Attorney Lee Kwang-seon (35th class of the Judicial Research and Training Institute), head of the Yellow Envelope Law Response Center at YulChon, said in an interview on the 19th that after the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers took effect, demands for talks from subcontractor unions surged, but cited "legal uncertainty" as the main reason the number of corporations that actually entered negotiations has been extremely limited.
The yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers (amendments to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act), which took effect on the 10th, expands the scope of employers and the subjects of labor disputes and limits damage claims, with the key point allowing subcontractor unions to demand talks with parent corporations even when there is no direct contractual relationship.
Within nine days of implementation, 683 subcontractor unions demanded talks at 287 parent business sites, but actual negotiations were limited to 13.
Lee said, "The standard of substantive control is vague, making it difficult for corporations to hastily enter talks," and added, "Confusion is inevitable until case law accumulates." Lee continued, "Even when agreeing to talks, prior review is needed on issues such as whether to unify the bargaining table, conduct individual 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 how to respond and whether the parent company qualifies as an employer. In particular, if the parent refuses to bargain, the Labor Relations Commission must determine employer status within 20 days, so we also receive many requests to prepare written responses for that. It was expected."
─Not many corporations have entered actual talks.
"The yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers only stipulates the abstract concept of 'substantive control' and provides no specific criteria for determining employer status. There are interpretation guidelines from the Labor Ministry, but they are only administrative interpretations. Clear standards have not been presented for various variables that may arise during bargaining. From the perspective of corporations, it is structurally difficult to readily acknowledge control and enter talks. In the end, institutional stability will likely be secured only after a considerable period of court rulings accumulates."
─In what cases is substantive control recognized?
"Looking at lower court cases, there is a relatively consistent tendency to recognize it in work environments, especially in industrial safety. After the Serious Accidents Punishment Act took effect, corporations actively engaged in safety management, but these measures have instead served as grounds for recognizing control. Because subcontracted workers work at parent business sites within in-house subcontracting structures, the parent could not help but be involved in safety and health management to avoid legal liability. Yet measures to prevent accidents end up serving as grounds for recognizing control."
─Conversely, when is it not recognized?
"Wages are a prime example. The parent has no obligation to directly pay the wages of subcontracted workers and does not intervene in the payment process. For this reason, substantive control is often denied in wage-related matters."
─What is the response strategy for corporations when a subcontractor union requests talks?
"First, it is necessary to determine whether there is substantive control over the subcontractor and, if so, over which matters that control extends. If substantive control is recognized, the corporation must agree to bargain according to the procedures set by the Trade Union and Labor Relations Adjustment Act, and conversely, if it is determined that there is no control, the corporation may refuse the demand for talks. However, the appropriateness of this determination will ultimately be reviewed after the fact 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 also be grounds for strikes.
"If a management decision affects working conditions, it is important to consult sufficiently with the labor union in advance. In that process, corporations should fully explain why such decisions had to be made to prevent the issue from escalating into industrial action."
─Hasn't it also become harder to claim damages for union activities?
"It is still possible to claim damages for unlawful union activities. It is true that the 'imperfect joint liability' has been partially limited, weakening the effectiveness of damage claims for unlawful industrial action, 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 and several liability for the full amount of damages. For example, if the damage amounted to 2 billion won, all participants could be liable for the entire amount, and the company could claim the full amount from a specific individual or distribute claims among several people.
However, the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers changes this by requiring the scope of liability for each individual to be calculated separately, considering factors such as status within the union, degree of participation, and income level. Even for the same amount of damage, the individual burden varies. As a result, the responsibility of ordinary union members is greatly reduced, while critics say that from the perspective of corporations, the deterrent effect against unlawful industrial action may be weakened."
─Are damage claims possible even for aggressive industrial actions such as occupations or destruction?
"Filing a damages claim itself is possible. However, as liability is divided individually, the key figure who led the action may bear a heavy burden, while the responsibility of those who merely participated is greatly reduced.
There has been an aspect in which corporations claimed large damages against unions to give ordinary members a warning effect that "if you participate in unlawful acts, you will be held liable." But with the implementation of the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, there are concerns that this deterrent effect will weaken and unlawful industrial action may increase."
─The worker presumption system is being promoted.
"The worker presumption system is a system that recognizes a sole proprietor as a worker if certain requirements are met, and the scope of responsibility could extend to the parent. In this case, the scope of bargaining would widen and disputes could increase."
─Coupled with the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, the burden on corporations appears to have increased further.
"Yes. The scope of bargaining widens and the potential for disputes grows. If a subcontractor re-subcontracts to sole proprietors, those sole proprietors could, based on the worker presumption system, make various demands directly to the parent 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 parent. Corporations bear the burden of proving on their own that the counterparty is not a worker, but it is practically difficult to prove the absence of 'direction and supervision.' This is why there are concerns about an increase in lawsuits over severance pay, annual leave pay, and weekly holiday allowances."