Our paper aims at analyzing the union effect on the externalization of employment relations, focusing on how labor unions affect management's strategic use of non-regular labor within the Korean context of industrial relations. Our study presents several interesting implications. Firstly, the unions' motivator role for managerial use of non-regular labor is more evident than its constrainer role. Secondly, union power exerts a "U-type" impact on the use of indirect non-regular labor, while affecting directly employed nonregular labor in a positive linear way. Thirdly, labor unions in large establishments are more active and influential in representing their members' interests than their counterparts in small establishments with limited financial resources. In particular, the interactive function of the union's power and union leaders' attitudinal inclinations is found to be significant in the negative direction among large establishments.