Park Sang-hoon, attorney at Hwawoo LLC
The recently revised Article 2, Paragraph 5 of the Trade Union Act has brought “business management decisions that affect working conditions” within the definition of a labor dispute. This amounts to more than a single change in the text of labor relations law — it sets up a head-on collision between workers’ three basic labor rights under the Constitution and the management rights of companies. Its destructive potential is not to be taken lightly, as it could shake the foundations of the national legal system and constitutional values, beyond labor-management conflict at individual workplaces. The reasons management decisions cannot be made subject to mandatory bargaining or strikes are confirmed by firmly established Supreme Court precedent and by global standards.
The Supreme Court has consistently upheld the legal doctrine protecting management rights. Through a consistent line of rulings, it has held that high-level management judgments such as new investment, restructuring and the consolidation or closure of business units cannot be subjects of collective bargaining, and that strikes opposing such decisions lose their legitimacy and constitute unlawful industrial action. Management judgment is an inherent authority under which the decision-maker must hold full discretion and act quickly to ensure the company’s survival amid market uncertainty.
The revised Union Act, however, uses the sweeping phrase “that affect working conditions,” leaving room to draw even high-level management judgments — which the Supreme Court has as a rule excluded from collective bargaining — into the sphere of industrial disputes. This raises considerable concern that it will clash with the legal standards for protecting management rights that the judiciary has built up over many years, undermining legal certainty at workplaces.
This leads directly to the problem of conflicting constitutional rights. Just as the three basic labor rights are core fundamental rights of workers guaranteed under Article 33 of the Constitution, management rights are likewise constitutional rights grounded in the freedom of occupation and property rights guaranteed under Articles 15 and 23. Under the constitutional framework, when two fundamental rights collide, the principle is not to force the unilateral sacrifice of one side but to interpret and apply the norms so that both can coexist — an approach known as harmonizing interpretation of norms. It cannot be permitted to make management decisions subject to mandatory bargaining and then allow disagreement between labor and management to become the detonator for a strike. Doing so would excessively infringe on the essential content of management rights in the name of expanding labor rights.
Global standards, and in particular the U.S. Supreme Court’s balancing test, offer reasonable lessons for Korea’s legal system. In First National Maintenance, the U.S. Supreme Court held that decisions such as closing a business or making investments are as a rule excluded from mandatory collective bargaining, even when they affect workers’ employment. The court set the standard that such matters can become subjects of bargaining only exceptionally, when the benefit to labor-management relations obtainable through collective bargaining clearly outweighs the management burden the employer must bear, including the need for speed and flexibility in decision-making. This is a doctrine holding that whether a matter is subject to bargaining should be recognized only in limited fashion, after objectively weighing the effect on working conditions against the need for collective bargaining.
Striking a balance with labor rights without infringing on the employer’s inherent management rights requires supplementary interpretation that specifies the scope of management judgments open to bargaining. In the final interpretive guidelines it is due to release shortly, the government must state clearly that high-level management judgments directly tied to a company’s survival and growth — new investment, plant expansion and the relocation of workplaces — are excluded from labor disputes. A more fundamental solution requires amending the Union Act itself. I urge the government to draw up forward-looking guidelines or amend the law to remove judicial uncertainty and protect management rights under the Constitution.