[Expert Roundtable] The "Yellow Envelope Act" Nears Implementation... The Six-Month Roadmap Is Crucial

Three Key Issues and a Single Challenge
Clarification Needed to Minimize On-Site Confusion

The "Yellow Envelope Act" (the amendments to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act) is set to come into full effect after a six-month grace period, following its passage in the National Assembly on August 24. The core elements are: ▲expansion of the definition of employer, ▲expansion of the scope of industrial action, and ▲limitations on claims for damages. As the law fundamentally alters the structure of the labor market and the dynamics of labor-management relations, perspectives among management, labor, and academia are sharply divided.

Asia Economy held a roundtable to examine the key issues and challenges. The discussion was moderated by Cho Youngjoo, Editor of the Politics and Society Section, with participation from Lee Byunghoon, Professor Emeritus of Sociology at Chung-Ang University; Kim Sunghee, former Professor at Korea University Labor Issues Research Institute; Kim Heeseong, Professor at Kangwon National University Law School; and Jo Inseon, Partner Attorney at YK Law Firm.

The debate over the amendments centers on three main points: first, expanding the scope of employers and employees; second, expanding the scope of industrial action; and third, limiting claims for damages. The moderator noted, "Management is especially concerned about the first and second points, and the third could reignite controversy depending on how it unfolds," and asked the panelists for their overall assessments. The discussion quickly converged on the "expansion of the employer concept," as the root of the issue lies in the ambiguous language of "substantial control" in the law.

Professor Kim Sunghee, former professor at Korea University Labor Issues Research Institute (from left), Professor Lee Byunghun, emeritus professor at Chung-Ang University, Jo Inseon, partner lawyer at YK Law Firm, and Professor Kim Heeseong at Kangwon National University are discussing the "Yellow Envelope Act" at the Asia Economy headquarters. Photo by Heo Younghan

'Definition of Substantial Control'... How Far, and in What Way?

In multilayered employment structures such as primary contractors, subcontractors, special types of employment, and platforms, the criteria for "who is a party to collective bargaining" determine the success or failure of the system. The key issue is how to clarify the legal requirements for "substantial control."

Professor Kim Heeseong stated, "The essence lies more in the expansion of the employer concept than in allowing non-employees to join," adding, "The intent is to recognize employer status up to the primary contractor in a subcontracting structure, but the term 'substantial control' is too vague." He continued, "In cases involving CJ Logistics, Hanwha Ocean, and Hyundai Steel, lower courts have mentioned 'substantial control,' but there are no concrete criteria for judgment," and argued, "Depending on who makes the judgment, the conclusion could differ, undermining legal stability." He further explained, "Ideally, the law should be revised back to the original provisions, but if that is not realistic, supplementary legislation is needed to provide examples of criteria in the law or to establish a basis for delegation in the enforcement decree."

In response, Attorney Jo Inseon said, "Although the three basic labor rights have been formally guaranteed since democratization, in practice, they remain restricted," adding, "Lawsuits for damages and the evasion of employer responsibility have weakened labor rights." Jo Inseon argued, "In industrial sites where even wage increases are impossible without the involvement of the primary contractor, the primary contractor has avoided responsibility by claiming there is no employment relationship," and asserted, "Expanding the definition of employer is the minimum measure to bring rights within the institutional framework."

Professor Lee Byunghoon emphasized, "There is significant symbolic value in restoring the rights of workers in blind spots such as fissured workplaces, indirect employment, special types of employment, and platform workers," and assessed, "Expanding employer status lowers the barrier to entering the formal system." He also stressed, "To minimize confusion at the outset of implementation, the Labor Relations Commission or the Ministry of Employment and Labor should be given at least minimal authority to make determinations."

A 'Review Mechanism' Before the Courts Is Essential for Functionality

When disputes over employer status arise, the workplace comes to a standstill over "who negotiates with whom." If waiting for a final court decision takes years, a prompt administrative decision-making framework is essential.

Professor Kim Heeseong pointed out, "There needs to be a designated institution and authority to make determinations on employer status before the matter reaches the courts," and "At a minimum, there should be provisions delegating the roles of the Labor Relations Commission and the Ministry of Employment and Labor in reporting, mediation, and decision-making." He argued, "Currently, there is no legal basis for delegation in the enforcement decree, so without legislative amendments, any guidelines or manuals would lack legal binding force."

Attorney Jo Inseon explained, "A task force for gathering opinions should operate transparently for six months, and a minimum set of guidelines should be developed by broadly incorporating on-site perspectives from both labor and management."

Former Professor Kim Sunghee added, "With little time left before implementation, it is necessary to set priorities and define only the most essential categories first."

Heesung Kim, Professor at Kangwon National University. Photo by Younghan Heo

'Bargaining Beyond Corporate Boundaries' and Single Bargaining Channels

Recognizing the employer status of primary contractors brings collective bargaining outside the boundaries of individual workplaces. How to reconcile this with the current "single bargaining channel" system is crucial for practical implementation on the ground.

Professor Kim Heeseong said, "If the employer status of primary contractors is recognized, multiple unions may form within a single workplace, immediately raising the issue of single bargaining channels," adding, "There is no standard for whether the unit is the primary contractor or the subcontractor, and it is difficult to resolve this with just enforcement decrees or guidelines." He continued, "The key is who can quickly determine the bargaining parties, but if it goes to court, it could take three to five years," and argued, "It is necessary to determine where the authority for mediation lies before implementation."

In contrast, Attorney Jo Inseon explained, "In industry-wide unions such as the Metalworkers' Union, joint and solidarity bargaining is already taking place," and said, "Rather than mechanically applying single bargaining channels, it is more realistic to operate comprehensive bargaining based on field experience." He added, "In industries with industry-wide unions, multi-party bargaining is already in effect. The basic framework can be shared, and details can be resolved through separate negotiations."

Professor Lee Byunghoon stated, "Diagonal bargaining between primary contractors and subcontractors is different in nature from the existing system," and suggested, "Guidelines at the level of enforcement decrees or rules should be established, and in the long term, the relevant legal provisions should be revised."

Does It Include Managerial Decisions... The Boundary Between Management Rights and the Three Basic Labor Rights

To what extent do managerial decisions directly related to working conditions fall under this? There needs to be a clear standard for distinguishing between "infringement of management rights" and "effectiveness of the three basic labor rights."

Former Professor Kim Sunghee said, "Managerial decisions such as divesting business units, restructuring, plant closures, and overseas investment can all become issues, but it is impossible for the law to regulate every detail."

Professor Kim Heeseong argued, "Excessive restrictions could infringe on the constitutionally guaranteed freedom of management," and insisted, "The scope of industrial action should be narrowed." He also said, "The expression 'managerial decisions affecting working conditions' is overly broad," and warned, "If the legal concept is not specified, it could be interpreted arbitrarily."

In response, Attorney Jo Inseon said, "It is not realistically possible for unions to indiscriminately intervene in highly technical managerial decisions," and suggested, "Administrative guidelines can ensure that only matters directly related to working conditions are covered." Jo Inseon further explained, "It is not overseas investment itself, but when it directly affects domestic employment and working conditions, the need for bargaining arises," and "It is possible to specify procedures for notification and consultation on major managerial decisions in collective agreements."

Former Professor Kim Sunghee added, "For decisions requiring speed and confidentiality, such as building sales or new investments, priorities should be set and standards presented to avoid misunderstanding them as full subjects of bargaining."

Byunghoon Lee, Professor Emeritus at Chung-Ang University. Photo by Younghan Heo

Limiting Claims for Damages: Balancing 'Effectiveness of the Three Basic Labor Rights' and 'Employer's Right to Defend'

Excessive claims for damages have restricted the right to strike. However, there are strong counterarguments that limiting damages without protective measures creates another imbalance. The key is a "substitute balancing mechanism."

Attorney Jo Inseon said, "Claims for damages have been misused as a means to restrict the right to strike, one of the three basic labor rights," and argued, "This amendment does not grant new rights, but is the minimum mechanism to make constitutional rights enforceable."

On the other hand, Professor Kim Heeseong pointed out, "In overseas cases, limitations on damages are accompanied by employer defenses such as allowing replacement workers and prohibiting total occupation," and warned, "If we limit damages without such defenses, the balance could be lost." He further argued, "In particular, the phrase 'exemption from liability for damages unavoidably caused in response to the employer's illegal acts' could allow for self-remedy, raising constitutional concerns."

In response, Professor Lee Byunghoon said, "Safeguards such as 'no work, no pay' and union member voting are already strongly in place," and "The premise that strikes are an easy option does not reflect reality." Attorney Jo Inseon added, "This law is not 'protective legislation' but 'guaranteeing basic rights,'" and "Exaggerated crisis rhetoric does not reflect the actual situation."

On-Site Concerns and Counterarguments: "Endless Disputes" vs. "Exaggerated Crisis Rhetoric"

Before the legal interpretations are settled, there are warnings that disputes will increase, while others counter that fears are overstated given the real difficulties of striking.

Professor Kim Heeseong expressed concern, "Until legal precedents are established, ongoing disputes over interpretation could destabilize the industrial ecosystem," and "Manuals and guidelines lack binding force, so neither unions nor employers are likely to accept them." He also pointed out, "Allowing all rights disputes to become subjects of industrial action is problematic," and "Disputes over interpretation and implementation of collective agreements should be decided by the Labor Relations Commission or the courts as a rule."

Attorney Jo Inseon said, "Strikes are by no means easy. There are strong real-world constraints such as 'no work, no pay,' high voting thresholds, and internal differences among union members," and argued, "This amendment is closer to 'normalization' by international standards."

Jo Inseon, Partner Attorney at YK Law Firm. Photo by Heo Younghan

International and Industrial Structure Context: Outsourcing, Platforms, and the EU Due Diligence Act

The law is only the minimum framework. But for the system to function, it must be supported by industrial structure and social culture. How to internalize the social costs of outsourcing must also be discussed.

Professor Lee Byunghoon said, "A significant portion of future disputes are likely to arise not in main factories, but in subcontracting, non-regular, and platform sectors," and "Such conflicts must be resolved within the institutional framework."

Former Professor Kim Sunghee explained, "The industrial environment has changed dramatically over the past decade. With the spread of outsourcing and platforms, debates over employer status have become more complex," and said, "As in the European Union's discussions on corporate due diligence, it is necessary to consider ways to reduce the transfer of risks and inequalities through outsourcing." He added, "Some view the amended law as an experiment in global standards," and "Social responsibility and employment stability must be considered together."

Wage Gaps Between Primary Contractors and Subcontractors and the 'Politics of Solidarity'

The law does not immediately redistribute the pie. However, only with an institutional foundation can paths to solidarity and coexistence open. The key is trust and design between regular and subcontracted workers.

Professor Lee Byunghoon said, "There is consensus on the need to address wage gaps between primary contractors and subcontractors, but careful design is needed due to concerns that direct bargaining could be conflated with illegal dispatch arguments."

Professor Kim Heeseong diagnosed, "It is uncertain whether unions at large companies will actually agree to 'median equalization,' and it is difficult to see the law alone reducing the gap."

Attorney Jo Inseon said, "This law does not immediately redistribute the pie. It is the minimum system to lay the foundation for coexistence and reducing discrimination between primary contractors and subcontractors," and "While it is not easy for regular union members to give up their share, industry-wide joint bargaining and side support-what can be called the 'politics of solidarity'-can provide sufficient strength."

Sunghee Kim, former professor at Korea University Labor Issues Research Institute. Photo by Younghan Heo

Six-Month Roadmap: What, How Far, and By Whom

There is not much time left before implementation. If minimum standards, procedures, and allocation of authority are not established, confusion on the ground will lead to distrust in the system.

Former Professor Kim Sunghee said, "If the expansion of employer status is stipulated, the institution and authority to make such determinations before the courts should also be specified," and "It is necessary to consider supplementing the main law to clarify the division of roles and delegation basis for the Labor Relations Commission and the Ministry of Employment and Labor."

Professor Kim Heeseong emphasized, "There is no basis for delegation in the current enforcement decree. If we rely solely on administrative guidelines without amending the law, there is no legal binding force." He added, "The scope of industrial action must also be specified in legal terms."

Professor Lee Byunghoon said, "The Ministry of Employment and Labor's task force must broadly gather opinions from both management and labor and hold open discussions on guidelines to increase acceptance of the system."

Between Guaranteeing Basic Rights and Predictability: 'Implementation Design' Is the Decisive Factor

There is an inevitable clash between the purpose of the amendment (guaranteeing basic rights and addressing blind spots) and predictability on the ground (rule of law and stability). The key to minimizing conflict is the "implementation design" surrounding the legal text. Experts generally agree on the direction, but also concur that without concrete measures before the law takes effect, confusion is inevitable.

Former Professor Kim Sunghee said, "I agree with the intent of the law, but industrial realities have changed," and emphasized, "The authority and procedures for making determinations must be clarified as much as possible before implementation."

Professor Kim Heeseong argued, "While I agree on the need to resolve the dual structure of the labor market, supplementary legislation is needed to ensure that the rule of law and predictability are not undermined."

Attorney Jo Inseon explained, "This amendment is not about protection, but about guaranteeing basic rights," and "It can be operated sufficiently with the wisdom of those on the ground."

Professor Lee Byunghoon stated, "Implementation is ultimately a process of social learning," and "Open discussions and ongoing dialogue are necessary."

Ultimately, the outcome depends on clear criteria for determining "substantial control," concrete boundaries for the scope of industrial action, separation of procedures for rights disputes and industrial action, a prompt pre-court review mechanism, and operational guidelines that accommodate industry-wide, joint, and comprehensive bargaining. Six months is a short time. However, if priorities are set and a bridge is built between the legal text and the workplace, the "Yellow Envelope Act" can achieve a soft landing as a predictable change, rather than an exaggerated source of fear.

Moderator: Cho Youngjoo, Editor and Head of the Politics and Society Section

Compiled by: Yoo Byeongdon, Reporter