[Edaily SOYEON KIM Reporter Jo Min-jeong] With the government making it clear that labor disputes over “N% of operating profit as performance bonuses” do not constitute a legitimate basis for a strike, attention is now focused on the future direction of SK hynix’s wage and collective bargaining negotiations. As SK hynix’s management and labor union recently began wage and collective bargaining negotiations, it has become increasingly likely that they will bring the performance bonus system agreed upon last year back to the negotiating table.

Kim Young-hoon, Minister of Employment and Labor, met with the press corps at the Sejong Government Complex on the 22nd and announced that detailed criteria specifying the scope of labor disputes under the “Yellow Envelope Act” (Trade Union Act) would be established promptly. Minister Kim stated, “As this is a directive from the President, we will implement it without delay,” adding, “We will arrange opportunities to fully explain the intent of the law and the system to labor and management on the ground to prevent confusion and misunderstandings during the initial implementation phase.”

At the Cabinet meeting the previous day, President Lee Jae-myung mentioned enforcement decrees, presidential decrees, enforcement rules, and interpretive guidelines from the Ministry of Employment and Labor as measures to clarify the criteria for labor disputes. In particular, he made it clear that the “N% performance-based bonus”—where a certain percentage of operating profit is paid as a performance bonus—is not subject to labor disputes, and emphasized the need to clarify the scope of labor disputes, which has been expanded by the implementation of the “Yellow Envelope Act.” While the “Yellow Envelope Act” expanded the scope of labor disputes to include “business management decisions that affect working conditions,” interpretations differ between labor and management regarding whether the N% performance-based bonus falls under this category.

As the government has effectively established the standard that “performance bonuses are not subject to labor disputes,” some observers suggest this could become a flashpoint in future labor-management relations. The government’s direct mention of individual companies’ performance bonus systems is interpreted as a move anticipating the possibility that demands for N% performance bonuses—which began at SK hynix—could spread across the business community.

The government is expected to accelerate efforts to refine the system by revising the interpretation guidelines. Since amending the enforcement decree requires procedures such as a legislative notice and review by the Ministry of Government Legislation—and could potentially lead to discussions on revising the “Yellow Envelope Act”—revising the interpretation guidelines is currently considered the most likely course of action.

The business community believes it cannot rule out the possibility of a series of strikes by labor unions demanding N% performance bonuses. Amid the semiconductor supercycle, such demands have intensified, particularly at SamsungElectronics and SK hynix, which posted record-breaking earnings. The Kakao union went on strike late last month, demanding performance bonuses equivalent to 13–15% of operating profit. The HD HYUNDAI HEAVY INDUSTRIES union is demanding 30% of operating profit as a performance bonus, while the HyundaiMotor union is demanding 30% of net profit.

SK hynix is undoubtedly the focus of particular attention. This is because the discussion on N% performance bonuses, which began at SK hynix last year, has entered a new phase just one year later. As this year’s wage and collective bargaining negotiations began, the company reportedly proposed a plan to pay a portion of the performance bonuses—which had previously been paid entirely in cash—in stock. This move appears to take into account the fact that SamsungElectronics’ Semiconductor (DS) Division also receives its special management performance bonuses in the form of company stock.

Last year, SK hynix’s management and labor union agreed to abolish the cap on the Profit Sharing (PS) bonus—a performance-based bonus funded by 10% of operating profit—and to maintain this arrangement for 10 years. Of this amount, 80% of the PS payment is to be paid in cash in the current year, while the remaining 20% (10% annually) is to be deferred and paid over a two-year period.

If this system remains in place, SK hynix’s annual operating profit is projected to reach 270 trillion won this year, meaning the average performance bonus per employee is estimated to be between 700 million and 800 million won (pre-tax). While actual payment amounts may vary depending on job level and individual performance, the need to reform the system is emerging given the massive scale of cash bonuses being distributed.

Choi Tae-won, Chairman of SK Group (and Chairman of the Korea Chamber of Commerce and Industry), recently drew attention when he remarked, “While our goal is to bring as much happiness as possible to our employees, if that happiness infringes on the interests of stakeholders such as shareholders or is not sustainable, we may need to review and revise the system.”

However, the labor union’s opposition is expected to be significant. The SK hynix labor union is strongly resisting the change, given that it agreed last year to maintain the system for 10 years—and the proposal to alter it after just one year. Furthermore, as the government has established a standard stating that strikes over performance bonuses do not constitute a labor dispute, the union’s negotiating strategy in future wage and collective bargaining negotiations is expected to face considerable constraints.

Choi Jun-seon, Professor Emeritus at the Sungkyunkwan University Law School, explained, “Since the law is ambiguous, it can certainly be clarified through interpretive guidelines, making a revision of those guidelines the most realistic solution,” adding, “In the long term, the law itself needs to be revised to specify the scope of labor disputes.”