Supreme Court limits collective bargaining duty to direct employers

The Supreme Court on May 21 dismissed an appeal by a union seeking to force a shipbuilding company to engage in collective bargaining, ruling that the firm was not the legal employer of the subcontracted workers involved.

The case centered on whether a primary contractor could be classified as a user obligated to bargain with a union representing employees of its subcontractors. The union had demanded negotiations after the company refused, arguing it exerted substantial control over working conditions at its site. Lower courts rejected the claim, and the high court upheld those rulings, stating the legal definition of a user requires an explicit or implicit employment relationship.

Justices noted that while recent legislative amendments have expanded the definition of a user to include those with de facto control over working conditions, those changes took effect on March 10, 2026 and do not apply retroactively to this case. Consequently, the court applied the previous legal framework, which strictly ties bargaining obligations to the existence of a wage-paying employment contract.

The majority opinion emphasized that imposing affirmative bargaining duties on entities without direct contracts requires careful interpretation, particularly given that violating such duties carries criminal penalties of up to two years in prison or fines reaching 20 million won. The court reasoned that because collective bargaining aims to improve conditions through binding agreements, the obligation must remain closely linked to the individual employment relationship, unlike prohibitions on interference which can apply more broadly to those with factual control.

Four justices issued a dissenting opinion arguing that the purpose of labor laws is to protect workers' rights regardless of formal contractual arrangements. They contended that any entity capable of substantially determining working conditions should bear the responsibility to negotiate, especially when subcontracted workers face economic dependence on the primary contractor.