We provide below an overview of the amendment to the Act on the Promotion of Employee Participation and Cooperation (the “Act”). The amendment provides statutory grounds for the election of employee members of the Labor Management Council (the “LMC”), which was previously set forth under the Enforcement Decree of the Act, and strengthens the grounds for their representation of the workforce.
The LMC is becoming increasingly important as a key organization for securing productive and cooperative labor management relationships via enhancing employees’ understanding of the business and ensuring their active participation in the decision-making process.
According to the Labor-Management-Government Agreement on the employee representation system (which was unanimously resolved by the Economic, Social, and Labor Council on October 16, 2020), in cases where there is no labor union representing a majority of employees but there is an LMC in place, employee members of the LMC must be elected by a direct and anonymous vote.
However, matters related to election of LMC employee members are currently prescribed under the Enforcement Decree, not under the Act itself. Moreover, the Enforcement Decree does not set forth matters related to the obligation to have a majority of employees participate in the election of LMC employee members (“Employees’ Member Voters”). This raised the question of whether said employee members can democratically represent the entire workforce.
In light of the foregoing, the newly amended Act provides the following amendments to ensure that employee members of the LMC appropriately represent employees:
Matters related to the election of employee members of the LMC (through a direct, secret and anonymous vote) under Article 3 of the Enforcement Decree of the Act are included in Article 6 of the Act.
In cases where there is no union comprised of a majority of employees, the majority of employees must participate in the election of employee members of the LMC.
The election of Employees’ Member Voters (indirect voting method) also requires a direct, secret, and anonymous vote by a majority of employees.
The requirement set forth in the Presidential Decree that states that an employee must obtain recommendations from ten or more employees in order to register as a candidate to become an employee member of the LMC is removed.
While the importance of the LMC is increasing, the Act sets forth serious sanctions for the following: (i) failure to establish an LMC (Article 30 of the Act, fine not exceeding KRW 10 million), (ii) disadvantageous measures against employee members or interference in the election process for employee members (Article 31 of the Act, fine not exceeding KRW 5 million), and (iii) failure to hold an LMC meeting (Article 32 of the Act, fine not exceeding KRW 2 million). In establishing a new LMC or electing new members of an existing LMC, employers should be fully aware of the above amendment to the Act and proceed accordingly.