The Supreme Court of Korea reached an en banc decision on August 27, 2020 to overturn a lower court ruling, which had nullified a collective bargaining agreement provision requiring an auto manufacturer to hire a direct family member of its employee in the event of such employee’s work-related death (the “CBA Provision”).  The case was transferred back to the Seoul High Court.  

The lower court held that the CBA Provision significantly restricts the employer’s ability to freely enter into employment contracts and undermines the principle of fairness as it results in passing of employment from generation to generation.  In particular, the lower court noted that the CBA Provision is in violation of Article 103 of the Civil Act, which protects fairness and social order, as the CBA Provision provides excessive benefits to the bereaved family and unilaterally imposes hiring obligations on the employer without considering any relevant factors (e.g., economic status of the bereaved family, hiring criteria for the job concerned, etc.).  

However, the Supreme Court overturned such decision by emphasizing that the collective bargaining agreement must be respected as the outcome of the parties’ right to collectively bargain, which is guaranteed by the Constitution.  The Supreme Court held that the CBA Provision is not in violation of Article 103 of the Civil Act for the following reasons. 

1. The CBA Provision was included in the collective bargaining agreement pursuant to a mutual agreement by the parties. 

2. Unlike other special hiring provisions such as hiring children of retiring employees, the CBA Provision contributes to the social cause of protecting the weak. 

3. Considering the special/statutory hiring provisions for the bereaved family of soldiers and policemen, providing job opportunities for a particular group of individuals is a legally viable method of protection. 

4. The auto manufacturer in this instance has been hiring family members of deceased employees who qualify under the CBA Provision for a substantial period of time.  Thus, it is difficult to conclude that the auto manufacturer’s freedom to hire was significantly restricted by the CBA Provision. 

5. The family members of deceased employees are not given priority over other applicants in an open recruitment process, but are processed through a different hiring channel.  Moreover, the number of employees hired through the CBA Provision is not significant considering the overall size of the company.  Thus, it is difficult to view that the CBA Provision has caused a substantial degree of impact on other applicants. 

This Supreme Court ruling explicitly held that collective bargaining agreement provisions that even restrict personnel management rights must be respected as long as the employer has voluntarily agreed to such provisions through collective bargaining.   

Accordingly, please note the foregoing in negotiating collective bargaining agreements going forward. 

[Korean version]