Collective Bargaining With Principal Contractors: A Successful Strategy Learned From Department Store and Duty-Free Shop Salesperson Cases
Why This Case Matters Now
Sales employees working for brands operating inside department stores and duty-free shops have long been caught between two different “employers.”
The tenant company that signed the employment contract paid the wages, but the department store or duty-free operator controlled the actual working conditions — including working hours, days off, customer service methods, and even restroom usage.
Even when workers demanded collective bargaining, they were often blocked by the response:
“We are not the party to the employment contract.”
Labor Relations Commissions also frequently sided with the companies.
That barrier began to collapse with a single judgment issued by the Seoul Administrative Court on October 30, 2025. Then, with the revised Labor Union Act taking effect on March 10, 2026, the principle was formally incorporated into the law.
Key Legal Principles Recognized by the Court
① The Standard of Substantial Control — Expanding the Concept of “Employer” Beyond Contractual Relationships
The court held that the concept of an “employer” should not be interpreted narrowly as merely the direct party to the employment contract.
Instead, it should be broadly interpreted to include entities that substantially and concretely control or determine working conditions.
This reflects the modern reality in which technological development and evolving labor structures have created various nontraditional employment arrangements where labor is provided without direct contractual relationships.
② Scope of Bargaining Subjects — Even Management-Related Issues May Become Negotiable Matters
The court recognized that issues such as:
- Guaranteeing collective rest rights
- Protecting customer service workers
- Use and expansion of workplace facilities
constitute matters directly related to improving working conditions and therefore qualify as legitimate subjects of collective bargaining.
However, the court also clarified that whether the companies were ultimately required to accept those demands was a separate issue.
In other words, the court clearly distinguished between:
- The existence of a duty to engage in collective bargaining, and
- An obligation to accept the union’s demands
③ Relationship With the Revised Labor Union Act — Applicability Even Before the Amendment
Following the March 2026 amendment to the Enforcement Decree of the Labor Union Act, procedures for handling correction applications relating to bargaining demands against principal contractors were formally established.
However, the court held that even without the legislative amendment, the existing interpretation of the Labor Union Act alone was sufficient to recognize employer status for principal contractors exercising substantial control over working conditions.
In other words, even before the revised law took effect, lower court decisions had already recognized that a principal contractor could bear collective bargaining obligations where substantial and concrete control over working conditions existed.
How to Prepare for Collective Bargaining With a Principal Contractor
What Labor Unions Should Review
- Identifying substantial control by the principal contractor
- Designing appropriate bargaining agendas
- Sending and preserving official bargaining requests
- Utilizing Labor Relations Commission procedures
- Establishing solidarity and collective action strategies
What Employers Should Carefully Consider
- Compliance with bargaining notice obligations
- Risks associated with claiming “we are not the employer”
- Discussions regarding the scope of bargaining subjects
If This Is Your First Principal Contractor Bargaining Case
Now is one of the most favorable times to demand collective bargaining, as court precedents and Labor Relations Commission decisions continue to accumulate and the revised Labor Union Act has officially taken effect.
However, even a single procedural mistake may result in losing the opportunity to exercise bargaining rights.
Decent Law Firm provides comprehensive legal support throughout the entire collective bargaining process involving principal contractors, including:
- Review of employer status issues
- Design of bargaining agendas
- Assistance with bargaining demand procedures
- Representation before Labor Relations Commissions and administrative courts
If you are preparing to demand collective bargaining from a principal contractor, or if your bargaining request has already been rejected, now is the time to seek legal guidance and establish the proper response strategy.
