LABOR LAW GUIDE

Chapter 14 Collective Bargaining and Collective Agreement

Section 3: Understanding Collective Agreements. Ⅳ. Extended Coverage of Collective Agreements. Ⅴ. Termination of Collective Agreements

Ⅳ. Extended Coverage of Collective Agreements

In principle, a collective agreement is binding to the signatories(the labor union, its member employees and the employer) to the agreement. In exceptional cases, however, the effect of a collective agreement is extended to general employees so long as certain requirements are met.

1. General binding force at company level

If a majority of comparable regular employees at a business or workplace are bound to the same collective agreement, the remaining comparable regular employees at the business or workplace shall also be covered by the collective agreement.

(1) By general binding force, collective bargaining is applicable to all employees including non-union members.

According to the principle of freedom to contract, when a labor union concludes a collective agreement with a company, it does not have to only revise it to include better working conditions, but can also include less favorable conditions. In cases where the collective agreement is concluded with less favorable working conditions, such agreement cannot be null and void, with the exception of special situations where the revision is so disadvantageous as to go beyond the purpose of the labor union. In a case where both parties concluded a collective agreement in which employees would receive reduced wages temporarily for six months starting June 1, 2006, in an extraordinary general assembly to save the nearly bankrupt company due to business deterioration, the collective agreement is effective unless there are special conditions that would make it ineffective.
On the other hand, a collective agreement concluded by mutual agreement between the company and the union is basically applicable to the two parties concerned: the employer and the labor union and its union members. However, in accordance with Article 35 of the Trade Union Act, when a collective agreement is made with a majority of employees with the same kind of job employed under ordinary circumstances in a business or workplace, the normative sections concerning working conditions and other matters concerning the treatment of employees as prescribed in the collective agreement shall apply to the other employees with the same kind of job employed in the same business or workplace. Accordingly, if a majority of employees with the same kind of job fall under the general binding force of the collective agreement, non-labor union members in the same kind of job shall fall under the normative sections of the collective agreement, such as wages of the corresponding collective agreement, unless there are special conditions not to do so.

(2) In principle, the collective agreement concluded shall be definitely applicable to the parties concerned: the employer and the labor union’s members, except if general binding force applies.

The representative of a labor union shall have the authority to bargain for working conditions and other conditions with the employer for the labor union and its members. In principle, the collective agreement concluded shall be definitely applicable to the parties concerned, the employer and the labor union’s members, except if general binding force applies, according to Article 35 of the Trade Union Act. Even though the company fits in the application of general binding force by the Trade Union Act and so its working conditions become applicable to non-union members by the enlarged effect of the collective agreement, the enlarged effect of the collective agreement cannot be applicable to the employer and those who cannot have union membership according to the union’s bylaws.

(3) In cases where the collective agreement of a company does not specify the scope of its membership and therefore applies to all kinds of jobs, all employees of the company are deemed as employees with the same kind of job because of the enlarged effect of general binding force.

In principle, the effective scope of the collective agreement is confined to the two parties concerned: the employer and the labor union’s members, but in accordance with Article 35(General Binding Force) of the Trade Union Act, when a collective agreement is made with a majority of employees with the same kind of job employed under ordinary circumstances in a business or workplace, it shall apply to other employees with the same kind of job employed in the same business or workplace. In this case, employees with the same kind of job employed under ordinary circumstances means all employees with the same kind of job as a matter of fact in the company regardless of the employee position and type, fixed or unfixed employment period, or the name of the labor contract. In cases where the collective agreement does not specify the scope of its membership and so applies to all kinds of common occupations, all employees of the company are deemed as employees with the same kind of job because of the enlarged effect of general binding force. However, in cases where the collective agreement specifies a scope of membership for the type of job and excludes a certain group of employees from application of the collective agreement, it is hard to regard that certain group of employees as having the same kind of job under which the enlarged effects of the collective agreement are applied in terms of general binding force.

(4) The scope of working conditions in the collective agreement for technical (blue-collar) employees cannot be enlarged and applied to other white-collar or managerial employees.

If the members of a labor union, party to the collective agreement, consist of only technical(blue-collar) employees, and if working conditions are not the same between the technical employees(union members) and the white-collar or managerial employees(non-union members), the collective agreement is not applicable to white-collar or managerial employees in terms of the purpose of Article 35 of the Trade Union Act concerning enlarged application of the collective agreement.

2. General binding force at regional level

If two-thirds or more of comparable regular employees in a region are bound to the same collective agreement, it can be determined that the remaining comparable regular employees and their employers in the region shall also be subject to the collective agreement. For such extension of the coverage of a collective agreement, the competent authority, at the request of either party or both parties or on its own, shall bring the case before the Labor Relations Commission for resolution.

Ⅴ. Termination of Collective Agreements

A collective agreement is terminated in any of the following cases:
- Expiration of the term of validity;
- Withdrawal or termination of the collective agreement;
- Dissolution of a party to the agreement; or
- Unilateral termination of the automatic extension contract.

1) The effective period of the collective agreement expires or the collective agreement becomes invalid by one party cancelling the agreement during the autonomous extension period.

2) Unless otherwise provided in a separate agreement, if no new collective agreement is concluded by the expiry date of the existing agreement even though the parties have continuously engaged in collective bargaining before and after the expiry date, the existing collective agreement shall remain effective for up to three months after its expiry date.

3) If no new collective agreement is concluded after expiration of the extended effective term, the existing agreement shall be applicable only if the existing agreement specifically provides that it shall remain in effect until a new collective agreement is concluded. Provided, however, that any one party concerned may terminate the collective agreement by giving notice to the other party six months in advance.

For further questions, please
call (+82) 2-539-0098 or email bongsoo@k-labor.com

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