Business Sector Counters 'Yellow Envelope Act' with "Allowing Replacement Labor During Strikes"... Concerns Over 'Labor-Management Conflicts' (Comprehensive)

Allowing Alternative Work and Prohibiting Workplace Occupation
Formal Proposal to Government for Strike Improvements
"US and UK Dismiss Employees for Workplace Occupation"

Kim Hyung-su, chairman of the Geoje-Tongyeong-Goseong Shipbuilding Subcontractors Branch of the Korean Metal Workers' Union, speaks at a Metal Workers' Union press conference regarding the labor-management agreement on the reinstatement of subcontractor workers dismissed from Daewoo Shipbuilding & Marine Engineering, held on the morning of the 8th in front of the National Assembly in Yeouido, Seoul. (Photo by Yonhap News)

[Asia Economy Reporters Moon Chaeseok and Choi Seoyoon] The business community has proposed to the government improvements in labor-management relations that include allowing replacement labor during strikes and prohibiting workplace occupations. This is interpreted as a countermeasure against the so-called 'Yellow Envelope Act (Amendment to the Labor Union and Labor Relations Adjustment Act),' which limits the scope of corporate claims for damages against illegal union strike actions.

On the 19th, the Federation of Korean Industries (FKI) announced that it had proposed to the Ministry of Employment and Labor an 'Improvement Plan for Establishing Balanced Labor-Management Relations,' which includes allowing replacement labor to cover losses caused by union strike actions and prohibiting illegal workplace occupations by unions.

The seven measures proposed by the FKI are: ▲allowing replacement labor during strike actions ▲prohibiting workplace occupations ▲improving the unfair labor practices system ▲complying with relevant rules when non-working employees enter workplaces ▲expanding the effectiveness of collective agreement validity periods ▲improving strike voting procedures ▲strengthening the effectiveness of administrative orders to correct illegal collective agreements.

"Let us 'manage' losses with replacement labor when strikes occur"

The core of the proposal is to allow employers to cover losses caused by strikes through replacement labor such as new hires, subcontracting, and dispatching. It calls for establishing a system to secure the 'right of corporate defense,' which directly conflicts with the labor sector's intent behind the Yellow Envelope Act.

It also requested the creation of strong sanctions to eradicate illegal workplace occupations by unions, noting that under the current Labor Union Act, the prohibition of workplace occupation is limited to 'facilities related to production and other major tasks and equivalent facilities,' leaving other areas as essentially the union's 'playground.'

Additionally, it argued that the mismatch between the validity period of collective agreements (up to 3 years) and the maintenance period of the bargaining representative union's status (2 years) causes practical difficulties in concluding collective agreements, and thus the bargaining representative union's status maintenance period should be aligned to 3 years.

Choo Kwang-ho, head of the FKI Economic Headquarters, said, "While Korea sufficiently guarantees the right of unions to strike, unlike major advanced countries, the employer's right of defense is insufficient. To minimize industrial damage caused by labor conflicts and to correct the tilted playing field in favor of unions, it is urgent to amend the labor union law in line with global standards."

Meanwhile, the Democratic Party of Korea has selected the Yellow Envelope Act as a key legislative task for the regular session of the National Assembly, and the Justice Party has also pushed for its enactment as party policy. On the other hand, the ruling People Power Party and the business community strongly oppose it, warning that illegal actions by militant unions could paralyze the industry, making it a hot issue in this regular session.

The business community's call for institutional improvements to strengthen employers' defense rights against union strike actions is interpreted as a response to growing concerns over the Yellow Envelope Act actively promoted by opposition parties. There are fears that if the Democratic Party and Justice Party push it through in the current opposition-majority parliament, illegal strikes will be encouraged, inevitably causing damage to companies.

Amid growing concerns over a 'perfect storm' (large-scale economic crisis) in the global economy, the conflict is expected to reignite as companies facing increased uncertainty and the labor sector's push to significantly expand labor rights clash.

"US and UK dismiss workplace occupations with dismissal as an advanced country lesson"

The core of the seven tasks the FKI demanded the Ministry of Employment and Labor to correct is to allow measures such as 'replacement labor' through new hires when unions engage in strike actions, and to enable sanctions and dismissals of union members who illegally occupy workplaces.

Especially regarding the eradication of workplace occupations, this is a sensitive issue for the business community due to the recent trend of increased on-site occupations by union members including non-working union members (such as dismissed workers) following the passage of the 'Three Labor Laws.' Kim Taegi, executive committee member of the Job Solidarity, said, "The controversy over the Yellow Envelope Act should be seen as a 'property rights infringement' by the labor sector (one-sidedly against companies)," pointing out that "people other than the parties involved (non-union member workers) inevitably suffer significant damage."

The FKI argued that illegal acts such as assault, facility destruction, and business obstruction are occurring in areas where workplace occupations are allowed due to blind spots in the Labor Union Act, citing the June dock occupation incident at Daewoo Shipbuilding & Marine Engineering as an example. The term 'helpless' was also used. Even in advanced countries, there is a strong view that union workplace occupations must be thoroughly prevented. According to the FKI, in countries like the US, UK, and Germany, strikes are only allowed outside the workplace. In the US and UK, disobedient workers can be dismissed.

Lee Jun-hee, labor-management relations law team leader at the Korea Employers Federation, which represents employers on the Minimum Wage Commission, criticized, "There is no country in the world that is pushing legislation to completely prohibit claims for damages for acts such as damaging company property or assaulting specific individuals." He added, "Under current law, Korea already prohibits employers from claiming damages for losses caused by strike actions conducted through legitimate (lawful) procedures, so the labor sector should prioritize efforts to conduct strike actions 'lawfully.'"

"Union strikes 'helpless'... conflicts persist even after wage and collective agreement negotiations"

In addition to restricting illegal union strike activities, the FKI included in its 'seven tasks' requests to improve irregularities in wages and collective agreements (wage and collective bargaining agreements, or 임단협). This is to respond to the spread of 'blind lawsuits' by the labor sector and the increase in social costs. It pointed out various irregularities in collective agreements and indiscriminate unfair labor practice lawsuits by unions.

The FKI proposed to the government that the validity period of collective agreements and the status of the bargaining representative union should both be maintained at '3 years.' Under current law, the effect of collective agreements between management and the bargaining union lasts for 3 years, but the bargaining union's status is only recognized for 2 years. If the bargaining union changes before the agreement expires, the losses increase accordingly, and the agreement is unlikely to be properly observed.

The FKI said, "To effectively extend the validity period of collective agreements and establish stable labor-management relations, the validity period of collective agreements and the maintenance period of the bargaining representative union's status should both be set to 3 years."

The FKI also argued that the problematic regulations related to unfair labor practices, which provide unions with opportunities to 'sue first and ask later,' should be revised. According to the FKI, Korea's unfair labor practice system unilaterally regulates only employers and imposes criminal penalties for violations, leading unions to frequently file lawsuits and complaints. According to the 2020 Employment and Labor White Paper published by the Ministry of Employment and Labor last year, only 15.5% of employers reported for unfair labor practices were actually prosecuted. The remaining 84.5% were considered baseless.

Conversely, there are no specific regulations on unfair labor practices by unions. There is no legal basis to sanction acts such as unjustified refusal to negotiate, coercion to join specific unions, or demands for operational support. In the US, both unions and employers are equally regulated, but there are no criminal penalties. In Japan, only employers are regulated like in Korea, but there are no criminal penalties. Germany and the UK do not have an unfair labor practice system at all.

The FKI said, "To maintain a balance in bargaining power and establish a fair labor-management order, it is necessary to delete employer criminal penalty provisions and introduce an unfair labor practice system for unions, as in the US and Japan."

This content was produced with the assistance of AI translation services.