87% of Companies Say "Yellow Envelope Act Will Negatively Impact Labor Relations"... Only 1% Expect Positive Effects

99% of Companies Call for Urgent Supplementary Legislation
"Implementation Should Be Delayed and Legal Clarity Enhanced"

Concerns have been raised that the amendment to the Trade Union Act, commonly known as the Yellow Envelope Act, set to take effect in March next year, will have a negative impact on labor-management relations. There are calls for supplementary legislation to either postpone the implementation date or clarify legal concepts.

According to a survey conducted by the Korea Employers Federation (KEF) targeting 100 companies with annual sales of over 500 billion won, 87.0% of the responding companies predicted that the Yellow Envelope Act would have a 'negative impact' on labor-management relations.

On the other hand, 12.0% of companies responded that there would be little impact, while only 1.0% expected a positive effect.

Regarding the negative impact, the most frequently cited reasons were 'an increase in requests for bargaining with the primary contractor by subcontractor unions and excessive demands' (multiple responses, 74.7%) and 'an increase in legal disputes over practical control due to ambiguity in the legal provisions' (64.4%).

In relation to the core aspect of the amendment, which is the 'expansion of the definition of employer,' companies identified 'a surge in legal disputes' as the greatest risk. Specifically, 77.0% of respondents pointed to 'an increase in legal conflicts over whether the primary contractor qualifies as an employer due to ambiguous criteria for determining practical control,' and 57.0% anticipated that 'primary contractors would be asked to negotiate on matters over which they have no decision-making authority.'

Regarding changes to the compensation for damages provisions, the most common expectation among companies (59.0%, multiple responses) was 'an increase in demands for immunity from union illegal acts.' This was followed by concerns about 'an increase in illegal acts other than industrial action' (49.0%) and 'an increase in illegal acts such as workplace occupation' (40.0%).

Notably, 99.0% of the companies surveyed responded that 'supplementary legislation by the National Assembly is necessary' to resolve the issues with the amended Trade Union Act.

As for the direction of supplementary legislation, 'postponing the implementation of the law until legal uncertainties are resolved' (multiple responses, 63.6%) was overwhelmingly cited. This was followed by 'clarifying the criteria for managerial decisions subject to labor disputes' (43.4%) and 'clarifying the concept of employer' (42.4%).

Jang Jungwoo, Head of Labor-Management Cooperation at the Korea Employers Federation, stated, "The fact that 99% of the surveyed companies are calling for supplementary legislation reflects serious concerns that unresolved legal uncertainties could lead to significant labor-management conflict and confusion," adding, "We urge the government and the National Assembly to take these concerns seriously and to discuss supplementary legislation, including the postponement of the law's implementation."