KEF Criticizes Yellow Envelope Act Guidelines as "Overly Broad and Ambiguous"

Concerns Over Expanded Employer Definition and Excessive Collective Bargaining

The Korea Employers Federation (hereinafter referred to as KEF) has expressed concerns over the government's guidelines on the Yellow Envelope Act (the amendment to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act), particularly regarding the excessive expansion of the definition of employers.

On December 26, the Ministry of Employment and Labor announced for administrative notice the "Draft Guidelines for the Interpretation of the Amended Trade Union Act." The draft includes specific criteria and examples related to the expanded definition of employers (Article 2, Item 2) and the expanded scope of labor disputes (Article 2, Item 5) as stipulated in the amended law. The administrative notice period runs until January 15 of the following year.

The Ministry of Employment and Labor presented "structural control over working conditions" as the standard for determining employer status. This means that if a primary contractor structurally restricts the ability of a subcontractor to determine the working conditions of its employees-thereby fundamentally and continuously limiting the subcontractor’s discretion or autonomy-such actions may constitute structural control.

KEF raised concerns about the example given for structural control, which mentioned "the possibility of terminating a subcontract or consignment contract in the event of non-compliance." KEF argued that this could be misunderstood to mean that even contract terminations due to ordinary breaches in subcontracting agreements would fall under structural control.

In the areas of labor and safety, the guidelines specify that if a primary contractor actually dominates or controls the overall industrial safety and health system, substantial control may be recognized. KEF responded, "The examples for determining employer status in the fields of labor and safety are overly broad," and added, "There are concerns that even the fulfillment of safety and health obligations by the primary contractor toward subcontracted workers, as stipulated by the Industrial Safety and Health Act, could be interpreted as establishing employer status."

KEF also expressed concerns that demands for collective bargaining might surge even in cases of business management decisions such as mergers or splits. According to the amended Trade Union Act, business management decisions aimed at changes in corporate organization-such as mergers, splits, transfers, or sales-are not subject to collective bargaining. However, the new guidelines state that if mass layoffs or job reassignments are "objectively foreseeable" as a result of such business management decisions, demands for collective bargaining, such as employment security, may be made. The term "objectively foreseeable" is ambiguous, leading to concerns that the standard for excluding business management decisions like mergers or splits from collective bargaining could become meaningless.

KEF stated, "The examples and related content regarding the criteria for determining employers and the scope of labor disputes specified in the interpretation guidelines should be clarified, and confusion in the industrial field during the initial implementation of the amended Trade Union Act must be prevented."