1. Concept and Contracting Procedures of Collective Agreements

(1) Concept of collective agreement
A collective agreement is an agreed set of rules between the labor union and the employer concerning wages, working hours, and other issues. Even though it is an agreement on working conditions between the two parties, this agreement has normative effects on labor relations.

(2) Contracting procedures for collective agreements

Article 31 (Drawing up of Collective Agreements)
① Collective agreements shall be in writing, and both parties concerned shall sign their names or affix their seals thereto.
② The parties to collective agreements shall report the conclusion of collective agreements to the Administrative Authorities within fifteen days of the date of such conclusion.
③ If any provision of a collective agreement is determined to be unlawful, the Administrative Authorities may, upon resolution of the Labor Relations Commission, order amendment of that collective agreement.


A collective agreement that was not prepared in the method stipulated in Article 31 (1) of the Trade Union Act is null and void. Article 31 (1) of this Act stipulates that a collective agreement shall be prepared in writing and both parties shall affix their signatures and seals thereto. The purpose of the procedure is to clarify the details of the collective agreement, to prevent any future disputes surrounding those details, and to confirm the final positions of both parties to ensure truthfulness in the collective bargaining process. Therefore, if collective bargaining does not follow this procedure, it cannot remain effective.

1) The agreement shall be written
A collective agreement may be a general agreement on labor relations, but the contents shall be in writing.

2) The agreement shall be effective only if it is signed and sealed
The representative of the labor union or union chairman shall sign and seal, and the business owner shall do the same on the company's behalf.

3) The agreement shall be reported
The parties to the collective agreement shall make a report of the collective agreement to administrative agencies within fifteen days from the date of its conclusion. However, this report of the collective agreement is not a formal approval; therefore, it is unrelated to the effect of the collective agreement.

2. Valid Term of Collective Agreements


Article 32 (Valid Term of Collective Agreements)
① No collective agreement shall have a term of validity exceeding two years.
② In cases where a collective agreement does not specify a term of validity or has a term exceeding the period stipulated in paragraph (1), it shall automatically be deemed to be two years.
③ 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. If no conclusion is made on a new collective agreement 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.


① No collective agreement may be effective for longer than 2 years. The effects of a collective agreement are lost when its term of validity is exhausted, but the parts concerning employee working conditions (normative section) shall remain effective as being part of the contract of employment (Article 32).

② If the employer and the union have yet to reach a collective agreement despite their good-faith commitment to working out a new agreement to replace the existing one, the existing collective agreement shall remain valid for 3 more months from the date of its termination.

③ If there is an additional agreement within the document that the existing collective agreement shall remain valid after its effective duration expires and until a new agreement is concluded, the existing agreement shall be applicable in that way. However, either party may terminate the existing collective agreement by giving notice to the other party 6 months before the date the party wants the agreement to be terminated.


The purpose of an upper limit for the effective period of a collective agreement
If a collective agreement were allowed to remain effective for an excessively long period of time, it would probably serve as an unnecessary restriction to both parties. Furthermore, it would be contradictory to the fundamental purpose of the collective agreement, which is to maintain or improve working conditions and stabilize labor relations. Accordingly, in order to keep a collective agreement relevant, it is necessary to put an upper limit on the effective term. Supreme Court ruling on Feb.9.1993, 92Da27120


3. Contents 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. Article 33 of the Labor Union Act.


(1) Normative Section


Labor 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 who falls under any of the following subparagraphs 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 wages, 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 effect and direct effect. Article 33 of the Labor Union Act


① The compulsory effect is the 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 The 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. MOEL Guidelines: Nosa relations team-1049, on Apr.14,2006.


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. Supreme Court ruling on Feb. 23, 1996, 94Nu9177.


2) Although a newly concluded collective agreement was less favorable than the previous collective agreement, the new collective agreement will apply. MOEL Guidelines: Union 01254-623, on May30,1995.

3) Concluding a collective agreement that is unfavorable to employees is still effective. Supreme Court ruling on Sep. 29, 2000, 99Da67536.


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. Supreme Court ruling on Jun. 9, 2000, 98Da13747.


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. Supreme Court ruling on Dec. 27, 2002, 2002Du9063.


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. Supreme Court ruling on Sep. 29, 2000, 99Da67536.


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. Supreme Court ruling on Sep. 29, 2000, 99Da67536.


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. Supreme Court ruling on Jan. 14, 1994, 93Da968.


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. Supreme Court ruling on Mar. 27, 2014, 2011doo20406


(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 MOEL Guidelines: Nojo 01254-605, on May26,1993.

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. MOEL Guidelines: Nojo 68107-1065, on Nov.16, 2000.


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 Supreme Court ruling on Sep. 11, 1992, 92Nu7733.


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.

4. 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. Article 35 of the Labor Union Act


1) By general binding force, collective bargaining is applicable to all employees including non-union members. MOEL Guidelines: Nosa relations team 776, on Mar.22,2006.


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. Supreme Court ruling on Dec. 26, 2002, 2001Da36504.
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. MOEL Guidelines: Nojo 01254-27, 1999.01.11.


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. MOEL Guidelines: Nojo 01254-869, 1998.12.24..


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. MOEL Guidelines: Nojo 01254-218, Mar. 10, 1992.

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. Article 36 of the Trade Union Act


5. 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. Article 32 of the Trade Union Act, ③


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.