Labor Commission Recognizes Employer Status for Subcontracted Workers, Strengthening Principal Employer Liability

For the first time in the private sector, the Labor Commission has issued a ruling recognizing the principal employer as the legal 'employer'. The Seoul Regional Labor Relations Commission approved both correction requests filed by the subcontracted labor unions for Induk Hakwon (Induk University) and Sungkonghoe University. On the same day, the Seoul Regional Labor Relations Commission also approved a correction request filed by the union of a subsidiary of the Korea Airports Corporation.

The background to this ruling lies in the enforcement of the 'Yellow Envelope Act'. Subcontracted unions at Induk University and Sungkonghoe University filed negotiation requests with their respective universities after the law came into effect. However, when the principal employers failed to announce the negotiation requests, the unions submitted correction requests to the Labor Commission on the 18th and 19th of last month.

After an investigation and hearing, the arbitration committee determined that the principal employers held a position of substantial and concrete control and decision-making power over some of the working conditions and environments of the subcontracted workers. In the case of university facility management services, particular consideration was given to the fact that the principal employers structurally controlled the working hours of subcontracted workers and held substantial decision-making power regarding improvements to the work environment, such as rest facilities.

Each institution where employer status was recognized was ordered to publicly announce the negotiation requests for seven days. Subsequently, they are to engage in collective bargaining with the subcontracted unions to allow labor and management to autonomously negotiate and determine the working conditions of subcontracted employees. However, if the principal employers wish to contest this ruling, they can file for a retrial with the Central Labor Relations Commission, and if they still disagree, they can pursue administrative litigation.