Advised Foreign PE-Owned Company in Successful Collective Bargaining and Wage Negotiations
2025.01.14.
Yulchon advised a Korean portfolio company owned by a foreign private equity fund (the “Company”) in connection with its 2024 collective bargaining and wage negotiations. Yulchon provided legal representation and strategic guidance throughout the process, helping the company executive successfully create a collective bargaining agreement and wage settlement despite complex labor dynamics.
Foreign PE-owned companies often face labor tensions arising from employees’ concerns over job security and differing expectations between Korean management and foreign shareholders. These challenges are particularly pronounced when the PE maintains clear management objectives but lacks familiarity with Korean labor laws and union dynamics. Such tensions can be further exacerbated when there is a misalignment between the foreign PE’s expectations and those of local management. In this context, it is essential to fully understand the interests of all stakeholders —shareholders, management, and labor union (employees) —and to steer negotiations toward a balanced and mutually acceptable resolution.
Yulchon played a central role in bridging these gaps by: (i) leveraging deep knowledge of Korean labor law and union bargaining practices, (ii) conducting ongoing coordination with the PE to formulate Company’s proposal acceptable to all stakeholders, and (iii) providing the labor union with persuasive grounds to accept the Company’s proposal, including reference to peer company wage increases, Company’s financial performance metrics such as operating profit and net income, and the Company’s 2025 business outlook. As a result, the final wage agreement was executed on terms that included a wage increase rate reduced by 60% from the labor union’s initial demands, without entering into a formal collective bargaining agreement
Yulchon’s proactive strategy, legal insight, and strong network with key stakeholders, including the Korean Federation of Trade Unions, were instrumental in achieving a swift and efficient resolution. This case demonstrates Yulchon’s ability to guide clients through complex labor negotiations, helping foreign investors navigate Korea’s rigid labor law environment and labor union landscape while aligning the interests of shareholders, management, and labor union.
