Attorney Lee Kwang-seon, head of the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, response center at YulChon (Judicial Research and Training Institute Class 35), said in an interview on the 19th that although demands for bargaining by subcontractor unions have surged since the law took effect, the number of corporations that have actually entered negotiations remains extremely limited due to "legal uncertainty."
The yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers (Trade Union and Labor Relations Adjustment Act amendments to Articles 2 and 3), which took effect on the 10th, expands the scope of employers and subjects of labor disputes and limits damage claims, with a key point allowing subcontractor unions to demand bargaining even with prime contractors that have no direct contractual relationship.
Within nine days of implementation, 683 subcontractor unions demanded bargaining at 287 prime-contractor business sites, but actual negotiations were limited to 13.
Lee said, "The criteria for substantive control are vague, making it difficult for corporations to rush into bargaining," and added, "Confusion is inevitable until case law accumulates." Lee continued, "Even when agreeing to bargain, prior review is needed on issues such as whether to unify the table, conduct separate talks, or separate bargaining units."
Lee, a labor law expert, joined YulChon in 2023. Lee was selected as a "top lawyer" for 2024–2025 by "Chambers Asia," a legal services evaluator in Asia. The following is a Q&A with Lee.
─What are the main inquiries from corporations regarding the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers?
"The most common questions from corporations that received bargaining demands concern response strategies and whether the prime contractor qualifies as an employer. In particular, if the prime contractor refuses to bargain, the Labor Relations Commission must determine employer status within 20 days, so there have been many requests to prepare responses for that. It was expected."
─Not many corporations have actually entered bargaining.
"The yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, only sets out the abstract concept of 'substantive control' and provides no concrete criteria for determining employer status. The Labor Ministry has issued interpretive guidance, but it remains an administrative interpretation. Clear standards are not presented for various variables that may arise during bargaining. From the perspective of corporations, it is structurally difficult to readily acknowledge control and proceed to negotiations. Ultimately, institutional stability will likely be secured only after a substantial period of court rulings accumulates."
─In what cases is substantive control recognized?
"Lower-court precedents show a relatively consistent tendency to recognize it in work environments, especially in industrial safety. Since the Serious Accidents Punishment Act took effect, corporations have actively pursued safety management, but these measures have, in fact, served as grounds for recognizing control. Given that subcontracted workers, under in-house subcontracting structures, work at prime-contractor business sites, prime contractors had no choice but to be involved in safety and health management to avoid legal liability. However, measures for accident prevention end up serving as grounds for recognizing control."
─Conversely, when is it not recognized?
"Wages are a representative area. Prime contractors are not obligated to pay subcontracted workers directly and do not intervene in the payment process. For this reason, substantive control is often denied in wage-related matters."
─What should be a corporation's response strategy when a subcontractor union requests bargaining?
"First, determine whether there is substantive control over the subcontractor in question and, if so, the extent to which that control reaches specific issues. If substantive control is recognized, corporations must agree to bargain under the procedures set by the Trade Union and Labor Relations Adjustment Act, and if control is deemed lacking, they can refuse the demand to bargain. However, the propriety of this judgment will ultimately be reviewed ex post by the Labor Relations Commission, the courts, or investigative authorities."
─With the implementation of the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, management decisions can now constitute grounds for a strike.
"If a management decision affects working conditions, it is important to consult thoroughly with the labor union in advance. In that process, explain fully why such a decision was unavoidable and work to prevent it from escalating into industrial action."
─Hasn't it also become harder to seek damages for union activities?
"It is still possible to seek damages for unlawful union activities. It is true that the effectiveness of damage claims for unlawful industrial action has weakened somewhat as 'imperfect joint liability' has been partially limited, but the claims themselves are not blocked."
─Specifically, how has it changed?
"Previously, if unlawful industrial action was recognized as a joint tort, participating members and the entire union bore joint liability for the full amount of damages. For example, if damages were 2 billion won, all participants could be liable for the full amount, and the company could claim the full amount from a specific individual or apportion claims among several people.
However, the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, changed this to calculate individual liability separately, considering factors such as a member's position in the union, degree of involvement, and income level. Even for the same amount of damages, the individual burden varies. As a result, while the liability of ordinary union members is greatly reduced, critics say the deterrent against unlawful industrial action may be weakened from the perspective of corporations."
─Is it possible to claim damages even for aggressive industrial action such as occupation or property damage?
"Filing a claim for damages itself is possible. However, as liability is divided individually, a key figure who led the action may bear a heavy burden, while the liability of those who merely participated is greatly reduced.
There is a reason corporations have sought large damage awards against unions: to send a warning to ordinary members that "if you take part in unlawful acts, you will be held responsible." But with the implementation of the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, concerns are being raised that such deterrence has weakened and unlawful industrial action could increase."
─A worker presumption system is being pursued.
"The worker presumption system recognizes a person as a worker if a self-employed individual meets certain requirements, and there is a possibility that the scope of responsibility will extend to prime contractors. In that case, the scope of bargaining would broaden and disputes could increase."
─It appears corporate burdens have grown further in tandem with the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers.
"Yes. The scope of bargaining broadens and the likelihood of disputes increases. If a subcontractor subcontracts again to sole proprietors, those sole proprietors could, based on the worker presumption system, make various demands directly to the prime contractor on the premise that they are workers under the Labor Standards Act, or they could be presumed to be the subcontractor's workers and bargain with the prime contractor. Corporations bear the burden of proving that the counterparty is not a worker, but in reality it is not easy to prove there was no "direction or supervision." This is why there are concerns about an increase in lawsuits over retirement pay, paid leave allowances, weekly holiday allowances, and more."