Must a principal contractor bargain with its subcontractors’ union — and if so, over what? Since the amended Trade Union and Labor Relations Adjustment Act (the “TULRAA”) took effect, few questions have generated more uncertainty for companies operating in Korea. On June 15, 2026, the Ulsan Regional Labor Relations Commission (“Ulsan RLRC”) gave one of the first meaningful answers to this question: not over everything. The Ulsan RLRC assessed the principal contractor’s employer status separately for each item on the bargaining agenda, and rejected that status as to most of the key items — including wages.
This approach is a notable departure. Until now, Labor Relations Commissions have tended to treat employer status as an all-or-nothing question. Once a principal contractor was found to be an “employer” as to any single agenda item, that status was extended to every other item, often without close scrutiny. Here, by contrast, the Ulsan RLRC scrutinized each item on its own facts — and reached different conclusions for different items.
Kim & Chang represented the principal contractor (the “Principal Contractor”), an automobile manufacturer, in this matter. We summarize the decision and its practical implications below.
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Background
The Korean Metal Workers’ Union — with which a union chapter of subcontractor employees is affiliated — demanded collective bargaining with the Principal Contractor on the chapter’s behalf. Under the TULRAA, an employer that receives a bargaining demand must post a public notice of the demand for seven days to notify other labor unions and employees — so a company required to make that announcement is, in effect, recognized as an employer obligated to bargain. The Union applied to the Ulsan RLRC to compel that announcement, putting the Principal Contractor’s employer status squarely at issue.
The multi-tiered subcontracting structure characteristic of the automobile industry drew a large number of subcontractors into the dispute. The job functions at issue were unusually broad, spanning production management, security, cafeteria services, janitorial work and sales. This was also the case for the agenda, which reached wages, occupational safety and the working environment alike.
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Decision
In assessing each agenda item, the Ulsan RLRC focused on two core criteria. The first was whether the subcontractor employees’ work was subject to the Principal Contractor’s substantial control. The second was whether those employees worked in facilities the Principal Contractor owned and managed, in accordance with standards it had set. The analysis produced different outcomes for different items.
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Production management, cafeteria and security. These employees work within the Principal Contractor’s premises, equipment and facilities, and must observe the sanitation and security standards it sets. On that basis, the announcement obligation was recognized — but only for a limited set of items concerning facilities and the working environment.
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Sales. Employer status was denied outright. The sales dealerships are separate businesses that handle hiring, workforce management and compensation on their own.
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Wages and other working conditions, and the remaining production-related items. Employer status was denied here as well. That the Principal Contractor’s production plans, facilities and equipment exert some influence on working conditions does not, by itself, establish substantial control over wages, performance bonuses, occupational safety or employee benefits.
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Significance
Few industries depend on as extensive a division of labor as automobile manufacturing. A finished vehicle is the product of collaboration among various specialized companies, from parts production and transport to vehicle inspection, sales, and support functions such as cafeteria operations and security. Precisely because those companies are so closely interconnected, the case carried a real risk that the Principal Contractor’s employer status would expand without limit.
Our team based the Principal Contractor’s defense around the legislative purpose of the amended TULRAA, the case law on substantial control, and a close reading of how the industry actually operates, developing a distinct line of argument for each agenda item and marshaling the facts that supported it. The result was a decision denying the Principal Contractor’s duty to bargain over a substantial number of the key items demanded by the Union.
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Implications
The decision settles two key points. The amended TULRAA does not create an unlimited expansion of who counts as an “employer,” and a principal contractor’s duty to bargain must be assessed individually, on concrete facts. We expect the decision to carry significant weight as a precedent in similar disputes. At a time when most workplaces face real uncertainty over the scope of any duty to bargain with subcontractor unions, an item-by-item approach places a reasoned limit on employer status and materially improves predictability.
For companies, the practical takeaway is to anticipate which items a subcontractor union is likely to raise and to assess whether the company in fact exercises substantial control over each. Reviewing how on-site facilities and equipment are managed, and what the service contracts actually provide, will allow a company to establish a precise response — and to prepare for a demand before it is raised.
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[Korean Version]
