[비즈한국] The home appliance rental industry, facing demands for improved treatment of field management staff, is on high alert over the industry's first large-scale class-action lawsuit challenging the employment status of these workers under the Labor Standards Act. There is a sense of crisis that similar cases could follow for each company, much like the lawsuit filed in late August last year against Coway021240 regarding claims for holiday and annual leave pay. Negotiations are also hitting snags, as companies worry that measures to improve working conditions, such as covering business expenses, might backfire legally. LG Electronics066570's subscription and care service subsidiary, Hi-Care Solution, has been in wage and collective agreement negotiations since March of last year, but the conflict has dragged into a new year as the two sides fail to narrow their differences. As concerns grow that lawsuits to confirm employee status could become the "last resort" for various field inspection organizations, companies are closely watching to see if labor union risks will escalate.
LG Electronics Accelerates 'Subscriptions' Amid Conflict with Field Inspection Union
LG Electronics is rapidly expanding its subscription business in the large home appliance sector, covering refrigerators, air conditioners, and TVs. The existing rental business, centered on water purifiers, served as the foundation. LG entered the rental market, previously dominated by mid-sized appliance firms like Coway, SK Magic (formerly Tongyang Magic), and Chungho, with water purifiers in 2009. After failing to surpass 100 billion won in revenue until 2015, the business reached 439.8 billion won in 2019—a 33% year-on-year growth ten years after launch. In 2023, after integrating the existing rental business with the large appliance subscription business, annual revenue exceeded 1 trillion won for the first time, and for 2024, performance is expected to reach the 1.8 trillion won range, nearly 60% higher than the previous year. The growth is attributed to the company's competitiveness in home appliances and its care services.
The issue of improving conditions for field inspection staff came to the surface five years ago. Care solution managers who inspect LG Electronics' home appliances belong to Hi-Care Solution, a dedicated subscription and care subsidiary of LG Electronics. Hi-Care Solution was established in 2020 by separating the rental division from Hi-M Solutek, a wholly-owned maintenance subsidiary spun off by LG Electronics in 2006, for the purpose of professionalizing operations and expanding service infrastructure. Care solution managers formed a labor union that same year. While Coway, the industry's undisputed leader, was the first to see a field inspection union formed, LG Hi-Care Solution was the first to sign a collective agreement. Four months after the union's establishment in September 2020, labor and management signed an agreement covering a raise in inspection commissions, fuel subsidies linked to oil prices, and a "no-show support system" (appointment cancellation fee). However, the following year's negotiations dragged on past the year-end before barely reaching a conclusion with a 350-won commission increase, and this year's wage and collective agreement talks have yet to find direction.
The LG Care Solution branch of the Korean Metal Workers' Union, Seoul Chapter, has been holding rallies since late November last year near LG Science Park in Magok, Gangseo-gu, Seoul, urging the company to participate in negotiations in good faith. Following the proposal of the first union plan in March last year, labor-management discussions have been ongoing for 10 months. Currently, the union's key demands include: payment of 100,000 won for fuel costs, a 500-won increase in commission for slim water purifiers, and free provision of uniforms. The union criticized the situation, stating, "The company's uncooperative attitude has caused the wage and collective agreement discussions this year to drag on," adding, "We see no willingness to negotiate from the company's side."
Caution Over Providing Fuel and Uniforms, As It May Imply Employee Status
The sluggish progress in negotiations at Hi-Care Solution is interpreted by some as a ripple effect of the Coway "employment status confirmation" lawsuit. Field inspectors are classified as special employment workers; they have no base salary and their pay is determined by the number of accounts (device inspection requests) they handle in a month. They are categorized like independent business owners and are not covered by the four major social insurance plans. Approximately 2,600 Coway field inspectors (Cody/Kodak) filed a lawsuit against Coway at the end of August last year, claiming holiday and annual leave pay. Since these payments are rights granted only to employees under the Labor Standards Act, the central issue of the lawsuit depends on whether they are recognized as employees under that law.
Field inspection staff at companies like Coway, LG, and SK Magic are recognized as employees under the Trade Union Act, allowing them to exercise the right to organize, bargain, and take collective action. However, they have not secured the status of employees under the Labor Standards Act. To secure "substantive" improvements in actual working conditions and wage terms, their status as employees must be confirmed, a hurdle they have yet to clear.
If Coway inspectors are recognized as employees, it is highly likely that similar lawsuits seeking legal status confirmation will follow across the industry. There is also the possibility of these expanding into lawsuits for severance pay. This is why the industry is holding its breath and monitoring the atmosphere. LG is no exception. A representative from the LG Care Solution branch stated, "The company is refusing most of the union's demands, such as increased fuel subsidies and uniform support, citing the reason that they could later serve as evidence of employee status," adding, "It is the same with our demands for basic protections against 'power trips' regarding work distribution and unfair contract terminations."
Currently, LG's commission unit prices are: 9,700 won for slim water purifiers, 10,650 won for direct-flow water purifiers, 12,800 won for ice-maker refrigerators, and 10,000 won for the first stage of Air Purifier Alpha. Because workloads are concentrated in water purifiers, which have relatively low unit prices, staff report earning about 1.6 million won while handling 150–160 cases per month. Fuel subsidies are paid at an average of 14,000 won. It is a structure where workers are forced to cover various expenses, including fuel costs of 200,000 to 250,000 won per month, out of their own pockets.
A Hi-Care Solution representative stated, "We have tried to reach an agreement by offering an increase rate exceeding the inflation forecast last year, but we could not conclude negotiations due to differences between labor and management," adding, "However, the company continues to make efforts to narrow the gap with the union. The two sides have held several dialogues this year and are working toward a compromise, and we plan to continue negotiating in good faith."
A concrete schedule for the lawsuit between Coway and its Cody/Kodak staff is expected to be set in the first half of the year. Not only the industry itself but also other sectors dealing with the issue of employee status for special employment workers are keeping a close watch on the potential impact of the ruling. A representative for a field inspection organization said, "Even if it's not a union-led effort, there are voices considering individual responses. We will watch how the situation develops."
Kim Nam-seok, a lawyer specializing in labor law, noted, "Providing fuel subsidies and uniforms could work against companies in lawsuits to confirm employee status. From a corporate perspective, they would have scrutinized those factors carefully." He added, "The point of contention in the lawsuit is the existence of a subordinate relationship. If workers only handle work from one company to maintain their livelihood, follow the company's instructions and schedules, and report on the content of their work, there is a high possibility that their status as employees will be recognized. In the case of class-action lawsuits, there is sufficient supporting evidence, so the court's judgment is drawing much attention."
An industry official stated, "Each company is closely monitoring major issues like lawsuits, but the best approach is to reach a consensus without conflict."