Yellow Envelope Act: Three Key Issues in the Final Guidelines [Why&Next]

① Ambiguity of ‘Structural Control’ in Employer Status Criteria
② Expanded Scope of Labor Disputes...
When Are Layoffs ‘Objectively Expected’?
③ Questions Over the Effectiveness of Labor Dispute Subjects...
What Constitutes an Employer’s ‘Clear Violation’ of a Collective Agreement?

As the government prepares to finalize its interpretive guidelines for the so-called 'Yellow Envelope Act' (amendments to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act), set to take effect on March 10, 2026, key points of contention between labor and management remain unresolved. Experts note that disagreements over the criteria for determining employer status, the scope of labor disputes, and whether business management decisions should be subject to collective bargaining are unlikely to be settled simply by supplementing the guidelines.

According to relevant ministries on January 7, the Ministry of Employment and Labor is currently gathering feedback from labor, management, and experts to further supplement the interpretive guidelines for the amended trade union law, which have been administratively pre-announced until January 15. Observers inside and outside the government believe that the final guidelines will likely maintain the structure of the existing draft, but will refine the language in areas where concerns from both labor and management are concentrated. Both labor and management are closely watching whether the final version will be interpreted in a way that is unfavorable to their respective interests.

Ambiguity of ‘Structural Control’ in Employer Status Criteria

The most significant point of contention concerns the criteria for determining 'employer status,' which is central to the amended law. According to the guidelines, even in the absence of a direct employment contract, the principal company may be recognized as an employer if it exercises 'structural control' over the working conditions of subcontracted workers. This expands the definition of employer status to include those who substantially control or determine working conditions. The key is that there must be an ongoing transactional structure in which the principal company continuously restricts or controls the subcontractor’s autonomy in determining working conditions, rather than merely intervening occasionally or temporarily. Specific factors for consideration include working hours and rest periods, the scale of workforce deployment, occupational safety management systems, and methods of wage determination.

The problem is that neither labor nor management accepts the concept of structural control as a clear standard. Labor representatives are concerned that emphasizing 'structure' and 'continuity' in structural control could actually narrow the scope of employer status, even when the principal company clearly directs work, manages personnel, or controls safety. They argue that the government’s criteria could be interpreted as recognizing employer status only in cases where the principal company exercises significant direction and supervision over the subcontractor. Labor groups also point out that, in the process of asserting employer status to negotiate with the principal company, subcontracted or indirectly employed workers may face a heavier burden of proof than in cases involving illegal dispatch.

Conversely, management argues that the examples of structural control are overly broad. They contend that the possibility of terminating a subcontract or consignment contract for non-fulfillment, or the principal company’s safety obligations under the Industrial Safety and Health Act, could be mistakenly used as grounds for determining employer status. They also note that case-based examples in the guidelines, rather than quantitative standards, are problematic. It is expected that the final version of the guidelines will also find it difficult to emphasize quantitative criteria due to the wide variety of circumstances between labor and management. Ultimately, there is growing consensus that the determination of employer status will have to be left to the post-facto judgment of labor commissions and the courts.

Expanded Scope of Labor Disputes... The Spark of ‘Objective Expectation’

The boundaries of collective bargaining subjects in relation to the scope of labor disputes also require further clarification. The amended trade union law expands the subjects of labor disputes to include 'business management decisions affecting working conditions' and 'the employer’s clear violation of a collective agreement.' The guidelines identify 'whether there is a substantial and concrete change in working conditions' as the core criterion.

For example, decisions on corporate restructuring, such as overseas relocation of factories or mergers and spin-offs, are not themselves subjects for bargaining. However, the guidelines specify that if layoffs or reassignment are 'objectively expected' in the process, the union can demand negotiations. The Ministry of Employment and Labor cites cases such as when the timing or method of layoffs is under consideration, or when a business transfer to another region is unavoidable for management reasons.

Some in labor circles view this as providing a 'minimum safety net,' but remain skeptical about how the phrase 'objectively expected' will be recognized in practice. They argue that if employers announce management decisions in stages or do not explicitly disclose employment adjustment plans, demands for bargaining are unlikely to be accepted.

Management expresses the opposite concern. They argue that the ambiguous standard of 'objective expectation' could effectively make management decisions such as mergers and spin-offs subject to bargaining, thereby infringing on corporate decision-making autonomy. They warn that this could excessively expand the scope of industrial action. A management representative stated, "The boundary between business management decisions and changes in working conditions must be determined on a case-by-case basis, and simply supplementing the guidelines will not be enough to bridge interpretive differences."

‘Clear Violation’ in Labor Dispute Subjects Likely to End Up in Court

The phrase 'clear violation' in determining whether an issue qualifies as a subject of labor dispute has also emerged as a new source of conflict. The guidelines state that a labor dispute may arise if the employer acknowledges but fails to remedy a violation of a collective agreement, or if the violation is objectively confirmed during labor commission mediation or bargaining guidance. This provision has drawn the attention of labor groups, as it opens the door for disputes over violations of collective agreements to be treated as grounds for industrial action.

Labor representatives question the effectiveness of the provision, arguing that the moment an employer contests the alleged violation, the clarity of the violation is undermined. In contrast, management contends that even interpretive differences between labor and management could become subjects of labor disputes. While the guidelines specify that the clarity of a violation should be determined based on objective evidence and procedures confirmed during labor commission mediation or bargaining guidance, in reality, both labor and management believe that most cases will ultimately require a court ruling to reach a conclusion. Labor law experts believe that even after the final guidelines are issued, they will serve more as reference points for disputes than as tools for reducing them.