Ⅰ. Concept

Article 33 of the Constitution guarantees three basic rights of labor to enhance working conditions, and the Trade Union & Labor Relations Adjustment Act(hereinafter referred to as the Trade Union Act) was established towards guaranteeing those rights in practical terms. Labor unions and employees are free from civil and criminal liability for justifiable industrial action and shall not be treated unfavorably in personnel management.
Labor unions can acquire better working conditions through collective agreements, and while engaging in collective bargaining with the employer, they can request better wages, working hours, and welfare, etc. At the beginning of collective bargaining, employers often reject union demands because labor costs directly affect overall production costs. Labor unions then collectively refuse to provide labor service in order to achieve their demands, and obstruct normal business operations. The employer counteracts this with the no pay, no work principle, which deprives the employees participating in strikes from receiving their wages. This confrontation between labor union and company then leads to conclusion of an adjusted agreement, called the collective agreement.
Here, if the employer is allowed to hire persons unrelated to business operations or use replacements during a period of industrial action - if contracting or subcontracting out is allowed - so as to continue work which has been stopped by that industrial action, a strike will not affect an employer as much as planned and the labor union will be discouraged from going on strike and therefore more easily agree to employer proposals. In order to prevent practical infringement of this right to take industrial action, it is stipulated in the Trade Union Act that hiring new employees or outsourcing jobs which have been interrupted by industrial action is not permitted. Therefore, provisions restricting replacement of workers during strikes are protections designed to maintain the balance of power between the labor union and the employer.
Here, I would like to concretely review the concept and content of these restrictions on the replacement of workers involved in strikes, and essential public services where this replacement is allowed.

Ⅱ. Concept behind Restrictions on Employee Replacement

Article 43 of the Trade Union Act regulates that no employer shall hire persons unrelated to their business operations, or use replacements during a period of industrial action so as to continue work which has been stopped by that industrial action. This includes contracting or subcontracting work out(Paragraph(1) and(2)). Penal provisions are implemented in the event of violations. Article 16 of the Act on the Protection, etc. of Dispatched Workers(Employee Dispatch Act) also regulates that a sending employer shall not dispatch an employee to a workplace where industrial action is underway to perform the work stopped due to such industrial action.
The purpose for restricting employee replacement during a period of industrial action is to protect the employee right to strike according to the Constitution, in practical terms. Restrictions on employee replacement are institutional mechanisms designed to guarantee effectiveness of industrial action by a labor union, and are also unavoidable in realizing the principle of equality in collective bargaining. If an employer is allowed to take unrestricted counteraction against a labor union’s industrial actions, those industrial actions lose all effectiveness as a tool for the union to achieve its goals.

Ⅲ. Scope of Restrictions on Employee Replacement

1. The meaning of persons unrelated to business operations

Judicial rulings on the concept of business generally explain that business refers to an independent company organization operating continuously and organically in one managerial body such as an individual business or corporate entity. Subsidiaries within a larger company are considered different businesses. However, a particular company with headquarters in one city and plants or branch offices located in other areas is regarded as one business.
The restriction on the use of persons unrelated to business operations means that persons who are related to business operations can be used as replacements during a period of industrial action. This makes it possible to continue the work stopped during industrial action, with union members not participating in the strike, non-union members, and other employees who are related to the company’s business operations.


2. Restrictions against hiring new employees

Article 43(1) regulates that no employer shall hire persons who are not related to that employer’s business operations, or use replacements during a period of industrial action so as to continue work which has been stopped by that industrial action. In this case, there are two representative judicial rulings.

1) An employer hired new persons before a period of industrial action, with the intent of continuing to perform the work of strikers during the period of industrial action. This case violated Article 43 of the Trade Union Act.

2) An employer hired new persons gradually to fill vacated positions. Even though these persons were used to continue the work stopped by later industrial action, this replacement was justifiable exercise of the employer’s personnel management rights as they were not hired specifically to replace the workers taking industrial action.

3. Conditions for justification of counteractions by a labor union

Judicial rulings on the conditions for justification of labor union counteractions against replacement by an employer during a period of industrial action can be divided into justifiable replacement and illegal replacement.

1) The court determined obstruction of business as a violation in cases where the labor union members entirely and exclusively occupied company premises to block the employer’s justifiable replacement of workers to perform work stopped due to industrial action.

2) As long as strikers did not use violence or destruction or threatening actions to block an employer’s illegal replacement of workers to continue work stopped due to industrial action, the court ruled that considerable counteractions are acceptable.

4. Applicability to illegal industrial action

The provision placing restrictions on replacement may be applicable to justifiable industrial action only. Since there are provisions protecting labor union members from civil and criminal liability during industrial action according to the Trade Union Act, the employer can continue business operations by using replacements to do the work stopped due to illegal industrial action. That is, an employer can hire new persons or use employee replacements to prevent damage caused by a labor union’s illegal industrial actions.
However, in reality there are many cases where determining whether industrial action is justifiable or not is complicated and cannot easily be determined outside of a courtroom. In cases where an employer hires new persons or uses as replacements those unrelated to business operations on the assumption that a strike is illegal, this can infringe on a labor union’s right to take industrial action. Therefore, employee replacement should be prohibited in principle in cases where the justification for industrial action is unclear, but used in cases where the industrial action clearly has no justification.
        
5. Prohibition against contracting or subcontracting work out during periods of industrial action

Article 43(2) of the Trade Union Act makes it very clear that no employer shall, during a period of industrial action, contract or subcontract out work which has been suspended because of that industrial action. Provided, in cases where a subcontractor company’s labor union takes industrial action and the subcontractor company cannot carry out the duties assigned under the service contract with the contractor company, the contractor company can terminate the service contract or continue the interrupted work with its own direct employees, and hire new employees or make a subcontract agreement with other companies. There are no related judicial rulings, but Ministry of Employment and Labor Guidelines interpret that such replacement actions are not in violation of the provision to prohibit employee replacement.
In a related case, a district(gu) office and a cleaning company entered into a service contract for the cleaning company to collect household trash in that district. When the cleaning company’s labor union took industrial action and stopped work, the gu office was allowed to collect the trash using its own employees and have other cleaning companies carry out this duty. This was determined as not in violation of the Trade Union Act’s related provision because the gu office was not the employer of the subcontract workers involved.

6. Prohibition against employee dispatch

Article 16 of the Employee Dispatch Act regulates that a sending employer shall not dispatch an employee to a workplace where industrial action is underway to perform the work stopped due to such industrial action. If employee dispatch is allowed, it has the same effect as replacing the workers engaged in industrial action with persons unrelated to business operations. This kind of replacement is prohibited, whether by the using employer or the sending employer. Provided, this provision was designed to prohibit new employees from being used to replace striking workers during a period of industrial action, but using dispatched employees who are currently dispatched at the workplace to carry out work stopped at the same workplace by industrial action is permitted.


Ⅳ. Comments

The restrictions on replacing employees during industrial action are designed to protect, in practical terms, the three basic rights of labor in line with an employer’s ownership rights. These restrictions on employee replacement: ① are only applicable to operations during the industrial action, ② forbid hiring of new employees unrelated to business operations, and ③ apply only during justifiable industrial action. This provision has received criticism that prohibiting replacement of employees to do the work stopped during periods of industrial action restricts an employer’s ownership right and allows serious damage to business operations. However, in reality if unrestricted employee replacement is allowed, strikes would have no meaning to or effect on the employer. This would make the basic rights of labor meaningless. Therefore, Article 43 of the Trade Union Act is necessary to realize the principle of a balance of power between labor and management in determining working conditions.