The yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, takes effect on the 10th. Subcontract workers will be able to demand negotiations with the parent corporations even if they are not in a direct labor-management relationship. In addition, corporations' claims for damages will be limited for labor unions' legitimate industrial actions.
The yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, amends Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act, and corporations are raising several concerns. Corporations with many subcontractors say they could end up having to continue labor-management negotiations endlessly.
ChosunBiz reviewed the key points based on the amended law and the Ministry of Employment and Labor (MOEL)'s "manual for win-win bargaining procedures between parent companies and subcontractors" and "interpretive guidelines."
1) Must bargain with subcontractor worker groups they do not directly employ
The biggest change in the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, is that large parent corporations must also bargain with subcontractor worker groups they do not directly employ. In Article 2 of the amended Trade Union and Labor Relations Adjustment Act, "employer" now includes "a person who, even if not a party to the labor contract, can substantially and concretely control or determine working conditions."
Also, as "business management decisions that substantially and concretely change a worker's status" are included in the scope of collective bargaining, there are concerns that labor disputes may increase.
2) Can every subcontractor union bargain directly with the parent company?
No. If the parent company merely demands delivery deadlines and end products or only controls access procedures, it is highly likely not to be recognized as the employer of the subcontractor union.
By contrast, if the parent company determines key working conditions such as the subcontractor's working hours or break times, work schedules, and work environment, it is more likely to be recognized as the employer.
Whether employer status applies is determined by the Central Labor Relations Commission. Early in implementation, cases are likely to flood the labor commission, and lawsuits challenging its decisions may also increase.
3) Do the parent company union and subcontractor unions bargain together?
No. The government's position is that, because the scope of bargaining and interests differ between the parent company union and the subcontractor unions, separating bargaining units is the principle. Even if they work at the same business sites, the parent company union and the subcontractor unions will have different bargaining structures.
4) Must the parent company negotiate dozens of times year-round with subcontractor unions?
The Ministry of Employment and Labor (MOEL) says this is an "excessive concern." That is because a subcontractor union must go through the "single bargaining channel" process to bargain with the parent company.
Single bargaining channeling is a system in which, when there are two or more labor unions at one business site, a single representative union is designated to bargain with the employer. If individual bargaining is demanded without going through this process, the employer has no obligation to comply.
However, the labor ministry also allows separation of bargaining units among subcontractor unions. Separation is permitted when ▲ unions' interests differ, ▲ representation of interests is inadequate, or ▲ there is a possibility of conflict among unions. It is also separated when ▲ differences in working conditions among subcontractors are large or ▲ employment types or bargaining practices differ.
Because of this, business groups worry that "if bargaining units are easily separated, we may have to bargain individually with unions at hundreds of subcontractors."
5) Must unions consent to management decisions such as adopting robots or entering new industries?
The labor ministry views management decisions themselves—such as adopting robots, entering new industries, or investing overseas—as not subject to collective bargaining. Mergers, partitioning, transfers, and sales are also not, in themselves, subjects of collective bargaining. However, if layoffs, restructuring, or reassignments occur in the process, they are subject to labor disputes.
Meanwhile, converting fixed-term workers to permanent positions; establishing standards to ensure fairness in disciplinary and promotion systems; and setting standards related to extending the retirement age are subjects of collective bargaining.
6) What happens if the parent company refuses to bargain?
It may constitute an unfair labor practice. The labor ministry said, "If a parent employer does not respond to a subcontractor union's demand for collective bargaining, it will be subject to legal action for refusal or neglect of bargaining, as an unfair labor practice."
7) If an illegal union strike responds to the parent company's unlawful acts, does it get a free pass?
The amendment added a clause stating that "there is no liability for damages if, in order to defend the interests of the labor union or workers against an employer's unlawful act, the employer is unavoidably harmed."
The labor ministry explained, "As a concept of self-defense, liability may be exempted within a reasonable scope only when there is no other means and a response is unavoidable." However, because the scope of legitimate industrial action requires legal judgment, conflict may continue.