Samsung Electronics strike over profit-linked bonuses would be illegal under new guidelines, minister says

Minister of Employment and Labor Kim Young-hoon said a Samsung Electronics union strike last May over demands for bonuses tied to a fixed percentage of operating profit would constitute an illegal strike under the ministry's newly issued guidelines on the amended Trade Union and Labor Relations Adjustment Act, commonly known as the Yellow Envelope Act.

However, Kim said the new guidelines would not apply retroactively, as Samsung Electronics management and labor had already agreed on a bonus payment structure through collective bargaining.

Speaking on SBS Radio's "Kim Taehyeon's Politics Show" on Tuesday, Kim said there had been a fundamental concern about whether it was appropriate for companies to set aside bonus payments before paying taxes — as if paying interest first — out of operating profit.

Kim drew a line at the idea that all performance bonus demands would be excluded from the scope of industrial action. However, he said requiring a company to pay a fixed percentage of operating profit as bonuses could excessively constrain management's business judgment. "Demanding N percent of operating profit as bonuses before taxes are even paid could create misunderstandings among foreign investors and lead to a chilling effect on investment or a weakening of corporate competitiveness — that is the intent behind the restriction," he said.

Asked whether the Samsung Electronics strike would constitute an illegal strike under the new guidelines — even if they cannot be applied retroactively — Kim said, "Yes," adding, "I think it would be difficult to start by carving out N percent of operating profit right off the top."

The Ministry of Employment and Labor announced Thursday that under its Yellow Envelope Act implementation guidelines, demands for management performance bonuses linked to corporate profit would in principle not qualify as mandatory subjects of collective bargaining. The ministry said such demands risk infringing on the rights of third parties, including the state and shareholders, and could excessively restrict corporate management decisions and execution. However, where management and labor have already reached an agreement on bonus payment methods through collective bargaining, that agreement remains valid — meaning the new guidelines do not apply retroactively to Samsung Electronics.

"The law cannot be resolved in a single stroke — precedents must accumulate," Kim said. "What we lack is not a system but trust."

Kim expressed caution about introducing a white-collar exemption — a system that excludes high-earning professionals from working-hour regulations — as part of a special act on mega special zones being pursued by the ruling party and government. "It is true that we should row while the tide is in, but exempting working hours without limit is a separate matter," he said. "Rather than competing on sheer volume of working hours, labor, management and the government should find innovative ways to secure flexibility while protecting workers' health."

Kim said the government had put on hold a plan to extend unemployment benefits to workers under 35 who voluntarily resign but meet certain conditions, after the measure was left out of next year's budget proposal over concerns about potential side effects. "The intent was to give young people another chance, as many leave jobs in a way that is formally voluntary but effectively involuntary because they struggle to adapt to the workplace," he said. "There was some criticism, so we decided not to include it in next year's budget for now."

Kim, a former KTX locomotive engineer, said the planned integration of KTX and SRT operations "puts an end to the privatization debate." He said the division of what had been a single railway system was "a preliminary move toward so-called privatization," adding that while it was framed as a competitive structure, it had only added to public inconvenience. "It has put an end to the privatization debate that has dominated our society," he said.