Notices

Supreme Court Decision 2021Do11473

The Supreme Court has ruled that CJ Logistics does not qualify as an “employer” subject to the prohibition against replacement work under the Trade Union and Labor Relations Adjustment Act (“TULRAA”), even where it deployed its directly employed drivers during a strike by parcel delivery workers. This is the first Supreme Court decision addressing the legality of replacement work by a principal company during a subcontracted workers’ industrial action. Because the case arose before the amended TULRAA came into effect, the Court held that, under the former Act, the principal company could not be regarded as the workers’ employer.

The ruling can be viewed as a “butterfly effect” of the Supreme Court en banc decision issued in May this year in the HD Hyundai Heavy Industries collective bargaining case. In that decision, the Court limited employers bearing a duty to bargain collectively to persons or entities having an “express or implied employment relationship” with the workers. The Court has now applied the same reasoning to the prohibition against replacement work.

Following its July ruling that CJ Logistics had no duty to bargain collectively with the parcel delivery workers’ union, the Supreme Court has applied the same standard to replacement work, thereby once again narrowing the scope of principal-company employer status. Given that the Supreme Court took approximately five years to decide the case, however, criticism is likely that the Court has constrained subcontracted and non-regular workers’ exercise of the right to collective action by relying on the former TULRAA.

Twelve Union Members Indicted for Attempting to Prevent Deployment of Directly Employed Drivers in Gimcheon

According to reporting by Maeil Labor News on September 6, the Supreme Court’s Third Division, with Justice Lee Heung-gu presiding, issued its decision on September 2 in the appeal involving 12 parcel workers’ union members prosecuted for obstruction of business. The Court dismissed the appeals filed by 10 of the defendants, as well as the prosecution’s appeal. As to the remaining two defendants, however, the Court reversed and remanded the case because of a procedural defect involving the lower court’s failure to state the reasons for its judgment. The decision came seven years and three months after the defendants were indicted in June 2019. The Supreme Court proceedings alone lasted approximately five years.

The case originated from a strike by parcel delivery workers in Gimcheon, North Gyeongsang Province, in November 2018. Twelve parcel delivery workers who had entered into consignment agreements with CJ Logistics agencies demanded collective bargaining with the agencies. When bargaining did not take place, they refused to make deliveries.

CJ Logistics then deployed directly employed parcel delivery drivers to the terminal to fill the delivery gap. Union members inspected the cargo carried in the directly employed drivers’ vehicles and prevented the vehicles from leaving the terminal. Prosecutors subsequently indicted them for obstruction of business.

The key issue was whether CJ Logistics constituted an “employer” subject to Article 43(1) of the TULRAA. That provision prohibits an employer, during a period of industrial action, from hiring or using persons “unrelated to the business concerned” to perform work that has been suspended because of the industrial action.

If CJ Logistics did not qualify as an employer, Article 43 would not apply in the first place, meaning that its deployment of replacement personnel would be lawful. In that event, there would be no need to determine either the scope of the “business concerned” or whether the directly employed drivers were related to that business.

Court of Appeals Recognized Principal-Company Employer Status but Found Deployment of Directly Employed Drivers Lawful

The lower courts recognized CJ Logistics as an “employer.”

In January 2020, the trial court acquitted the union members, holding that CJ Logistics’ deployment of directly employed drivers as replacement personnel violated the TULRAA.

In August 2021, the appellate court likewise held that CJ Logistics qualified as an employer under Article 43 because it was in a position to exercise substantial and specific control and decision-making authority over the parcel delivery workers’ working conditions.

Unlike the trial court, however, the appellate court concluded that CJ Logistics’ nationwide parcel delivery operation constituted a single “business concerned” and that directly employed drivers from other regions were also employees belonging to that business. Accordingly, deploying such employees to Gimcheon was lawful.

In other words, the appellate court found that CJ Logistics was an employer, but that its use of directly employed drivers nevertheless constituted permissible replacement work.

Based on that conclusion, the court held that the union members’ actions preventing the drivers from performing their work did not constitute justifiable conduct. Ten of the 12 union members were therefore fined between KRW 1 million and KRW 3 million. As for the remaining two, their acquittals remained in effect after the prosecution’s appeal was dismissed.

Supreme Court Rejects Employer Status: “Not a Counterparty Bearing the Duty to Bargain Collectively”

The Supreme Court rejected the lower courts’ finding that CJ Logistics had employer status.

Although the Court reached the same ultimate conclusion as the appellate court in finding the union members guilty of obstruction of business, its legal reasoning concerning principal-company employer status was fundamentally different.

Citing the Supreme Court en banc ruling in the HD Hyundai Heavy Industries case issued in May this year, the Court stated:

“Industrial action is directed against the counterparty that bears the duty to bargain collectively. Under the former TULRAA, a person who does not qualify as an employer bearing a duty to bargain collectively cannot, absent special circumstances, be regarded as bearing the obligation under Article 43 of the TULRAA not to use replacement workers.”

Because there was no express or implied employment relationship between CJ Logistics and the parcel delivery workers, the Court concluded that CJ Logistics was not an employer bearing a duty to bargain collectively with the parcel workers’ union. Consequently, CJ Logistics was also not subject to the statutory prohibition against replacement work.

Accordingly, the deployment of CJ Logistics’ directly employed parcel delivery drivers did not constitute unlawful replacement work.

The Supreme Court explained:

“Although certain parts of the reasoning stated by the lower court were not entirely appropriate, its ultimate conclusion was correct because CJ Logistics’ deployment of its directly employed parcel delivery drivers cannot be regarded as unlawful on the ground that it violated Article 43(1) of the TULRAA. Accordingly, the lower court correctly concluded that the defendants’ conduct did not constitute justifiable conduct.”

Conflicting Lower-Court Decisions and Concerns Over Restrictions on the Right to Collective Action

Because the case was decided under the former TULRAA, the ruling is expected to affect similar cases governed by the same version of the law.

The Supreme Court is now unlikely to accept the reasoning adopted in a number of lower-court decisions that imposed the statutory prohibition against replacement work on principal companies based on their substantial control over subcontracted workers’ working conditions.

The decision is also expected to generate controversy over whether the Supreme Court is restricting not only workers’ collective bargaining rights but also their right to collective action, particularly where replacement work directly affects the effectiveness of a strike.

Lower courts have so far taken three different approaches to the deployment of directly employed drivers during industrial action:

the principal company is an employer and its replacement work is unlawful;

the principal company is an employer, but its replacement work is lawful; or

the principal company does not qualify as an employer in the first place.

In a case concerning the deployment of replacement personnel during industrial action in Busan, the trial court recognized the principal company as an employer and held that the replacement work was unlawful, acquitting the union members.

The appellate court, however, reversed that decision. Although it continued to recognize the principal company’s employer status, it held that the deployment of directly employed drivers from other regions was lawful.

The Ulsan District Court likewise recognized the principal company as an employer but held that the use of directly employed drivers was lawful. By contrast, the Gyeongju Branch of the Daegu District Court held that CJ Logistics did not qualify as an employer.

Hong Jun-pyo, Reporter forthelabor@labortoday.co.kr

Source: Maeil Labor News