Court Rules Retailers Must Engage in Collective Bargaining with Tenant Sales Staff

For the first time, a court has ruled that large retail companies operating department stores and duty-free shops are obligated to engage in collective bargaining with sales staff affiliated with tenant companies.

On October 30, the 14th Administrative Division of the Seoul Administrative Court (Presiding Judge Lee Sangdeok) ruled in favor of the plaintiff in a lawsuit filed by the Department Store and Duty-Free Shop Sales Service Union against the chairman of the Central Labor Relations Commission, seeking to overturn a decision that dismissed their claim of unfair labor practices.

The union had filed for relief after the parent companies refused to respond to their request for collective bargaining. The application was first dismissed by the Seoul Regional Labor Relations Commission, and the Central Labor Relations Commission also rejected the appeal, prompting the union to file a lawsuit.

The court found that, although the companies did not have direct employment contracts with the sales staff, they exercised "substantial and specific control" over certain working conditions, such as working hours, use of facilities within the department stores and duty-free shops, and customer service manuals. Therefore, the companies were recognized as employers, and the court determined that the Central Labor Relations Commission's decision was unlawful.

Although the so-called Yellow Envelope Act (the amendment to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act) has not yet taken effect, the court expanded the concept of employer based on the effective guarantee of the constitutionally protected three basic labor rights. The National Service Industry Union welcomed the ruling, stating that it was a natural outcome that embodied the spirit of the Yellow Envelope Act and called for immediate engagement in collective bargaining.