In Company Y(an auto parts maker), as wage negotiations did not go smoothly, its trade union refused to work on weekends and holidays, and reduced its production (70%→50%→30%), resulting in significant losses for carmakers. In another instance, trade union of Company H (an automaker), stopped working overtime and on holidays during collective bargaining. As a result, its parts suppliers risked bankruptcy.
The reason for trade unions to refuse overtime holiday work is to minimize damage to the union while maximizing the detrimental impact to the employer.
During collective bargaining, trade unions use various strategies including refusal to work. Trade unions understand that if they refuse to work, their members would not be paid under the principle of ‘no payment, no work’. So trade unions, in the early stages of negotiation, tend to stop working on holidays, or refuse to work overtime. For instance, Company H’s trade union refused to work on weekends from March to June, dissatisfied with the introduction of a new daytime consecutive two-shift system. This action by the union resulted in a production shortfall of over 83,000 vehicles, with a value of $1.5 billion USD (₩1.7 trillion KRW).
To extend working hours, an employer needs to receive consent from each employee. Article 53.2 of the Labor Standards Act stipulates “If the parties concerned reach agreement, the working hours may be extended by up to twelve hours per week”. For companies with trade unions, ‘agreement between the parties concerned’ may be replaced by collective bargaining stipulating such agreement. On 9th July 1997, the Supreme Court ruled “If the trade union collectively refuses to perform extended work which is generally accepted beforehand based on a mutual agreement, and eventually disrupts the company’s normal operations, such activity by the union is regarded as an industrial action” (No. 91do 1051). However, the Supreme Court also said that if there is no advance agreement between labor and management over holiday / extended work, the employer is not allowed to order its employees to work overtime / holidays (13th March, 1979: No. 763657).
Actions Taken by Company M’s Trade Union- The union, in opposition to the company’s plans to outsource the security guard service (5 union members),
– convened an emergency meeting
– demanded cancellation of the company’s outsourcing plan and called for all members to gather in front of the main entrance
– refused to work night-shift / extended hours and a slowing down of all work
– held a vote on strike
If company does not properly deal with the trade union’s refusal to work extended hours / holidays, union is likely to increase its action.
In response to such refusal to work extended hours / holidays, companies should take steps to minimize its losses.
First, if a trade union illegally refuses to perform extended / holiday work, the company must notify its employees that such actions are illegal and they should not participate. According to the Ministry of Employment & Labor’s administrative interpretation (4th April 2008), if a trade union refuses extended / holiday work which was usually performed before, it would be regarded as an industrial action under the Trade Union & Industrial Relations Adjustment Act. Therefore, without justifiable subject, purpose, procedure and method, it would be deemed an illegal industrial action. In this situation, where the trade union does not respect due process such as mediation or vote on strike, the company should immediately request that the trade union stop such illegal actions.
Second, regarding employees who participate in illegal strikes, the company should ensure that they are held civilly and criminally liable for damaging/obstructing business as a result of these strikes. The Supreme Court ruled “since truck drivers’ collective refusal to transport oil is an industrial action, it is legitimate for the company to take disciplinary measures against those who reject holiday work without justifiable procedure” (25th July, 1997: No. 96da29892).
Third, the company should not compensate union members for loss of the income caused by their refusal to work extended hours / holidays. If the company were to give bonuses to its employees in return for settling labor disputes, the trade union would never stop refusing work as a means of protest.
In collective bargaining, companies should stick to their principles when it comes to dealing with trade union’s refusals to work extended hours / holidays.
Recently, a growing number of trade unions, before staging all-out industrial actions, have been calling for their members to reject extended / holiday work in order to demonstrate their power. When a trade union illegally refuses to work extended hours / holidays, the company must request that the union stop its action and get back to work. If the union responds negatively to such a request, the company should then take disciplinary measures in accordance with its regulations, and hold the union civilly and criminally responsible for damages. As demonstrated in the cases for companies Y and H, when trade unions refuse to work overtime / holidays, companies need to handle them carefully to prevent the situation from escalating even further.