Korea Employers Federation (KEF) argued that high-level management decisions by companies, such as performance allocations linked to operating profits or the construction of new factories, should be excluded from the scope of labor disputes.
The federation suggested introducing labor flexibility measures to ease working hours and employment regulations in mega-special zones.
KEF made the remarks in a statement released today (August 17) titled "Business Recommendations on Recent Labor Issues."
KEF explained that performance allocations linked to operating profits are neither matters concerning working conditions nor business management decisions affecting working conditions, meaning they cannot be subject to collective bargaining, and strikes staged for such purposes can hardly be justified.
The federation noted that the Labor Standards Act and its enforcement decrees do not stipulate performance bonuses as working conditions, and the Supreme Court has also denied their character as wages on the grounds that they lack a close connection to working conditions and are closer to the ex-post distribution of business performance.
KEF stated that even in major economies, it is rare for labor and management to agree on fixing a certain percentage of operating profits as performance bonuses.
In the United States, performance bonuses are paid differentially based on individual performance, and compensation committees under boards of directors make such decisions at big tech companies.
France operates a statutory profit-sharing system with legal caps on individual payouts, while KEF expressed concern that demands for operating profit-linked performance bonuses, if spread across industries, could dampen investment and research and development (R&D) while intensifying labor-management conflicts.
Accordingly, the federation urged revising the definition of labor disputes under the Trade Union and Labor Relations Adjustment Act to exclude high-level management decisions such as profit sharing from the scope of labor disputes, and called on the Ministry of Employment and Labor to clarify through enforcement decrees and ordinances that they are not subject to collective bargaining.
Regarding the government's Honam region semiconductor mega project, KEF mentioned moves by the labor sector to turn the establishment of semiconductor plants into a collective bargaining agenda, stating, "The establishment of a new factory is a high-level management decision by business owners and cannot be subject to collective bargaining."
It further argued that supplementary legislation is necessary to amend the Trade Union Act to exclude high-level management decisions, such as establishing new plants, from the scope of labor disputes.
KEF also called for strengthening labor flexibility to enhance the competitiveness of mega-special zones.
The rationale is that as competing countries such as the United States, Japan, and China flexibilize working hours and employment forms, domestic companies should also be provided with an environment for flexible workforce management.
Specifically, it proposed reflecting the following in the Special Act on Mega-Special Zones: ▲ expanding the management unit for extended working hours (currently weekly) to monthly, quarterly, semi-annual, or annual bases; ▲ exempting R&D, professionals, and core startup personnel from working hour regulations (white-collar exemption); ▲ extending the periods for flexible and selective working hour systems; ▲ extending the employment period for fixed-term workers (currently two years); and ▲ expanding tasks eligible for worker dispatch.
Lee Dong-근, Executive Vice Chairman of KEF, stated, "The technology hegemony competition in the era of the AI and semiconductor grand transformation ultimately boils down to how swiftly and flexibly talent can be deployed," adding, "High-level management decisions such as operating profit performance allocations and factory establishment must not become subjects of labor-management conflict, and labor flexibility must be backed up for mega-special zones to serve as the starting point for fostering national strategic industries."
(Photo provided by KEF, Yonhap News)
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