Major automaker unions, including Hyundai Motor Company, are preparing for strikes as direct negotiations with subcontractor unions emerge as a new labor variable. With the implementation of the Yellow Envelope Law, the Labor Relations Commission has partially recognized the user status of Hyundai in relation to subcontractors, forcing automakers to consider negotiations not only with their headquarters unions but also with subcontractor unions.
On July 17, industry sources reported that the Ulsan Regional Labor Commission delivered a decision partially accepting a request for correction regarding the negotiation demands filed by the Korean Metal Workers' Union against Hyundai Motor Company.
The commission determined that Hyundai holds substantial user status over certain in-house subcontracted workers, such as cafeteria staff and security personnel.
The key factor in recognizing user status was the work environment. Although these subcontracted workers belong to partner companies, they work in spaces owned by Hyundai, including major facilities and conveyor belts, and cannot change their working conditions without the company's approval.
The commission concluded that the work performed by these subcontracted employees is essential to Hyundai's operations, and the company exerts significant influence over their working conditions and methods. User status was also recognized for some working conditions of employees from second-tier subcontractors, who do not have a direct contractual relationship with the headquarters.
However, the commission did not recognize user status for sales representatives working in separate locations, stating that there is no substantial supervisory relationship with Hyundai.
This decision is significant as it marks the first recognition of user status in the automotive industry following the implementation of the Yellow Envelope Law. There is growing interest in whether this will set a precedent for future labor relations between primary and subcontractor unions in the automotive sector.
Automakers typically engage in contracts with subcontractors across various fields, including production processes, logistics, security, and catering. The manufacturing process involves collaboration among headquarters employees, subsidiaries, and first to third-tier subcontractors. Hyundai reportedly has around 8,500 partner companies.
Industry experts believe that if negotiations with subcontractor unions materialize, it could complicate labor relations further, especially as negotiations with headquarters unions are already challenging.
Unions at Hyundai, Kia, and GM Korea have initiated partial strikes and other labor actions during this year's negotiations. The addition of primary and subcontractor negotiations could extend the negotiation period and increase labor management burdens, raising concerns among industry stakeholders.
Experts suggest that while this decision may not apply uniformly to all automakers immediately, disputes regarding the actual control of primary companies over subcontracted workers are likely to increase in the future.
Lee Jong-seon, head of the Korea Employment and Labor Education Institute, stated, "Other automakers will be watching how Hyundai navigates this issue, and since this is a newly introduced system, there will likely be some trial and error before it is fully established." Kim Dae-jong, a professor at Sejong University, emphasized that this decision sets a principle that primary companies must negotiate with subcontracted workers, but the scope of negotiations will likely be limited to areas where the primary company has actual decision-making power, such as working conditions rather than wages. He added, "Given the potential for long-term litigation, it may not be easy for primary negotiations to become the norm across the automotive industry immediately."
* This article has been translated by AI.
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