South Korea's two major union federations demand scrapping of government labor dispute guidelines

South Korea's two major union federations have called for the immediate scrapping of a government directive that spells out when performance bonuses and management decisions can be subject to labor disputes. Both federations said the guidelines infringe on the three fundamental labor rights guaranteed by the Constitution by drawing distinctions based on how bonus demands are framed and by narrowing the scope of bargaining over management decisions that affect employment.

The Federation of Korean Trade Unions and the Korean Confederation of Trade Unions (KCTU) each issued statements Thursday condemning the Ministry of Employment and Labor's newly released "Implementation Guidelines on the Scope of Labor Disputes, Including Performance Bonuses." The federations said the directive — which sets criteria for determining what constitutes a labor dispute under the amended Trade Union Act, commonly known as the Yellow Envelope Act — would not reduce labor-management conflict but instead help employers avoid bargaining and escalate disputes.

Under the guidelines, the ministry excluded demands for performance bonuses tied to a fixed ratio of company profits from mandatory bargaining subjects and from the scope of labor dispute mediation and industrial action. It also ruled that management decisions themselves — such as opening or relocating a factory — are in principle not subject to mandatory bargaining. However, it said related matters could become bargaining subjects when changes to working conditions are objectively foreseeable based on specific workforce management plans.

The Federation of Korean Trade Unions took issue with the criteria for determining whether a bonus demand qualifies as a labor dispute based on the form of the demand rather than its substance.

"The guidelines set an arbitrary standard that judges whether something is a labor dispute based solely on the form of the demand, not the actual nature of the performance bonus," the federation said. "Under these guidelines, unions would have no choice but to make new demands each year for the payment amount or rate for that year."

The federation said that if demands for profit-linked bonuses are excluded, bargaining and conflict will simply repeat in a different form — with unions instead demanding a fixed amount or a set percentage of base pay or annual salary. It criticized the directive as a self-contradictory measure that, despite being designed to reduce social conflict, could actually inflame labor-management tensions.

The KCTU said the authority to set bargaining demands rests with the union, and the government should not impose excessive criteria on what can be bargained over. It said the guidelines make it difficult to even raise demands for a fair distribution of the fruits of labor at the bargaining table, effectively giving employers a free pass to avoid negotiations.

The KCTU also pushed back on the criteria covering management decisions. It said the introduction of AI and new technology, as well as the sale or relocation of workplaces, inevitably brings job insecurity and changes to working conditions — yet the government excluded the decisions themselves from bargaining and limited the scope to cases where changes to working conditions are objectively foreseeable.

"Workers will have no way to respond until the company finalizes its detailed restructuring plans," the KCTU said. "This is a legally abusive interpretation that completely blocks workers from exercising their right to self-help and demanding job security at a time when their workplace may disappear or their duties may change entirely."

Both federations also challenged the guidelines' provisions on the labor commission mediation process. The directive instructs the labor commission to recommend that a union revise its demands if it files for mediation over profit-linked bonuses or management decisions themselves, and to issue administrative guidance if the union refuses. It also ruled that an employer's refusal to bargain on such matters would be difficult to treat as an unfair labor practice.

The Federation of Korean Trade Unions said whether something constitutes a labor dispute must be determined through individual review of specific bargaining demands and their impact on employment and working conditions. It said the ministry's approach of predetermining outcomes and directing the labor commission's judgment could infringe on independent case review and workers' right to access mediation procedures.

The KCTU similarly criticized the directive as a measure that undermines the neutrality of the labor commission and strips unions of their lawful right to industrial action. It said it would mount a vigorous campaign to have the guidelines — which it said violate the three fundamental labor rights and stoke labor-management conflict — abolished.