participation and Cooperation. The Government indicates that the national legislation and judicial precedents, as well as ILO Conventions, show that the essence of personnel administration and business management rights cannot be undermined by a CBA clause restricting them. The Government believes that it may advise and persuade social partners to improve their CBAs through voluntary bargaining, not by force, in a mutually beneficial manner. In the Government’s opinion, this is not contrary to Convention No. 98.

The Committee’s conclusions

1. 366. The Committee notes that the complainants in this case allege that the Government promotes the revision of collective agreements containing clauses it deems “illegal” or “unreasonable”.
2. 367. The Committee understands from the explanation provided by the Government and the complainants that “illegal” clauses are clauses which are contrary to the national legislation in force. It further notes the complainants’ indication that trade unions are not contesting the Government’s efforts to eliminate such clauses.
3. 368. Regarding the so-called “unreasonable” clauses, the Committee notes that these are clauses which impact upon certain managerial rights and in particular those which impose an obligation on the employer to consult and obtain an agreement of the union on matters such as disciplinary measures imposed on a worker, dismissals, lay-offs, company relocation, etc. The Committee notes that on the one hand, the Government considers that any freely negotiated collective agreement provisions, even those limiting managerial prerogatives, are binding and must be complied with. On the other hand, the Government considers that such provisions are unreasonable because, in its view, they could lead to situations where the managers cannot duly exercise their managerial rights, for example in a situation where a union evades being consulted or does not give its agreement on a dismissal even in situations where the fault of the worker has been clearly demonstrated. The Government considers that such provisions therefore not only put at risk efficient management of a company but can also put the company’s survival at risk.
4. 369. Regarding the argument put forward by the Government, the Committee understands that its concern is not the existence of such a provision itself but rather its application in practice and recalls that mutual respect for the commitment undertaken in collective agreements is an important element of the right to bargain collectively and should be upheld in order to establish labour relations on stable and firm ground [see Digest, op. cit., para. 940]. That is to say that a union, party to a collective agreement containing a clause requiring its approval of a disciplinary measure to be taken against a trade unionist, should be consulted in accordance with the relevant provisions and in line with the interpretation given by the competent court in the event of disagreement. The Committee notes that, as explained by the Government, the Supreme Court of the Republic of Korea appears to have dealt with several cases by striking a balance between the protection of trade unionists against unfair disciplinary measures and the managers’ right to take such measures and that there is an established jurisprudence in this regard.
5. 370. The Committee notes the Government’s indication that it does not require the social parties to renegotiate the agreement, but rather advises them and tries to persuade them to do so on a voluntarily basis. The Committee notes the complainants’ allegation, not refuted by the Government, that the latter uses various incentives to that end. The Committee notes the Government’s view that its actions do not infringe upon the principle of free and voluntary bargaining, which the latter justifies by referring to the following paragraphs of the Digest, op. cit.:
   • 933. Certain rules and practices can facilitate negotiations and help to promote collective bargaining and various arrangements may facilitate the parties’ access to certain information concerning, for example, the economic position of their bargaining unit, wages and working conditions in closely related units, or the general economic situation; however, all legislation establishing machinery and procedures for arbitration and conciliation designed to facilitate bargaining between both sides of industry must guarantee the autonomy of parties to collective bargaining. Consequently, instead of entrusting the public authorities with powers to assist actively, even to intervene, in order to put forward their point of view, it would be better to convince the parties to collective bargaining to have regard voluntarily in their negotiations to the major reasons put forward by the government for its economic and social policies of general interest.
   • …
   • 1008. The suspension or derogation by decree – without the agreement of the parties – of collective agreements freely entered into by the parties violates the principle of free and voluntary collective bargaining established in Article 4 of Convention No. 98. If a government wishes the clauses of a collective agreement to be brought into line with the economic policy of the country, it should attempt to persuade the parties to take account voluntarily of such considerations, without imposing on them the renegotiation of the collective agreements in force.
6. 371. The Committee considers that a distinction must be made between on the one hand, the situation where the Government wishes the clauses of a collective agreement to be brought into line with the economic and social policies of the country, i.e. policies of the general interest, and situations where solely the interests of the parties to the collective agreement are involved. In the latter case, the Committee considers that any attempt to influence the social partners regarding issues which should or should not be covered by collective bargaining so as to favour one of the parties thereto, would run counter to the principle of autonomy of the bargaining partners and recalls in this respect that the voluntary negotiation of collective agreements, and therefore the autonomy of the bargaining partners, is a fundamental aspect of the principles of freedom of association [see Digest, op. cit., para. 925]. The Committee regrets that the Government has apparently offered incentives to achieve changes in collective agreements in areas that should rest within the autonomy of the bargaining partners and requests it to abstain from taking any further such actions. The Committee considers, however, that guidelines on collective bargaining, developed and adopted in a tripartite setting, would be an appropriate method for ensuring an effective framework within which legitimate concerns relating to the bargaining process can be duly taken into account. The Committee expects that any guidelines would be the result of full tripartite consultation.

The Committee’s recommendation

1. 372. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendation:
   • The Committee requests the Government to abstain from taking any further actions to achieve changes in collective agreements in areas that should rest within the autonomy of the bargaining partners. It expects that any guidelines on collective bargaining would be the result of full tripartite consultation.