Locally thermal quantum systems may contradict traditional thermodynamics: heat can flow from a cold body to a hotter one, if the two are highly entangled. We show that to recover thermodynamic laws, we must use a stronger notion of thermalization: a system S is thermal relative to a reference R if S is both locally thermal and uncorrelated with R. Considering a general quantum reference is particularly relevant for a thermodynamic treatment of nanoscale quantum systems. We derive a technical condition for relative thermalization in terms of conditional entropies. Established results on local thermalization, which implicitly assume a classical reference, follow as special cases.