Renewed Push for "Yellow Envelope Act"... Business Community Calls for Caution [Concerns from Industry] ②

Amendments to Articles 2 and 3 of the Trade Union Act, a Key Pledge of President Lee Jaemyung
Ruling Party Pushes for Legislation Again with Reintroduction... Opposition Party Has History of Veto
Business Community: "Expanding the Definition of Employer Undermines Legal Stability"
Labor and Management Clash Over Interpretation of Hyundai Heavy Industries Precedent
Fifty-five Percent of Foreign-Invested Companies Say 'Negative for Management'... Growing Concerns in Industry

With the inauguration of the Lee Jaemyung administration, the push for amendments to Articles 2 and 3 of the Trade Union Act, commonly known as the "Yellow Envelope Act," is expected to gain renewed momentum. This bill, which expands the definition of "employer" and limits the liability for damages related to illegal strikes by labor unions, was one of President Lee's key campaign pledges.

The bill had previously been passed under the leadership of the Democratic Party in both the 21st and 22nd National Assemblies, following the Moon Jaein administration. However, former President Yoon Sukyeol exercised his veto, citing concerns about industrial disruption and conflicts with the legal system, causing the bill to stall. Earlier this year, Democratic Party lawmakers Park Hongbae, Kim Taeseon, and Park Jeong reintroduced the amendment, signaling the start of full-fledged legislative discussions.

The amendment seeks to expand the definition of "employer" to include "anyone who has substantial influence over the determination of working conditions, regardless of whether an employment contract exists," and to limit civil liability for damages related to union industrial actions.

The business community has called for careful review, arguing that such provisions could place a burden on corporate management. The Korea Employers Federation pointed out that, based on the 2010 Hyundai Heavy Industries precedent, expanding the interpretation of "employer" requires caution.

Although this precedent held Hyundai Heavy Industries, as the principal contractor, responsible for unfair labor practices related to the dismissal of subcontracted workers, it did not recognize the company as a bargaining party for collective negotiations. In a 2017 lawsuit filed by the in-house subcontractor union against Hyundai Heavy Industries demanding collective bargaining, both the first and second trial courts did not recognize employer status, and the case is currently awaiting a full-bench Supreme Court decision.

The Korea Employers Federation argued, "Expanding the scope of legal responsibility in an abstract manner violates the principle of clarity under the rule of law," and added, "If amendments to Article 3 block claims for damages related to illegal strikes, industrial sites could effectively become lawless zones."

Concerns were also highlighted in a survey conducted last year by the Federation of Korean Industries targeting foreign-invested companies. Among 100 manufacturing companies with more than 100 employees, 55% responded that the "Yellow Envelope Act" would have a negative impact on management. Of these, 6% said "very negative," 49% "somewhat negative," while only 9% said "somewhat positive" and 1% "very positive." The main concerns cited were increased burden of contract management (27.3%), rise in strikes by subcontractor unions (25.3%), and escalation of conflicts between principal and subcontractors (22.1%).

While labor groups continue to argue for the legitimacy of the amendment based on precedents recognizing principal contractors as employers, the business community is pushing back, citing potential harm to the industrial ecosystem and legal stability. Tensions between political circles and industry are expected to continue, depending on the timing and scope of the bill's passage.

A representative from the Federation of Korean Industries stated, "The amendment to the Trade Union Act risks encouraging an overreliance on strikes to resolve issues, rather than fostering cooperation through dialogue between labor and management," adding, "A comprehensive review is necessary."