Protecting labor rights in multinational company spinoff

Corporate organization reform becoming increasingly frequent from 2010, employees suffer from job insecurity

German, Japan and Austria recognize the employees’ rights to choose, Korea lacks legal protection for employees

Global headquarters take advantage of legal vulnerability in Korea and neglect labor relations

The multinational pharmaceutical companies in South Korea came under fire after they started restructuring and downsizing unilaterally and the experts are urging for the labors’ rights to participate and choose should to be secured.

 

On Nov.

 

18, a member of the National Assembly Environment and Labor Committee and Democratic Party Lawmaker Yoon Joonbyeong, along with Seoul Metropolitan Council member Chu Seung-woo, convened a discussion panel regarding improving the labor environment and job security for the employees at multinational pharmaceutical companies.

 

This marks the first time employees of multiple multinational pharmaceutical companies came together to seek legal improvement.

 

The representatives expressed their commitment to not let their management to frequently conduct reorganization anymore, which results in job reassignment and pressure on resignation.

 

Chair Shim Sang-nam of MSD Korea Labor Union and Professor Kwon Oh-sung of Sungshin Women’s University Department of Law respectively gave a presentation on ‘Issues with the Current Multinational Companies’ Corporate Change,’ and ‘Succession of Labor Relations for Corporate Spinoff.’ Following the presentations, a discussion panel was conducted with Professor Choi Young-woo at Korea Labor Employment Training as a speaker, and Vice-president Jin Sunmee of Korea Certified Public Labor Attorneys Association, Senior Advisor Shin Jong-hwan of MSD Korea Labor Union, CEO and Labor Attorney Kim Kyungrak of Daesang Labor Law Firm, CEO and Labor Attorney A1 Labor Law Firm, and Chair Kang Seungwook of Pfizer Pharmaceutical Korea Labor Union as panelists.

 

Chair Shim Sang-nam said, “Recently, multinational pharmaceutical companies like Pfizer, Takeda, MSD, Roche and Sanofi had gone through reorganization.

 

The rumor goes that when Pfizer does it, then MSD copies it and it spreads throughout the industry.

 

And it is proving itself to be true, while the employees are suffering from job insecurity.” MSD has recently announced the list of 222 employees to be transferred to a new spinoff company Organon.

 

Senior Advisor Shin Jong-hwan stressed, “Many of the employees transferring to Organon feel insecure and call the labor union.

 

Because multinational companies frequently restructure the organization centering new business, the employees feel the insecurity often.

 

So we must find legal and systematic safety net to put a brake on these situations.” Chair Kang Seungwook, who officially moved to Viatris from Pfizer Group from Nov.

 

16, added, “Like spinoffs in Pfizer and MSD, corporate changes that go against employees’ will happen frequently in the pharmaceutical industry.

 

In the process, we felt the absence of legal support to protect the rights of those employees.” Labor law experts all agreed laws should protect the labors’ rights to participate and express agreement and disagreement in organization restructuring that currently the companies are making the decisions unilaterally.

 

Companies in Germany, for instance, recognize the labors’ rights to refuse, while the laws in Japan and Austria also stipulate the companies to undergo a set of procedures for the labors to formally object based on the principle to succeed the labor relationship.

 

Professor Kwon Oh-sung explained, “Some employees may be forced to transfer to a new company against their will, whereas some would be left behind when they wish to be transferred to new company.

 

Guaranteeing the labors’ rights to participate in decision making is important during the process of corporate split, and we need to seek measures to guarantee the labors’ rights to choose, such as the rights to refuse and formally object.” Labor Attorney Jin Sunmee also stated, “Although a corporate split could greatly influence the employees’ job security, the current commercial law and labor relations law do not stipulate any protection.

 

And often pharmaceutical companies let go of parts of employees by spinning off a new company dedicated to off-patent and less competitive products, which results to job insecurity and workplace discrimination.” Moreover, the attorney argued, “Based on the objective of the constitution and Labor Standards Act, the employees should be able to practice their rights to refuse transfer, when a company splits with a new business proprietor.” Also, Labor Attorney Han Man-ok highlighted, “For multinational companies that cannot create close relationship between the global headquarters and South Korean employees, there exists structural weakness that allows decision making only based on business efficiency.

 

And also because not enough legislative bills on labor relations are passed regarding the business split, it gives off an impression that ‘companies do not have to deeply consider labor relations in South Korea, as there is no legal tools to prevent reorganization due to labor relations.’” Labor Attorney Kim Kyungrak, who organized the panel discussion, added “I personally experienced M&A twice while I was working at multinational pharmaceutical companies like MSD Korea and Allergan Korea for 15 years before I became a labor attorney, and I was even offered an early retirement program.

 

With the corporate change becoming more frequent, we need to hold talks and raise awareness of the employees’ survival.”