Editorial: Guidelines Say N% Bonuses Are Not Grounds for Industrial Action, but Only Law Can End the Confusion

South Korea’s Labor Ministry has issued a set of guidelines to draw boundaries around labor disputes under the amended Trade Union Act, known as the Yellow Envelope Law. Its central message is clear: profit-linked “N% performance bonuses” and business management decisions do not automatically belong at the bargaining table.

The ministry said companies do not have to negotiate over performance bonuses tied to corporate profits, meaning unions cannot treat them as grounds for industrial action. It argued that distributing funds to workers in advance could restrict a company’s freedom to use resources for research and development, facility investment and dividends.

The guidance also excludes decisions such as building or relocating a factory, buying or selling a business, and adopting new technology when they merely have the possibility of changing working conditions. The dispute over N% bonuses began in the semiconductor industry and has spread to automobiles, steel and information technology. One large-company union has also sought to make investment in a semiconductor cluster in Honam a bargaining issue.

The editorial says these disputes reflect an attempt by unions to influence decisions that belong to management, including bonus calculations and investment. The amended law, which took effect in March, expanded the scope of industrial disputes from working conditions to business decisions that affect them. Critics say that wording created the confusion the ministry is now trying to contain.

But the guidance itself has no legal force. Even if a union strikes over other unresolved working conditions and then demands an N% bonus, the company may find it difficult to challenge that conduct legally. The editorial warns that the guidelines could therefore become a new source of courtroom battles. It calls for the parent law to authorize detailed provisions and for the current guidance to be written into an enforcement decree, so management decisions and labor-management bargaining can be separated more clearly.