Seoul High Court says department stores need not bargain with sales staff union

The Seoul High Court has ruled that department stores and duty-free shops are not obliged to bargain collectively with the union of sales staff employed by companies with stores in them, overturning a lower court ruling, according to reports on Oct 8 citing legal circles. The court's Administrative Division 10-2, with judges Park Hye-seon (박혜선), Won Jong-chan (원종찬) and Oh Hyun-kyu (오현규), ruled against the Department Store and Duty-Free Shop Sales Service Union (백화점면세점판매서비스노조) in its suit against the chairman of the National Labor Relations Commission (중앙노동위원회) seeking to cancel a review ruling on unfair labour practices. Seoul Shinmun reported the ruling was issued on Oct 2; Yonhap said it was issued recently. [ 1 , 2 , 3 ]

The union, whose members are sales staff of cosmetics companies with stores in department stores and duty-free shops, asked the stores six times in 2023 to bargain and was refused. It treated the refusals as unfair labour practices and applied for relief, but the commission rejected its request for review, saying it was difficult to see the stores as bearing an obligation to bargain. The union then filed an administrative suit. [ 2 , 3 ]

The first-instance court sided with the union, finding that the department stores and duty-free shops held substantial control over some of the sales staff's working conditions, directly or at least jointly with the tenant companies that employ them, and so had a duty to bargain as employers under the trade union law. According to Seoul Shinmun, it treated the retailers' setting of business days and hours and the facilities such as restrooms and break rooms provided to staff as substantial control. [ 1 , 2 , 3 ]

The appeals court cited a Supreme Court en banc ruling issued in May, which held that for cases predating the Yellow Envelope Law, the amended Articles 2 and 3 of the trade union law, an employer is in principle one who has an explicit or implicit contract with the workers. The law, which took effect in March this year, expanded the concept of employer to include those able to substantially and concretely control and decide working conditions without being party to the employment contract. The appeals court said whether the stores were employers must be judged by the earlier legal principle. Seoul Shinmun reported that the May ruling found HD Hyundai Heavy Industries had no duty to bargain with in-house subcontractor unions, and that in July the Supreme Court found CJ Logistics had no duty to bargain with couriers belonging to its delivery agencies. [ 1 , 2 , 3 ]

The court acknowledged that the stores set business hours and regular closing days and gave some training to sales staff, but said this was fulfilling obligations as a large retailer or exercising management rights over store facilities, with no direction or command of the staff, so neither an explicit nor an implicit contract existed. Seoul Shinmun quoted the court as saying the retailers shared information needed to run the stores with the tenant companies and fulfilled legal obligations. [ 1 , 2 , 3 ]

Seoul Shinmun reported that five department store companies have held three rounds of talks with the sales staff union and duty-free operators are due to hold a first meeting soon, and that the ruling could cause confusion. A legal source told the paper the Supreme Court should quickly settle the issue in line with the intent of the Yellow Envelope Law, which expanded the scope of employers and of labour disputes. [ 1 ]