Samsung accused of using illegally “disguised subcontractors”

Posted on : 2013-06-18 14:25 KST Modified on : 2019-10-19 20:29 KST
Chaebol using roundabout ways of avoiding responsibility to provide for workers
 June 17. (provided by OhMyNews)
June 17. (provided by OhMyNews)

By Im In-taek and Lee Jung-gook, staff reporters

Samsung Electronics Service, an affiliate of Samsung Electronics that repairs computers and home appliances manufactured by Samsung, is accused of using its partner companies as “disguised subcontractors,” illegally dispatching around 10,000 workers to work at those locations. As suspicion mounts that Hyundai Motor is not the only chaebol making large-scale use of illegal dispatching, criticism is increasing against companies that eagerly put laborers to work don’t fulfill their responsibilities as employers.

In a press conference held on June 17 at the National Assembly press building, the Democratic Party and MINBYUN-Lawyers for a Democratic Society said, “We have confirmed that Samsung committed illegal acts including disguising the hiring of workers through subcontracting work to partner firms and then directly handling labor management.” The precedent followed by the courts views as illegal cases of dispatching (disguised subcontracting) in which general contractors sign contracts for work with subcontractors and then directly supervise and direct the workers at those subcontractors, along with cases in which the subcontractors are not actually in control of their own management. When employees work for more than two years under such circumstances, the general contractor is obliged to hire them as full time employees.

At the press conference, documents were released containing testimonies by the heads and employees of these partner companies and material related to examples of Samsung Electronics Service disguising its management of partner companies, including a number of dispatching contracts. These documents reveals that the partner companies were so thoroughly under the thumb of Samsung Electronics Service that it is difficult to view them as having any reality as independent subcontracting companies.

These dispatch contracts state that the partner company (the subcontractor) must receive prior written consent from Samsung Electronics Service for any similar or identical contract. This means that subcontractors are not even able to make business contracts at their own discretion.

Dongrae Premium Service, a Samsung partner company near Busan, lost its contract with Samsung at the end of May. As soon as the contract was terminated, the company shut down its operations and notified Samsung Electronics Service of its plan to lay off its employees. The company management made no effort to win other contracts.

“Samsung ordered the company to shut down so that it could get rid of troublesome workers,” said Democratic Party lawmaker Eun Soo-mi. “When a problem occurs with workers at a partner company, Samsung terminates the contract, establishes a new company, and installs a former Samsung executive as the head of this new company.”

The press conference also proffered evidence that Samsung Electronics Service was substantially involved in the direction and oversight of workers, payment of their wages, and their training and discipline.

Regular employees of Samsung Electronics Service at the deputy general manager level even sent text messages to employees at partner companies to issue work directives. The dispatch contracts also stipulate that Samsung Electronics Service (the general contractor) reserves the right to conduct regular consulting for the partner company (the subcontractor) and review a variety of materials, and that the partner companies are obligated to submit management materials to Samsung Electronics Service. “Our only role was to pass along the wages that Samsung determined to our employees,” testified a head of one such partner company.

“By using disguised partner companies, Samsung is making it harder for fair trade to take place,” said Kwon Yeong-guk, a lawyer who chairs the labor committee for MINBYUN. “While these are superficially relationships between general contractors and subcontractors, in reality the employer of these workers is Samsung Electronics Service. That means this is a case of illegal dispatching. We are going to assemble a fact-finding team to look into Samsung’s illegal activity.”

“Since all of our partner companies are being operated independently, it does not make sense to talk about illegal dispatching,” a spokesperson for Samsung said.

 

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