The yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, took effect on the 10th. Subcontractor unions can now demand bargaining with parent corporations even without a direct contractual relationship. Corporate layoffs and restructuring are also included as subjects of dispute, and corporations' damage claims in the event of a union strike are restricted to some extent.
The yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, is an amendment to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act. The government has issued guidelines and interpretive notices since the law was promulgated in September last year, but corporations still express significant concern. On the ground, standards are seen as ambiguous, raising expectations that confusion will be unavoidable for the time being. We examined key issues and concerns arising from the implementation of the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers.
① Who is the employer? Legal battles may follow
The biggest change in the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, is that subcontract workers can demand bargaining with parent corporations. The amended law recognizes an entity as an employer if it is in a position that can "substantively and specifically control or decide" workers' working conditions, even if it is not a party to the employment contract.
In its guidance, the Labor Ministry presented "structural control over working conditions" as the criterion and explained the scope of employers through several examples. However, in actual workplaces, the parent–subcontractor structure is more intricately intertwined than the examples, prompting concerns that disputes over interpretation may continue. There are also expectations of more requests to the National Labor Relations Commission for employer determinations, potentially leading to legal challenges by those who object.
② Layoffs and restructuring also subject to bargaining… Conflicts may grow during business reorganization
A key concern for management is that disputes may arise during business reorganization. Previously, wages and working hours were the main subjects of bargaining, but the amended law considers layoffs or restructuring within business management decisions as subjects for bargaining.
On the first day the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, took effect, the union at a Hyundai Mobis subsidiary held a rally demanding "no sale of the lamp business." As a result, some expect conflicts to intensify during business reorganization, such as factory relocations or reductions in production lines. Concerns about labor–management clashes are particularly strong in the auto sector undergoing an electric vehicle transition, the petrochemical industry under heavy restructuring pressure, and the game industry with frequent organizational reshuffles. Some also worry that the pace of corporations' business reorganization could slow.
③ They said subcontractor wages aren't a bargaining subject… Unions push wage fights
Some subcontractor unions are moving to put "wages" on the agenda in bargaining with parent corporations. The Labor Ministry previously said in its guidance that "as a rule, subcontractor workers' wages should be discussed with the subcontractor that is a party to the contract," adding, "However, if there are circumstances suggesting the parent corporation 'substantively and specifically decided' wages, they may exceptionally become a subject of bargaining."
However, there are cases where unions are demanding wage increases as a bargaining agenda even when they do not meet these criteria. The Metal Workers' Union under the Korean Confederation of Trade Unions (KCTU) decided on the 3rd to demand wage increases and employment succession when changing vendors. Employees of Welliv, a subcontracted catering company for Hanwha Ocean, are also staging a sit-in to demand performance bonuses.
The Korea Enterprises Federation said on the 8th, "Some in labor are demanding bargaining on issues where employer status has not been recognized," adding, "Labor–management disputes will continue."
④ Labor–labor(勞勞) conflicts also a concern
There are also concerns that labor–labor (勞勞) conflicts could erupt if subcontract workers demand wage hikes or expanded benefits from the parent. With corporate resources limited, improvements in subcontract workers' wages or benefits could affect what parent-company workers receive.
Some also expect internal conflicts to intensify if subcontract workers demand direct employment by the parent. During the Moon Jae-in administration, when Incheon International Airport Corporation (IIAC) and the National Health Insurance Service pushed to convert nonregular workers to regular status, regular employees protested, citing fairness concerns.
⑤ Limits on strike-related damage claims… Employers' response capacity shrinks
Management also worries that employers now have fewer means of response than unions due to this legal revision. The amended law limits liability for damages related to union strikes, reducing the employer side's capacity to respond.
The Korea Enterprises Federation said on the 8th, "Even before the law took effect, subcontractor unions occupied business sites and staged sit-ins to apply pressure," adding, "Please refrain from illegal acts and follow bargaining procedures."