元請も下請組合の団体交渉の相手方となり得ます

This month’s issue — bargaining with a party you never contracted with

If your company in Korea uses subcontractors, outsourced services, or in-house partner firms, there is one change effective this March that you need to review.

The amended Trade Union and Labor Relations Adjustment Act (the “Trade Union Act”) was promulgated on 9 September 2025 and took effect on 10 March 2026. The change concerns the definition of “employer” under the Act. A company may now be treated as an employer under the Trade Union Act within a certain scope, even where it is not the party to the employment contract.

In practice this means the following. Where workers employed by a partner firm form a union and demand collective bargaining directly with the principal contractor, the response “we have no employment contract with them” may no longer settle the matter on its own.

What the law now says

The amended provision reads as follows.

• •Trade Union Act, Article 2 subparagraph 2, second sentence — “In such cases, a person who, although not a party to the employment contract, is in a position to substantially and concretely control and determine the working conditions of the workers shall also be deemed an employer within that scope.”

Two points must be read together. First, the test is substantial and concrete control and determination. What matters is what the company actually decides, not how the contract is labelled. Second, employer status applies “within that scope.” The principal contractor does not become the employer for all working conditions — only for those it actually controls and determines.

And once employer status is established, refusing to bargain carries consequences.

• •Trade Union Act, Article 81 paragraph 1 subparagraph 3 — refusing or neglecting, without justifiable reason, to conclude a collective agreement or otherwise to engage in collective bargaining with the union’s representative or a delegated person constitutes an unfair labor practice.

Where the line is drawn in practice

The key question is where ordinary contract management ends and control and determination begins. Ordinary requests, consultation, and coordination necessary to perform a subcontracting agreement are not automatically treated as control and determination; a central consideration is whether the contractor genuinely retains independent discretion over its own HR and labor management.

The areas that most often come into question are these.

• •Whether the principal contractor decides or approves working hours, break times, or overtime
• •Whether it intervenes in headcount, labor cost, wage increase rates, or allowance criteria
• •Whether it controls work processes, working methods, or safety procedures
• •Whether it sets the terms of access to welfare facilities such as commuter buses or rest areas
• •The degree to which partner-firm workers are integrated into the principal contractor’s organization
• •How economically dependent the partner firm is on business with the principal contractor

Points of particular concern for global companies

First, global standards can themselves become the risk. Headquarters frequently prescribes partner-firm work procedures directly on safety, quality, or security grounds. From headquarters’ perspective this is routine standards management; in Korea it may be assessed as an indicator of control and determination.

Second, day-to-day communication becomes evidence. Records showing that a principal contractor’s staff gave instructions directly to partner-firm workers, approved attendance or leave through a group chat, or requested the replacement of particular personnel will be examined as they stand.

Third, the response window is short. Once a bargaining demand is filed, the procedure runs on a fixed timetable. Missing the response point while waiting for headquarters approval can itself work against the company.

What HR should check now

• •Is there a documented list, by partner firm, of the working conditions your company actually determines?
• •Have you checked whether your staff have given direct instructions to, or approved attendance for, partner-firm workers?
• •Have you reviewed whether your work-procedure and safety requirements go beyond what performance of the subcontract requires?
• •Does each partner firm have an independent on-site manager who actually exercises HR and labor authority?
• •Is there an internal procedure setting out who reviews and who decides when a bargaining demand is received?
• •Are the underlying records — contracts, work instructions, meeting minutes — being retained and managed?
• •Do you have materials prepared to explain this regime to headquarters?

In summary

The essence of this amendment is that the axis of assessment has shifted from “who signed the contract” to “who actually decides.”

What deserves attention is that the assessment is made scope by scope. The principal contractor does not become the employer for every working condition, nor is the question foreclosed by a single subcontracting agreement. What is needed now, therefore, is not a redrafting of contracts but an internal understanding of which of the partner-firm workers’ working conditions your company is in fact determining.

Beginning that review only after a bargaining demand arrives leaves too little time.

※ This article is general information organized from publicly available legislation and does not substitute for legal assessment of an individual matter. The provisions cited are those of the Trade Union and Labor Relations Adjustment Act as effective 10 March 2026.