South Korean Labor Minister rules Samsung profit-based bonus strike illegal

South Korean Minister of Employment and Labor Kim Young-hoon stated that the May strike by Samsung Electronics' labor union, which demanded performance bonuses based on a fixed percentage of operating profits, would be considered an illegal industrial action under the government’s new implementation guidelines for the ‘Yellow Envelope Act.’

Minister Kim explained that requiring a specific percentage of operating profits to be allocated to bonuses before taxes or other management decisions are made could mislead foreign investors and weaken corporate competitiveness. He noted that while not all performance bonuses are excluded from collective bargaining, demands tied directly to a percentage of operating profit are not considered mandatory subjects of negotiation because they may infringe upon the rights of shareholders and third parties.

However, the Minister clarified that these new guidelines will not be applied retroactively to existing collective agreements already established between Samsung Electronics and its union. Regarding other labor issues, Kim expressed caution toward the ‘white-collar exemption’ for working hour regulations, emphasizing the need to balance flexibility with worker health, and noted that the exclusion of unemployment benefits for voluntary job seekers under 35 from next year’s budget was due to concerns over potential side effects.