Attempting to do things in accordance with the time-off system going into effect on July 1, 2010, ‘Company A’, with 72 employees set the maximum time-off limit within the 2,000 hours stated in the limit announced by the Ministry of Employment and Labor when the Company completed collective bargaining for 2011.
However, the union demanded 2,500 hours of paid time-off and threatened a strong response like a general strike unless the employer accepted the union demand. Fearing disruption of production, Company A reluctantly accepted the demand for 2,500 hours of time-off and completed negotiations.
Seeking the opinion of an advising labor attorney, the employer discovered that allowing time-off exceeding the legal limit is a violation of the related laws and could be subject to punishment. Company A decided to allow only 1,500 hours of paid time-off in reality. The union claims that the employer’s decision is a clear violation of the collective agreement.
Q. Should ‘Company A’ grant 2,500 hours of paid time-off to its union?
Management and labor have a responsibility to abide by a collective agreement on the precondition that the bargaining is legitimate and proper since an illegal collective agreement is ineffective, but this does not mean a collective agreement against the law is not at all legally binding. If matters can be determined by an employer or if the law allows an employer and the trade union to reach their own agreement on the related matters, a contract signed between the two parties is valid even though individual provisions of the contract are against the law. This is a ’permissive rule’.
On the other hand, should the employer and trade union make an agreement on matters which the law does not grant autonomy to do so, such regulations are automatically discarded. This is a ’mandatory rule’. The difference between permissive rules and mandatory rules is provided in the law, however, many situations require taking into account the purpose of the law and the degree of importance of the details before determining whether ‘permissive’ or ‘mandatory’ rules apply.
The regulations regarding time-off can be seen as mandatory rules, given that Article 24 of the revised Trade Union Act says that the penalty for any industrial actions by trade unions taken to demand payment of wages to full time union officials shall be a fine not exceeding 10 million won.
Considering the characteristics of these regulations, any collective agreement which violates the time-off system is considered invalid; therefore, Company A’s collective agreement permitting 2,500 hours of time-off is legally ineffective. After signing the collective agreement, the two parties must report to the Ministry of Employment and Labor within 15 days, after which the Ministry must order correction of the illegal collective agreement so that it complies with the law. If the employer and union fail to follow the Ministry’s order, they shall be fined up to five million won (Article 93 of the Trade Union Act).
If the employer and union do not revise their collective agreement after receiving the order for correction, the collective agreement allowing time-off exceeding the permitted limit becomes illegal. Then labor and management must make another collective agreement within the limits of the law. If labor and management fail to make a legal agreement, the Ministry of Employment and Labor may set a deadline for revision of the agreement. If this deadline is not met, then the government will impose an additional fine on both parties.
The Ministry of Employment and Labor has recently ordered correction to an illegal collective agreement exceeding the time-off limit and has taken firm disciplinary action against the union for resisting Ministry orders. In this case, the employer was excluded from legal punishment in consideration of his efforts to comply with the law.
Q. Did the employer violate the collective agreement as the union argues?
If an employer grants the maximum time-off hours within the time-off limit, the union has no basis to claim that the employer has violated the collective agreement. The agreement on time-off hours exceeding the limit of law is not legally valid. The employer, however, may grant a certain amount of time-off until labor and management negotiate a legitimate collective agreement.
If the union continuously ignores attempts by the employer to set the time-off hours within the legal limits, the full-time union officials will not receive any wages, pursuant to Article 24, paragraph 2 of the Trade Union Act. Before revision of the collective agreement, the union should not discuss the legitimacy of the employer even should the employer grant only 1,500 hours of time-off, less than the maximum time-off limit under the law, or grant no paid time-off hours at all.
In principle, it is true that collective agreements should be observed and respected by both the employer and the union since the collective agreement is a mutual promise. However, illegal collective agreements and irrational demands erode the relationship between labor and management. In the interest of future development of stable industrial relations, consensus should be built that agreements must be kept and unreasonable demands not accepted.