Guidelines for Enforcing the Yellow Envelope Act, Limiting the Scope of Bargaining on Performance Bonuses and Management Decisions

The Ministry of Employment and Labor announced on the 3rd an implementation guideline that excludes demands for performancebased bonuses tied to company profits and management decisions such as factory relocations and sales from the mandatory bargaining subjects of labor disputes. This guideline clarifies the interpretation standards of the revised Trade Union and Labor Relations Adjustment Act, and includes content that narrows the scope of disputes between labor and management. According to the guideline, performancebased bonuses that require a certain percentage of sales, operating profit, or net income are not subjects of bargaining or dispute under the Trade Union Act, and the establishment or relocation of factories, business sales or acquisitions, and the introduction of artificial intelligence and automation equipment are also, in principle, not subject to mandatory bargaining. However, it stated that if the impact on employment becomes concrete, as in restructuring or mass layoffs, bargaining over measures to ensure job security is possible. The labor sector pushed back, saying the guideline could violate the constitutional three basic labor rights, while the management sector said it would help prevent disputes but that additional conflicts at industrial sites could continue. The Labor Ministry explained that although the guideline is an internal work standard, it can have a substantial impact on the decisions of administrative agencies.