Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Samsung SDS faces collective bargaining demands from fledgling union
Visitors browse Samsung SDS' booth during the 2026 Public AI Expo at the KINTEX exhibition center in Goyang, Gyeonggi Province, June 23. Courtesy of Samsung SDS
By Nam Hyun-woo
Samsung SDS is facing growing pressure to improve its incentive system, as its labor union secured majority support just a day after its launch and demanded collective bargaining with management.
According to the company on Wednesday, it has decided to scrap a proposed revision to its incentive system, as support for the plan reached only about 40 percent in an employee vote.
The company had held the vote from June 24 through Tuesday, seeking approval from at least half of its employees to replace its existing cash-based “target achievement incentive” with treasury shares worth up to 20 percent of annual salary. However, the proposal faced employee opposition, ultimately prompting workers to establish the company's first labor union.
The union, the Samsung Group United Union Samsung SDS Chapter, was officially launched on Monday and secured more than 5,500 memberships the following day, surpassing half of the company's workforce of about 11,000. Membership rose to around 5,800 on Tuesday night before easing to 5,686 as of Wednesday morning.
This screen capture of Samsung SDS' labor union website shows that the union is on its second day of establishment with 5,686 members and one ongoing item on its agenda. Captured from Samsung SDS' labor union website
The union on Tuesday requested collective bargaining in accordance with legal procedures. The company refused to comment, but noted that it will begin the legally required process, including issuing a public notice to determine whether there are any other bargaining representatives and verifying whether the union represents a majority of employees.
The now-scrapped proposal was the primary reason for the union's establishment. It would have raised the benchmark for compensation to 20 percent from that of the current system, which is tantamount to less than 10 percent of annual salary.
However, employees opposed the plan because the value of the treasury stock could fluctuate depending on market conditions. In particular, the scheme was designed to reflect not only Samsung SDS' share price but also an index tracking KOSPI-listed IT service companies, meaning the payout could fluctuate regardless of the company's performance.
The union argued that the scheme was disconnected from employees' actual performance, could trigger temporary downward pressure on the share price if a large number of employees sold their shares around the same time and would reduce retirement benefits by eliminating the existing target incentive from the basis for severance pay calculations.
“What we wanted was not a thoughtless increase in performance-based compensation, but a transparent and fair evaluation process,” the union said in a statement. “The company has severely undermined the trust of many of our colleagues."
One of the main reasons for the company to propose the controversial scheme was related with severance pay calculations.
In January, the Supreme Court ruled in a lawsuit filed by 15 Samsung Electronics employees that the company's target incentive “qualifies as wages” and therefore must be included in severance pay calculations.
As the ruling triggered similar lawsuits at Samsung Electronics, Samsung SDS is believed to have pursued the shift to stock-based compensation to reduce its financial burden and minimize the risk of similar severance pay lawsuits by employees.
The union's leader told Yonhap News Agency that the union is relieved the situation had been resolved without legal action. "We hope our colleagues can put the confusion behind them and return to their work," he said, adding the union has “nothing to say about negotiation plans at this point."