The National Labor Relations Commission ruled that if a prime contractor is actually determining the wage increase rate for subcontractor workers, it must negotiate wage issues with the subcontractor's labor union.
Since the implementation of the revised Labor Union Act (Yellow Envelope Act), there have been many judgments by the Central Labor Relations Commission that the subcontractor's industrial safety and working environment issues were customizable for subcontracted workers, but this is the first time it has been reported that it has recognized that wages are customizable.
Given that the user-friendliness of primary contractors, which has been recognized mainly for industrial safety and working environment, has expanded to include wages, a key working condition, it is expected that there will be considerable impact on labor-management relations in the future.
According to the labor community on the 12th, the Central Labor Relations Commission dismissed the case filed by Gyeonggi Expressway against the Public Industry Hope Union in September, requesting a retrial for correction of the public notice of negotiation demands.
Due to the nature of the decision of the Central Labor Relations Commission being delivered to the parties 30 days after the decision date, the reasons for the decision were disclosed late.
Previously, workers from 'Ido', a subcontractor in charge of the integrated operation of the West Suwon-Osan-Pyeongtaek Expressway, demanded negotiations with the main contractor, Gyeonggi Expressway, in June, claiming that it is the employer that determines overall working conditions, including industrial safety, working hours, and wages.
When Gyeonggi Expressway did not announce its request for negotiation, the union applied for correction to the Gyeonggi Regional Labor Relations Commission. Accordingly, the Gyeonggi Labor Committee sided with the union, and the Central Labor Committee also maintained this decision.
In this decision, the Central Labor Relations Commission paid attention to the five-year consignment contract signed by Gyeonggi Expressway, which entrusted the operation of the expressway to a subcontractor.
Gyeonggi Expressway required labor costs, allowances, etc. to be listed in detail by item in the ‘labor cost calculation details’ at the bidding stage for subcontractors.
In particular, the 'annual wage increase rate' to be applied for the next five years was proposed. Accordingly, the calculation details reflected an increase of approximately 3% in the total basic salary each year compared to the previous year.
The basis was that the price presented by the subcontractor at the bidding stage was set within the range set by the main contractor, and the subcontractor had to comply with the main contractor's request to supplement the business plan.
In its decision, the Central Labor Relations Commission said, "The employer not only determined the total amount of consignment fees to be paid to the consignment company, but also determined the size of the number of people making up the cost and the amount of labor costs for each specific job in each business unit," and concluded, "It appears to be virtually controlling at what level the specific wages of workers at the consignment company will be determined and how they will be increased."
The fact that even wages corresponding to basic working conditions are viewed as something that the main contractor must negotiate with the subcontractor is expected to have a significant impact on the establishment of the Yellow Envelope Act and overall labor-management relations in the future.
Park Ji-soon, a professor at Korea University's Law School, pointed out, "If wages are included in the subject of negotiation, it may lead to the logic that it is the main contractor, not the subcontractor, that ultimately determines the basic working conditions of subcontracted workers," adding, "There are also concerns that subcontractors may eventually be reduced to human resources managers who only hire."
Criticism is also raised because this incident took place in the public sphere of highway operation.
Gyeonggi Expressway completed the West Suwon-Osan-Pyeongtaek Expressway in October 2009 as a private investment project. Ownership was transferred to the government and the government granted the right to operate for 30 years, and the investment cost was recovered through toll revenue.
Professor Park said, “Service contracts for public sector ordering organizations are often made in accordance with various guidelines, such as procurement standards and labor cost increase rates set by the government,” and added, “The relationship between primary and subcontractors in the public sector must be judged differently from the private sector.”
