Labor-Management Council
Bongsoo Jung, Labor Attorney at KangNam Labor Law Firm
Ⅰ. Concept
The purpose of this Act is to maintain order in industry, and contribute to development of the national economy by promoting the common interests of labor and management through joint participation and cooperation. This Act concerning the Promotion of Worker Participation and Cooperation(hereby, called the Worker Participation Act) provides for a consulting organization, known as the labor-management council(hereinafter also referred to as the Council).
All businesses that ordinarily hire more than 30 persons shall establish a Council. The number of employees hired ordinarily shall meet the standards of Article 14 of the Labor Standards Act, with the exception of the business owner, business representative, and all who are working in favor of the employer.
The unit for its establishment shall be a unit of business or a workplace that is given the authority to outline working conditions. For two different working places for one company, a separate workplace can be established for each. The Council of the Worker Participation Act shall not affect collective bargaining of the labor union, or other union activities.

1. Employers who have 30 employees or more shall establish a labor-management council in the main office and are permitted to establish a labor-management council in the workplace.
According to the Labor-Management Council Act(hereinafter the LMC Act), a labor-management council shall be established in a unit of the business or workplace where there are at least 30 normal employees, so that the employer shall promote employee welfare and healthy development of a business and workplace. The number of employees related to the establishment of the labor-management council shall be estimated on the basis of each business or workplace. In cases where there are fewer than 30 employees in one workplace, the employer does not have to establish a labor-management council. In accordance with Article 4(2) of the LMC Act and Article 2(2) of the Enforcement Decree, where the total number of workers engaged in one business is 30 or more, even if the workers in one business are dispersed in different regions, a labor-management council shall be established at the principal office, and each workplace can also establish a labor-management council.

2. Non-profit businesses or workplaces are not exempt from the duty to establish a labor-management council.
A labor-management council shall be established in each business or workplace ordinarily employing 30 employees or more, which is vested with the right to decide working conditions. A non-profit business or workplace is not exempt from the duty to establish a labor-management council.

3. In cases where one business consists of several workplaces in different regions, the employer shall establish an overall labor-management council combining several workplaces.
In cases where one business consists of several workplaces in different regions, the employer shall establish an overall labor-management council combining several workplaces(including the headquarters). Accordingly, in cases where workplaces are in Seoul, Jinju, and Daegu, the employer shall establish and operate an overall labor-management council combining the three workplaces. The representative director shall attend the combined labor-management council meetings and the employee members shall be composed of members representing each of the three workplaces. On the other hand, the employer does not have to establish and operate a labor-management council in each workplace, but, if possible, it is recommended. In this case, the labor-management council in each workplace can be held with the attendance of the top-level managers(plant manager, etc.) and employee members from that workplace.

4. In cases where the company has been divided into two entities, a labor-management council shall be established and operated for each.
According to the LMC Act, the labor-management council is different from a labor union. A labor union is organized for the purpose of maintaining and improving working conditions and enhancing economic and social status. However, the labor-management council is a consulting organization for the promotion of employee welfare and healthy development of the workplace, and shall be established in each business or workplace ordinarily employing at least 30 employees, which is vested with the right to decide working conditions.


Ⅱ. Composition of the Council
The Council shall be made up of an equal number of members representing the employer and the employees, the number of which shall be at least three but fewer than ten.
While members representing employees shall be elected by the employees, labor union representatives or those recommended by a labor union shall be the employee representative in cases where the labor union is formed by a majority of employees. Employee members of a business or workplace where such a labor union consisting of a majority of employees fails to organize shall be elected by direct and secret vote. If this is deemed impossible due to certain characteristics of the business or workplace, employees may elect their representatives in proportion to the number of employees in different departments. Then, the representative shall be elected by direct and secret vote with majority participation of the voters. However, members representing employers shall be representatives of the business or workplace concerned or the persons designated by such representatives.
The tenure of membership shall be three years until renewal. A representative shall continue to perform his duties until a successor is elected even if the term of office has expired. Members shall not work exclusively for the Council, but shall be compensated for their services to the Council, which exists to maintain the neutrality of members’ status and to make certain of work efficiency and impartiality. However, the time spent by the members to attend meetings of the Council shall be regarded as hours devoted to work. The employer shall not take disadvantageous action against the members’ interests in relation to the performance of their duties as members of the Council.

1. The members of the labor-management council representing employees in a unit of a plant where there is no labor union or employee representative shall be elected in a direct and secret vote by the employees.
Article 6 of the LMC Act stipulates that, while members representing employees shall be elected by employees, labor union representatives or those recommended by a labor union shall be the employee members in cases where the labor union is formed by a majority of employees. The employee members shall be employees in the corresponding business or workplace and the majority of employees shall be estimated in a unit of the corresponding business or workplace. Accordingly, in establishing a labor-management council in a unit of the workplace, the employee members shall be recommended by the labor union in cases where the labor union is formed by a majority of employees. If the union is formed by less than a majority of employees, the employee members shall be elected by direct and secret vote by the employees.

2. Employer behavior that may affect the election of employee members directly or indirectly shall be prohibited.
1) According to Article 6(2) of the LMC Act and Article 3 of its Enforcement Decree, the employee members shall be elected by a free choice of all employees in cases where there is no labor union representing a majority of employees. This means that employees shall voluntarily compose an election administration commission that can implement the registration of candidates and manage the election.
In this regard, Article 10(1) of the LMC Act stipulates that, No employer shall intervene in or interfere with an election of the employee members. This means that the employer shall not take any action directly or indirectly to influence the result of the election.
The employer shall not only be prohibited from actions designed to influence winning or losing of election for a particular candidate, but shall also not influence decision-making about general matters related to the election of an employee commission, like the establishment or activities of an election administration commission. Article 11 of the LMC Act stipulates an order of correction for these violations.
2) The employer of the LMC Act is the identical employer stipulated in Article 15 of the Labor Standards Act in accordance with Article 3(3) of the LMC Act: The employer means a business owner, or a person responsible for management of a business or a person who acts on behalf of a business owner with respect to matters relating to workers. The term, a person who acts on behalf of a business owner with respect to matters relating to workers means a person given by the employer a certain range of responsibilities and authority for the determination of working conditions like personnel, wages, welfare, and labor management, and command and supervision for implementation of labor service. This shall not be estimated by a formal job title, such as Section Manager or Senior Manager, but shall be estimated in an individual and concrete manner on the basis of job characteristics and actual work performance.

3. Although the representative of a labor union was dismissed and filed a dismissal case, he cannot maintain his status as employee member because he is not an employee under the Labor Standards Act due to his dismissal.
The term Employee in Article 2 of the LMC Act is defined in accordance with the Labor Standards Act. A representative in a labor union that was formed by a majority of employees can become an employee member under Article 6 of the Act and he/she must become an employee under the Labor Standards Act. Accordingly, although a representative of a labor union was dismissed and filed a dismissal case, he/she cannot maintain his status as employee member because he/she is not an employee under the Labor Standards Act due to his/her dismissal.

4. A union officer of an upper level labor union cannot become an employee member of the labor-management council.
The labor-management council is a conversational organization between labor and management, involving only employees and employers in the corresponding workplace. This does not only apply to a compulsory labor-management council under Article 4(1) of the LMC Act, but also to an arbitrary labor-management council under Article 4(2) of the LMC Act. Accordingly, the employee members in the labor-management council established per workplace shall consist of only employees engaged in that workplace, so a union officer of an upper level labor union cannot become a member.

Ⅲ. Operation of the Council
1. Council bylaws
A Council shall establish bylaws governing its organization and operations and shall submit a report on them to the Minister of Employment and Labor within fifteen days from the date of establishment. Any amendment thereto shall also be submitted to the Minister of Employment and Labor within fifteen days(Article 18 of the LMC Act).
Where the bylaws of the Council are made or modified, they shall be passed by decision of the Council. The bylaws of the Council shall contain such matters as listed in the following:
① Number of members;
② Matters relating to the procedures for election of employee members and registration of candidates;
③ Matters relating to the qualification of employer members;
④ Matters concerning hours regarded as hours worked by Council members;
⑤ Matters concerning the calling of meetings, sessions and operation, etc. of the Council;
⑥ Matters relating to the method of and procedures for voluntary arbitration; and
⑦ Matters relating to the number of grievance-handling members and to the handling of grievances, etc.

2. Meetings
In general, the Council shall hold meetings once every three months, but it can hold additional meetings if deemed necessary. The chairman shall call for and preside over the meetings of the Council. If the representative of either labor or management requests a meeting to be held, specifying the purpose of the meeting in writing, the chairman shall call for a meeting of the Council. The chairman shall notify each member of the date, time, place, agenda, etc. of the meeting seven days prior to the meeting.
Meetings shall open in the presence of a majority of employee members and employer members respectively, and a resolution shall be passed by a vote of more than two-thirds of all members present. Council meetings shall be open to the public; however, they may be closed to the public upon resolution of the Council.
The minutes shall include the signatures and seals of all attending members and shall be preserved for three years from the date drawn.

Ⅳ. Council Functions
The function of the Council is to promote employee interests and contribute to managerial rationalizations by consulting about specific items between labor and management.

1. Matters subject to consultation
Matters subject to consultation are mainly focused on production and personnel & labor management, and those matters discussed at the meetings of the Council are as follows:
① Productivity improvement and gain sharing
② Recruitment, placement, education and training of workers
③ Handling of worker grievances
④ Improvement of occupational safety and health and other aspects of the work environment and promotion of worker health
⑤ Improvement of personnel and labor management systems
⑥ General rules for employment adjustment, such as assignment and transfer, retraining and dismissal of workers for managerial or technological reasons, etc.
⑦ Administration of working hours and recess hours
⑧ Improvement of wage payment methods, wage structure, wage system, etc.
⑨ Introduction of new machines and technologies or improvement of work processes
⑩ Establishment or revision of rules of employment
⑪ Establishment of employee stock ownership plans and other support for the creation of worker wealth
⑫ Matters concerning rewards given to workers for their work-related inventions, etc.
⑬ Promotion of worker welfare
⑭ Installation of employee surveillance equipment within a workplace; and
⑮ Matters concerning the maternity protection of female workers and support for reconciliation between work and family life.
⑯ Other matters concerning labor-management cooperation

2. Matters subject to Council resolution
The employer shall seek a resolution from the Council on each of the following
① Establishment of basic plans for the education and training and skills development of workers
② Setting up and management of welfare facilities
③ Establishment of an employee welfare fund
④ Matters not resolved by the grievance handling committee
⑤ Establishment of various labor-management cooperative committees.
Matters subject to Council resolution are regulated under the LMC Act to promote the common interests of labor and management through participation and cooperation to prevent the employer from implementing them on the basis of his/her sole judgment.
Meetings shall open in the presence of a majority of worker members and employer members, and resolutions shall be passed by a vote of at least two-thirds of all members present. The matters decided by the Council shall be publicized immediately through company broadcasting, bulletin boards, posting notices and other pertinent methods. The two parties shall be equally responsible for implementing them.

3. Matters to be reported
The employer shall report and explain in good faith at a regular meeting the following:
① Matters concerning overall management plans and results
② Matters concerning quarterly production plans and results
③ Matters concerning manpower plans; and
④ Economic and financial conditions of the enterprise.
If the employer regularly reports and explains the above matters, a mutual trust in information sharing builds easily between labor and management. Thus, the employer shall report and explain matters faithfully and formally. In cases where the employer fails to give reports or an explanation, employee members may request relevant documents, and the employer shall respond in good faith to such requests. If the employer does not submit the appropriate data, he/she may be liable under penalty clauses.

(1) The concrete realm of matters subject to consultation and matters subject to the Council’s resolutions
Matters subject to consultation in accordance with Article 19 of the LMC Act are items to promote the common interests of labor and management, which shall be suggested by one or both parties for consultation and be dealt with by the Council. The concrete realm of matters subject to consultations shall be determined by voluntary discretion of labor and management on the basis of general principles and criteria. Accordingly, the employer shall not have a duty to go through prior consultation with the Council for individual items, such as employment of specific individuals, nor need to issue the council’s resolutions(in accordance with Article 20 of the LMC Act), even though some items for consultation were suggested by either labor, management, or both. The realm of employee training and skill development plans among the matters subject to Council resolution shall be standard plans for yearly training hours, major training items, etc. in general job training, cultural education, and other training related to the employee’s skills training, but does not have to include concrete implementation plans.

(2) The concrete realm of matters subject to consultation shall be determined voluntarily by labor and management. The consultation does not require a precondition for agreement and industrial actions are not allowed in the event of non-agreement.
According to the LMC Act, the concrete realm of matters subject to consultation shall be determined voluntarily by labor and management, but consultation from the Council does not mean its agreement is a precondition and industrial actions are not allowed if there is no agreement from the Council. In cases where Council agreement has been reached(and a resolution passed to that effect) on matters subject to consultation in accordance with Article 19(2) of the LMC Act, both employees and employer shall enforce these matters in good faith in accordance with Article 23 of the LMC Act. If the employer does not implement matters determined by the Council, he/she may be punished under Article 30 of the LMC Act.
(3) On matters subject to consultation, it is enough for labor and management to consult sincerely. The employer does not have to reach agreement with labor or follow the decisions made.
According to Article 19 of the LMC Act, on matters subject to consultation, it is enough for labor and management to consult sincerely. The employer does not have to reach agreement with labor or follow the decisions made. Accordingly, if matters concerning institutional improvement for personnel management are consulted on sincerely, this is enough even though the employer does not follow Council resolutions or agreements.
(4) Whether Council resolutions concerning working condition are as effective as that of the collective bargaining agreement
The purpose of the LMC Act is to promote the common interests of labor and management through their joint participation and cooperation. The LMC Act shall also require establishment of a labor-management council to be able to consult or determine matters concerning personnel and management, excluding matters concerning wages and working conditions subject to collective bargaining. Accordingly, it is taken for granted that matters concerning wages and working conditions shall be determined through collective bargaining. However, if both parties agreed on wages and working conditions in a labor-management council in order to conclude a collective agreement, the Council meeting shall be regarded as part of collective bargaining.
(5) Consultation regarding the number of full-time union officers in a labor-management council is not among the ‘matters subject to consultation with the labor-management council’.
Article 19 of the LMC Act regulates matters to be consulted on by the labor-management council. As paragraph 14(other matters as to cooperation between workers and employers) of Article 19 includes consultable matters other than those stated, the realm of matters shall be estimated individually and concretely, but shall be limited to matters within the purpose and intent of the LMC Act. Accordingly, in accordance with Article 24 of the Trade Union Act, matters related to full-time union officers are matters concerning labor union activities, and consulting on the number of full-time union officers in the labor-management council is not among the ‘matters subject to consultation with the labor-management council’ and does not correspond to the purpose and intent of the LMC Act.
(6) In establishing employee training plans and skill development, seeking a resolution from the labor-management council is required, but this does not mean that a Council resolution is necessary whenever the company implements training and education.
Article 19 and Article 20 of the LMC Act stipulates matters subject to consultation and matters subject to Council resolutions. The matters subject to Council resolutions shall be items that the employer shall consult and determine in the labor-management council in advance, which is distinct from matters subject to consultation not necessarily requiring resolution. Article 20 of the LMC Act requires the employer to seek labor-management council resolution in establishing employee training plans and skill development, but this does not mean that it is necessary to seek Council resolution whenever the company implements training and education. The employer shall sincerely implement the items decided by the Council or else will be fined 10 million won or less. However, there is no penal provision in the LMC Act when the company does not take issue on matters subject to a Council resolution.
(7) Although a matter concerning wages was agreed on by a labor- management council, the decision cannot be effective in accordance with the LMC Act. However, if the matter was concluded as part of a collective bargaining process, it is effective as a collective agreement.
In estimating the content of the Council’s meeting minutes, a certain meeting did not deal with matters subject to consultation stipulated by Article 20 of the LMC Act, but rather dealt with collective bargaining items. Accordingly, the items agreed upon are not effective according to LMC Act. However, if the agreement was concluded as a collective agreement relating to wages, it is effective as a collective agreement.
(8) Employee members of the Council do not have authority to agree to unfavorable changes to working conditions on behalf of other employees.
The labor-management council system is designed to maintain order in the industry by promoting the common interests of labor and management through joint participation and cooperation, which is distinct in purpose from a labor union. Although the company stipulates matters concerning working conditions in the matters subject to consultation, employee members of the Council who were elected by the employees do not have authority to agree to unfavorable changes to working conditions on behalf of other employees.
(9) It is null and void for a labor-management council to agree that the service period for overseas assignments will be exempted from calculation of the total service period.
The consecutive service period to calculate severance pay shall be a period from the first service date to the last day of service. Through mutual agreement in a Council, the service years of employees assigned overseas is regarded as a period included in calculations for interim severance pay and their severance pay will be calculated from the time after the adjustment period of severance pay. Even though the agreement is as effective as a collective agreement, the agreement violates lawthe Labor Standards Actand is therefore null and void.
Ⅴ. Grievance Handling
Grievances refer to individual complaints or difficulties concerning employees’ working environment or working conditions. A grievance is a complaint from an individual employee, which is different from industrial disputes related to collective complaints. Compulsory procedures are established to prevent individual employee complaints from enlarging into collective complaints. They also contribute to building mutual reliability in the process of handling such grievances.

1. Grievance handling representatives
All businesses or workplaces that ordinarily hire 30 employees or more shall have a grievance handling representatives to hear and handle workers’ grievances. There shall be a maximum of three grievance handling representatives, representing labor and management, who shall be elected from the Council members by the Council in a business or a workplace where a Council is established, and shall be appointed by the employer in a business or a workplace where no Council is established. Tenure, status and treatment of grievance handling representatives are the same as those of the labor-management council.

2. Procedures for grievance handling
If a worker has a grievance, he/she may report it to a grievance handling representative verbally or in writing. In this case, the grievance handling representative who receives such a report shall handle it without delay. When a worker takes a grievance to the grievance handling representative, he/she shall be informed of the measures taken and results thereof within ten days by the grievance handling representative. The grievance handling representative shall draw up and keep a ledger relating to the receipt and handling of grievances and keep it for one year.


Ⅵ. Labor-Management Councils and the Labor Union
A labor-management council shall be established in each business or workplace that ordinarily employs 30 employees or more and is vested with the right to decide the working conditions, in accordance with the LMC Act. It refers to the consulting organization designed to promote the welfare of employees and healthy development of the company through joint participation and cooperation. This labor-management council is distinct from a labor union, as a labor union means an organization(or associated organization) of workers, which is formed in a voluntary and collective manner upon worker initiative for the purpose of maintaining and improving their working conditions and enhancing their economic and social status. A labor union can be organized by voluntary decision of the employees in accordance with Article 5 of the Trade Union Act. Also, Article 5 of the LMC Act regulates that collective bargaining of the labor union and other activities will not be affected by the LMC Act.