Ⅲ. Details and Effects of a Collective Agreement

A collective agreement is made up of two different parts: one concerning working conditions and treatment of employees(normative section), and one concerning the rights and obligations of the employer(contractual section). Any part of the work rules or an individual employment contract which contradicts the normative part of the collective agreement is invalid and is replaced by the corresponding provisions of the collective agreement.

1. Normative section



The Trade Union Act: Article 33 (Validity of Standards)
① Any part of the rules of employment or a labor contract that violate standards concerning working conditions and other matters concerning the treatment of workers as prescribed in the collective agreement shall be null and void.
Article 92 (Penal Provisions) A person to whom any of the following subparagraphs apply shall be punished by a fine not exceeding ten million won:
1. A person who violates the matters falling under any of the following items from among the contents of a collective agreement concluded pursuant to Article 31 (1):
(a) Matters regarding wage, welfare costs and retirement allowances;
(b) Matters regarding working and resting hours, holidays and vacations;
(c) Matters regarding causes for discipline and dismissals and important procedures;
(d) Matters regarding safety, health and disaster relief;
(e) Matters regarding provision of facilities and conveniences and participation in meetings during on-duty hours; and
(f) Matters regarding industrial action.



The normative section of the collective agreement regards matters concerning working conditions and other matters concerning the treatment of workers. The normative section contains amount of wages, method of wage calculation, working hours, paid off-days, paid leaves, bonuses, agreements on welfare, kinds and calculations of industrial accidents, agreements on progressive severance pay, retirement age, etc.

Normative effects of the collective agreement include compulsory and direct effects.
1) Compulsory effect is nullification of any part of the rules of employment or a labor contract that violates standards of working conditions and other matters concerning the treatment of workers as prescribed in the collective agreement.
2) Direct effect refers to matters not covered in a labor contract. Any part which is made null and void by compulsory effect shall be governed by those standards of the collective agreement.

(1) Effect after expiration of the collective agreement.

Although the effective period of the collective agreement expires or the collective agreement becomes invalid due to one party’s notice of cancellation of the agreement during the autonomous extension period, standards concerning working conditions and other matters concerning the treatment of employees(namely, the normative section) as prescribed in the collective agreement would be transformed to the working conditions of individual employees and remain effective in their labor contracts. If the employer wants to revise the normative section, he shall conclude a new collective agreement in accordance with legitimate procedures, or revise the rules of employment and obtain the collective consent of the employees concerned.
On the other hand, the term working conditions means standards concerning the treatment of employees under the labor contract between the employer and those employees. Concrete contents refer to items stipulated in Article 96 of the Labor Standards Act(Rules of Employment) as well as wages, working hours, welfare, and dismissal procedures stipulated in that Act. Regulations in the collective agreement concerning disciplinary procedures such as composition of the disciplinary action committee falls under matters pertaining to awards and punishment pursuant to Article 96(10) of the same Act. So, this item shall be working conditions and be included under the normative section.

(2) Although a newly concluded collective agreement was less favorable than the previous collective agreement, the new collective agreement will apply.

(3) Concluding a collective agreement that is unfavorable to employees is still effective.

According to the principle of freedom to contract, when a labor union concludes a collective agreement with a company, it may revise it for more or less favorable working conditions. In cases where the collective agreement was revised with unfavorable working conditions, such an agreement is not null and void, with the exception of a special situation where the revision was concluded so disadvantageously that it goes beyond the purpose of the labor union. The labor union does not have to obtain advance individual agreement or authority from employees in relation to such an agreement. Whether the collective agreement is lacking such remarkable rationality or not shall be estimated by various situations, considering the contents of the collective agreement, its concluding procedures, business conditions for the employer, etc.

(4) In cases where a new collective agreement has not been concluded after one year from the expiration date of the previous agreement and the employees had been governed, with regard to their wages, by the previous agreement in the meantime, such application of the previous agreement is still effective.

Even when a collective agreement has ceased to be effective due to expiration of its term of validity, such provisions about wages, retirement pay, and other individual working conditions are still incorporated in the contract of employment of individual employees unless a new collective agreement or new rules of employment that prescribe otherwise is adopted or individual employees give their consent to extermination of those provisions in the previous agreement. Accordingly, even if the previous agreement had applied to the employees for more than one year due to belated conclusion of a new agreement, such application is deemed to be valid and is not against Article 35 of the former Trade Union Act that limits the effective term of a collective agreement on wages to one year.

(5) Even though a collective agreement provides for less favorable conditions than the rules of employment, such provision is effective.

When a collective agreement is devised or revised to include less favorable conditions than the existing rules of employment set forth for the same subject, the new or revised agreement implies that both parties have agreed to exclude application of the rules of employment for the subject. In the case in question, it is deemed that the revised collective agreement excludes application of the rules of employment with regard to dismissal criteria.

(6) Even if a collective agreement includes a clause on individual employees waiving claims regarding their wages, such agreement is not valid.

As individual employees already have the right to wages, retirement pay or bonuses, such things are at the disposal of the employees. Therefore, a labor union, unless with the consent or a mandate from individual employees to do so, cannot waive or delay the right to wages, etc., simply by means of a collective agreement with the employer.

(7) If a labor union concludes a collective agreement including working conditions less favorable to employees, the agreement is valid.

A labor union and an employer may conclude a collective agreement that provides for better or poorer working conditions. Unless the working conditions included are too poor to be reasonable or to be in compliance with the purpose of a labor union, a collective agreement may not be deemed as ineffective just because it includes poorer working conditions. In order to determine whether a collective agreement is reasonable or not, all surrounding conditions, such as the general contents of the agreement, the developments leading to conclusion of the agreement, and the employer’s financial situation, should be thoroughly examined.

(8) Upon expiration of a collective agreement, the provisions on the employment relationship, such as working hours or wages, continue to be valid.

When a collective agreement is concluded, its provisions on working conditions and other standards for employee treatment are incorporated into the employment relationship of individual employees. Therefore, even after expiration of the collective agreement, the normative provisions on working conditions, etc., will remain effective. In addition, as the provisions on personnel management and dismissal are also included in the normative section of the collective agreement, those provisions also continue to be effective, even after termination of the agreement and until a new collective agreement takes effect.

(9) Effect of a collective agreement restricting managerial dismissal

Should a company plan to restructure, it is the employer’s right to do so through managerial dismissals, mergers or abolition of an organization, and should not be part of collective bargaining. However, despite items in the collective bargaining that may affect the managerial rights of the employer, the labor union and the employer can conclude a collective agreement, and this collective agreement would be valid as long as those items do not violate the mandatory rules or disturb public order. Accordingly, if the employer agreed to provisions that restrict managerial dismissals in the collective agreement with the labor union, that collective agreement would not violate law or upset social order unless special circumstances apply. Furthermore, as any collective agreement deals with standards for working conditions and other treatment of employees, any managerial dismissal in opposition to this provision is not justifiable. However, in cases where the company’s situation has seriously changed from the time the collective agreement was concluded, and in cases where the company would suffer gravely negative outcomes(objectively determined) if it were forced to follow the collective agreement in this way, the employer can ignore these restrictions in the collective agreement and use managerial dismissal as needed.

2. Contractual section

The contractual section refers to the rules in a collective agreement regulating rights and duties between the two parties concerned in that collective agreement. The contractual section affects the labor union and the employer, but not the union members. Generally it contains articles of peace, solitary bargaining groups, union activities, shop, strikes, etc.
The contractual section has a liability effect in which one party binds the other party to some duty. The concrete items are as follows:
① Both parties to the agreement shall observe their duties in respect to their contractual sections(obligation to observe the agreement).
② Neither party shall induce an industrial action to change the contents of the agreement during the effective period of the agreement, which is usually the union’s duty(duty to maintain peace).
③ The labor union shall execute a duty of peace, as the employer shall be responsible for implementing the contents of the agreement(duty to implement).

(1) Normative and contractual sections
The ‘normative sections’ in the collective agreement mean the standards concerning working conditions and other matters concerning the treatment of employees, such as wages and their payment, working hours, paid holidays, severance pay, etc. The contractual sections refer to the rules regulating rights and duties between the two parties in the collective agreement, such as articles of peace, solitary bargaining groups, shop, strikes, etc.

(2) If the collective agreement becomes ineffective, standards concerning working conditions and other matters concerning the treatment of employees will be transformed to working conditions of individual employees and continue to remain effective, but the obligation section, such as pay to a full-time union officer, will cease to have effect.
Principally, the collective agreement ceases to have effect when its term of validity expires. However, according to Article 32(3) of the Trade Union Act, even though both parties continue to engage in collective bargaining to make a new collective agreement before or after expiration of the effective term of an existing agreement, the parties fail to make a new collective agreement, the existing collective agreement shall remain valid for three more months after its expiration. However, if the collective agreement contains a separate provision to the effect that when a new collective agreement is not made in spite of the expiration of the term of an existing collective agreement, the said existing collective agreement shall remain effective until a new collective agreement is made, such a separate provision shall be observed. Any party to the agreement may, however, terminate the existing collective agreement by notifying the other party of such termination six months in advance of the date the party intends to terminate it. If the collective agreement becomes ineffective, standards concerning working conditions and other matters concerning the treatment of employees(namely, the normative section) will be transformed to working conditions of individual employees and remain effective continuously, but the obligation section, such as pay to a full-time union officer, will cease to have effect.

(3) Industrial action in violation of a duty to maintain peace and its justification
The duty to maintain peace is the obligation that neither party shall revise or abolish the agreed upon matters unilaterally, nor request new conditions during the effective period of the collective agreement. Although there is no regulation stipulated in the collective agreement, such an agreement contains the intrinsic obligation inherent in its function of maintaining peace. Since the duty to maintain peace is very important to peaceful labor relations and preservation of order, industrial actions taken during the effective period of the collective agreement are not justifiable as part of the purpose of the labor union.