Government to Draft Yellow Envelope Act Guidelines...‘No Binding Force, Rendered Ineffective’

Yonhap News

The so-called "Yellow Envelope Act" (the amendment to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act), which has long been a key demand of the labor sector, passed the National Assembly plenary session for the first time in 10 years. After a six-month grace period, it is expected to take effect as early as March next year. In the meantime, the government plans to form a task force (TF) to develop detailed guidelines and manuals to address the concerns of the business sector. However, since the government's follow-up measures are likely to be advisory in nature, confusion and backlash from the business community appear inevitable.

According to government ministries on the 25th, the Ministry of Employment and Labor began forming a TF to collect opinions from both labor and management immediately after the passage of the Yellow Envelope Act. The aim is to ensure a smooth landing for the law by bringing together perspectives from business, labor, and the government to create a comprehensive guideline. The Ministry of Employment and Labor stated, "We are aware of concerns raised on the ground and will closely examine key issues to minimize uncertainty during the implementation process."

The problem is that the Yellow Envelope Act does not contain any enabling provisions that allow for delegation to enforcement decrees, meaning that the guidelines prepared by the government as follow-up measures can only be advisory. An enabling provision is a clause in a law that delegates specific matters to subordinate regulations such as presidential decrees. However, the Yellow Envelope Act lacks language such as "matters of enforcement shall be prescribed by presidential decree," which would grant the government such authority.

The main concern for the business community regarding this amendment to the Trade Union Act is the "expansion of the definition of employer" (amendment to Article 2, Section 2 of the Act). Previously, only business owners or their representatives were considered employers, but the revised law expands the definition to include "those who have the actual and specific authority to control or determine certain working conditions." The key point is that if a parent company has an impact on the working conditions of subcontracted workers, it will now be obligated to engage in collective bargaining.

However, there are limitations, such as the lack of a clear definition of who qualifies as an employer and ambiguity regarding which management decisions can become the subject of labor disputes. Immediately, business groups such as the Korea Employers Federation and the Korea Chamber of Commerce and Industry have voiced concerns, stating, "The scope of employers and the concept of labor disputes have been excessively expanded. Legal disputes between labor and management are inevitable due to this uncertainty." In fact, interpretations may differ depending on individual cases, such as whether the relocation of overseas factories can be the subject of a dispute or whether layoffs due to management reasons can be contested. Some argue that issues where labor and management are sharply divided will ultimately have to be decided by the courts.

The provision limiting claims for damages (amendment to Article 3) is also likely to be controversial. Previously, if a union's industrial action was deemed illegal, companies could file damage claims amounting to tens of billions of won. The revised law does not unconditionally protect or exempt illegal acts, but it does require that the scope of liability for damages be reasonably limited according to the degree of the union's contribution to the act. Immediate discussions are needed regarding the degree of the union's contribution and the scope of exemption. In addition, the newly introduced provision that "an employer may exempt a union from liability for damages arising from industrial action" has also been pointed out as a factor that could further intensify labor-management disputes.

The government intends to use these guidelines to meticulously prepare manuals on criteria for determining employer status for parent companies, bargaining procedures, and the scope of labor disputes, and is even considering including some of these elements in enforcement decrees if necessary. An official from the Ministry of Employment and Labor explained in a phone interview, "Through six months of TF discussions, we will address the concerns of the business community and may consider including these in the revised enforcement decree."

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