Companies Fulfilling Safety Obligations Under the OSH Act Face Employer Status 'Boomerang' Under Labor Law

"Difficult for Subcontractors to Make Independent Decisions on Work Environment"
Central Labor Relations Commission Finds Principal Contractor's Involvement Inevitable
"Fulfilling Legal Obligations Leads to Recognition of Employer Status"
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The fulfillment of the legal obligations of primary contractors to prevent industrial accidents is increasingly being used as grounds to recognize their duty to bargain with subcontractor unions, thereby increasing the burden on management. Since the implementation of the amended Trade Union and Labor Relations Adjustment Act (the Yellow Envelope Act), labor authorities have repeatedly acknowledged the employer status of primary contractors in matters related to industrial safety. As a result, the divergence in interpretation between labor and management regarding the scope of employer status has widened.

According to the industry on June 22, the Central Labor Relations Commission recently recognized the employer status of the primary contractors in cases involving POSCO and the Metalworkers’ Union and Plant Construction Union, as well as Hanwha Ocean and the Welliv Branch. In the POSCO case, the commission determined that POSCO exercises substantial control and decision-making authority over industrial safety matters, such as eliminating risk factors and installing safety equipment. This judgment was based on the fact that these measures are difficult for subcontractors to implement independently, making the involvement of the primary contractor inevitable.

In the Hanwha Ocean case as well, the commission acknowledged Hanwha Ocean’s employer status. Although the specific scope of this recognition will be clarified once the ruling is released, the industry interprets this as reflecting the reality that it is difficult to improve facilities and equipment such as kitchens, laundries, and commuter buses without the approval of the primary contractor.

The common factor in both cases is that the labor authorities determined that the primary contractors exerted substantial influence not because they directly intervened in the wages or personnel matters of subcontracted workers, but in areas such as industrial safety, working environment, and welfare facilities—domains that subcontractors find difficult to decide upon independently.

Currently, under the Occupational Safety and Health Act and the Serious Accidents Punishment Act, employers are obligated to improve the working environment to prevent industrial accidents even for those who provide labor but do not have a direct employment contract. In other words, when a primary contractor fulfills its safety obligations under the Occupational Safety and Health Act, it may be recognized as having employer status under the Yellow Envelope Act. The business community is concerned that fulfilling industrial safety management obligations could be used as grounds to recognize employer status, thereby expanding the scope of collective bargaining by subcontractor unions against primary contractors.

An official from the Korea Employers Federation criticized, “In large manufacturing facilities, if any subcontractor demands bargaining on the issue of industrial safety, employer status can be easily recognized. If compliance with the legal obligations of primary contractors is used as grounds to acknowledge employer status, it could significantly increase the burden on companies.”

In addition, management is concerned that employer status recognized in the field of industrial safety could be extended in the future to economic working conditions such as wages and welfare. In particular, they argue that if the duty to bargain is recognized even for matters that are difficult for the primary contractor to decide directly, the scope of responsibility may become excessively broad. On the other hand, the labor community insists that the primary contractor should be responsible for bargaining over all working conditions where it exercises substantial influence, and that economic demands, such as wage increases, should also be subject to negotiation.

If disputes arise over economic issues such as wages during future bargaining processes, further judgments from the Labor Relations Commission and the courts are expected. An official in the steel industry stated, “The issues addressed in previous commission rulings were limited to industrial safety, and employer status was recognized for industrial safety matters. However, whether wages are included is still open to interpretation, so additional judgments from the local and central commissions may be necessary in the future.” Hanwha Ocean also commented, “It is still difficult to determine whether wages are included or if it is limited to safety and work instruction areas.”

This content was produced with the assistance of AI translation services.