[Beyond the Scene] Confusion Sparked by 'N% Performance Bonus' Guidelines...Fuel Added by the Government

The controversy surrounding the 'N% performance bonus' shows no sign of abating. On September 8, the Minister of Employment and Labor stated that the 'N% performance bonus demand' strike by Samsung Electronics' labor union—which the minister personally mediated—was illegal, further intensifying the debate.

This is because the government effectively condoned and mediated an illegal demand. When the government, which should present clear principles, implements policies that shift over time—for example, 'it was right then, but now it's different'—both companies and citizens are left confused about what exactly to follow.

Yonhap News

The issue originally stemmed from the 'Guidelines on Items Subject to Labor Disputes Such as Management Performance Bonuses' released on September 3. As labor unions at large companies began demanding 'N% performance bonuses' and engaging in disputes, and as the Samsung Electronics union insisted that any relocation to local branches due to the 'three major mega projects' should require negotiation, the guidelines were hurriedly introduced in response.

However, a closer look at the details reveals contradictions that are disconnected from reality. According to the guidelines, demands to distribute a fixed percentage of sales or profit are not subjects for negotiation, whereas demands for a percentage of annual or base salary, or fixed-amount performance bonuses, are considered negotiable. This amounts to a semantic game in which demanding '10% of operating profit' is illegal, but demanding '1,000% of base salary' is legal.

Additionally, while union demands to withdraw or oppose new plant construction, relocation, overseas investment, business sales/acquisitions, or the introduction of new technology are deemed non-mandatory subjects for negotiation, the guidelines also state that such matters become negotiable if these decisions are expected to affect employee working conditions. This may appear to clearly define what is subject to negotiation, but by including management decisions as topics for dispute, the guidelines only add further uncertainty.

Going further back, all of this originated from the so-called 'Yellow Envelope Act' (amended Trade Union Act), which was implemented in March this year. Was the wide-reaching social impact of this law truly unforeseen at the time? On August 20 of last year—just days before the law's passage in the National Assembly—the policy chief at the time dismissed business community concerns, saying they were 'exaggerated' and maintaining that 'only mass layoffs or significant mergers and acquisitions would be subject to negotiation; it’s not as if anything can be negotiated.'

However, less than a year later, these assurances have turned into a sharp blow for industry stakeholders. The root of the current chaos is that the government has attempted to patch the loopholes created by the 'expansion of the scope of employers and labor disputes'—ushered in by the Yellow Envelope Act—with makeshift guidelines, only adding to the confusion.

As a result, companies now find themselves in the position of having to legally scrutinize whether even the smallest demands are subject to negotiation. As strikes become routine and legal risks escalate, companies' willingness to invest in the future and create jobs inevitably diminishes. Unless clear and consistent principles are re-established, this could come at a painful cost.

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