Jungheung Construction Sues Labor Commission Over Employer Status Ruling

Jungheung Construction and Jungheung Tokon have initiated administrative litigation, challenging a ruling by the Central Labor Relations Commission (CLRC) that designated them as the "real employer" for collective bargaining purposes with the tower crane union. This legal action marks the second instance of an original contractor filing a lawsuit to contest an employer status determination since the enforcement of the "Yellow Envelope Act," which aims to strengthen labor rights and expand employer accountability.

The CLRC's decision, made in June, stated that Jungheung Construction must engage in negotiations with the Korean Tower Crane Workers' Union (affiliated with the Federation of Korean Trade Unions). The commission cited the difficulty for subcontractor tower crane rental companies alone to address safety risks or install and dismantle safety equipment related to tower crane operations. However, the CLRC did not recognize the companies as employers for direct wage payments demanded by the union.

Jungheung Construction's decision to pursue legal action stems from a discrepancy with an earlier ruling by the Jeonnam Regional Labor Relations Commission in April, which found that Jungheung Construction had no obligation to bargain with the tower crane union. "The provincial labor commission's decision was overturned by the central labor commission," a representative from Jungheung Construction stated. "We believe there is a need to contest this legally and seek a final judgment through judicial proceedings."

This case follows a similar lawsuit filed by Hanwha Ocean on July 20th against a CLRC ruling that identified the company as the employer for the union of its subcontractor, Wellive, which handles in-house catering and shuttle bus services. The Ministry of Employment and Labor is reportedly reviewing its response strategy for Hanwha Ocean's lawsuit. The "Yellow Envelope Act" has introduced significant changes, potentially increasing the liability of original contractors for labor disputes involving subcontractors.

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We believe there is a need to contest this legally and seek a final judgment through judicial proceedings.