Hanwha Ocean labor dispute heads to arbitration in first major test of revised union law

A dispute over whether a prime contractor qualifies as an employer of subcontracted workers has escalated into formal labor dispute proceedings following the enforcement of the revised Trade Union Act, commonly known as the "Yellow Envelope Law."

The Central Labor Relations Commission has upheld its recognition of Hanwha Ocean as an employer in relation to subcontractor unions. The Korean Metal Workers' Union, which represents the subcontracted workers, has filed for labor dispute mediation against Hanwha Ocean, ratcheting up pressure on the shipbuilder.

The Geoje-Tongyeong-Goseong Shipbuilding Subcontractors' Branch and the Welliv Branch of the Korean Metal Workers' Union held a press conference Monday outside the South Gyeongsang Provincial Labor Relations Commission and announced they had filed for labor dispute mediation against Hanwha Ocean.

The filing follows the Central Labor Relations Commission's June 15 decision to dismiss Hanwha Ocean's appeal against an order to correct its notice confirming unions eligible for collective bargaining, thereby upholding the original ruling.

The commission recognized Hanwha Ocean's employer status in the shipbuilding subcontractors' case and also found that the company holds substantive and concrete control over the Welliv Branch workers in areas including industrial safety and working conditions.

The union said it had demanded collective bargaining 10 times since the South Gyeongsang Provincial Labor Relations Commission recognized the unions' eligibility in April, but Hanwha Ocean had not responded once. "The issue is not the legitimacy of the union — it is the prime contractor's refusal to bargain," the union said.

The South Gyeongsang Provincial Labor Relations Commission is expected to convene a mediation session within 10 days. If it determines that the gap between the two sides is too wide and issues a decision to suspend mediation, the union will be legally entitled to take industrial action.

Strike preparations are already underway. The Welliv Branch, which represents workers in catering, commuter bus and facility management services, held a strike ballot June 18-19, with 406 of its 437 members participating. Of those, 342 — or 84.2 percent — voted in favor, clearing the way for a strike. The Shipbuilding Subcontractors' Branch also plans to hold its own strike ballot after the mediation outcome is known.

The case is considered one of the first major instances in which recognition of a prime contractor's employer status under the revised Trade Union Act has led directly to collective bargaining demands and formal dispute proceedings. Labor groups are calling on prime contractors to fulfill their bargaining obligations, while business circles warn that a broader interpretation of employer status could fuel more conflicts on the shop floor.

The Ministry of Employment and Labor recently released a 100-day review of the revised Trade Union Act's implementation, saying that while demands for prime-subcontractor bargaining had increased, the feared "bargaining tsunami" or indiscriminate fragmentation of negotiations had not materialized. The ministry reaffirmed its position that a prime contractor can be recognized as an employer when it substantively and concretely controls workers' terms and conditions of employment.