[Invest&Law] Law Firms Mobilize All-Out Defense Against "Substantial Control" Ahead of Yellow Envelope Act Enforcement

With just one week left until the enforcement of the revised Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act, commonly known as the "Yellow Envelope Act," demand for legal risk management services among corporations is surging. This is due to the introduction of the concept of "substantial control," which allows subcontractor unions to directly request negotiations with the principal company. In response, major law firms are restructuring their dedicated teams and deploying top experts-including former high-ranking officials from the Ministry of Employment and Labor, as well as former judges and prosecutors-to provide comprehensive services ranging from pre-assessment of substantial control to collective bargaining and response to industrial actions.

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According to the legal community on March 4, Kim & Chang has established a "Labor Policy Task Force (TF)" within its Human Resources and Labor Group to provide in-depth advisory services on new government labor policies and corporate response strategies. The advisory team is led by Kim Wonjeong, head of the Human Resources and Labor Group (13th class of the Judicial Research and Training Institute), along with attorneys Kim Giyoung, Park Jeongtaek, and Kwon Sunha. Notably, the team has recently been strengthened by the addition of key members such as Ju Seona, a former presiding judge (33rd class), and Kang Geom-yoon, former Ministry of Employment and Labor official (37th class). Leveraging its vast pool of professionals, the firm is recognized for providing tailored solutions that reflect the unique characteristics of various domestic and international industries.

Lee & Ko recently reorganized and expanded its workforce into a 50-member "Labor Compliance Team," establishing a proactive response system. The team is led by attorney Jin Changsu (21st class), and the firm has recruited Ahn Kyungdeok, a former Minister of Employment and Labor. The team includes lawyers with experience as prosecutors and judges. They provide comprehensive one-stop legal services addressing complex practical issues such as the differences between the Dispatched Workers Act and the Yellow Envelope Act, and whether the prohibition of substitute labor applies during subcontractor union industrial actions.

Shin & Kim is operating a "Yellow Envelope Act Task Force (TF)" composed of over 30 experts. The team is led by attorney Cho Chanyeong (29th class), a former presiding judge for labor cases at the Seoul High Court, and advisor Kim Minseok, a former Vice Minister of Employment and Labor. Since the recent presidential election, the team has been proactively analyzing pledges and researching precedents and Japanese cases. Shin & Kim is particularly strong in consulting on contract structures, labor cost calculation methods, and bargaining strategies to mitigate risks stemming from the expanded definition of principal employers.

Bae, Kim & Lee is running a "Yellow Envelope Act TF" that provides consulting services to about 100 client companies. The TF, consisting of around 40 members, is led by Kim Sangmin (37th class), head of the Human Resources and Labor Group, and Lee Ukrae (22nd class), a former judge at the Seoul Central District Court. Recently, the team was further strengthened by the addition of Park Hwajin, a former Vice Minister of Employment and Labor, and Park Eunjeong (39th class), a former Supreme Court research judge. The firm is notable for having directly represented lower court cases-including those involving CJ Logistics and Hyundai Steel-that the Ministry of Employment and Labor uses as criteria for assessing substantial control. Among large law firms, it distinguishes itself by directly participating as bargaining representatives and engaging on-site in corporate labor-management issues, thus offering a high level of practical expertise.

Yulchon established a "Yellow Envelope Act Response Center" with about 40 members in August of last year, taking a proactive approach. The center is jointly headed by Jung Jiweon, a former policy director at the Ministry of Employment and Labor, attorney Lee Myeongcheol (30th class), a former Supreme Court labor research director, and attorney Lee Gwangseon (35th class), who has extensive pre-consulting experience. Together, they cover the Ministry, the judiciary, and practical advisory fields. Even prior to the passage of the Yellow Envelope Act, Yulchon built specialized expertise in "substantial control" cases through extensive experience before labor commissions and in litigation. The firm has established a four-phase integrated response process-from pre-assessment of employer status to preparation for negotiations and expansion of industrial actions-and is focusing on securing evidence and organizational restructuring as key pre-enforcement strategies.

Koo Yoon-chul, Deputy Prime Minister and Minister of Economy and Finance, is attending and speaking at the meeting of related ministers on the enforcement of the amended Trade Union Act held at the Government Complex Seoul in Jongno-gu, Seoul on March 4, 2026. Photo by Jo Yong-jun

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HwaHyun has launched an 80-member "New Government Labor Policy TF" to establish an integrated response system. The group is led by attorney Park Chankun (33rd class), TF team leader Park Samgeun (33rd class), and attorney Park Sanghun (16th class), a former editor-in-chief of the Supreme Court Labor Law Practice Research Society, all of whom are former judges. The team is further reinforced by the addition of advisor Lim Seojeong, a former Vice Minister of Employment and Labor, and Baek Sangyun, a senior expert and former deputy head of the Korean Confederation of Trade Unions, providing balanced insights encompassing both government and labor perspectives. The "HwaHyun Yellow Envelope Act Research Society" has contributed policy suggestions that have been partially reflected in the amended enforcement ordinance and interpretation guidelines. The firm is also preparing for various risks, including those related to contract-based employer status between holding companies and affiliates, as well as between principal and subcontractors.

Jipyung is operating a "Yellow Envelope Act TF" composed of about 50 members. The team is co-led by Kim Yongmoon (35th class) and attorney Kwon Younghwan (3rd bar exam), heads of the labor group. Drawing on extensive consulting experience across manufacturing, logistics, and finance, the firm provides comprehensive legal services covering HR, labor, and safety. Jipyung is particularly strong in diagnosing the ambiguous boundary risks where compliance with Industrial Safety and Health Act requirements may, in some cases, be deemed unlawful exercise of substantial control under the Yellow Envelope Act.

On the industrial front, concerns are mounting over management contraction, as the ambiguous standard of "substantial control" and the inclusion of business decisions such as mergers and acquisitions (M&A) and spin-offs as potential subjects of labor disputes have come to the fore. Large corporations that transact with hundreds of subcontractors are exposed to the risk of receiving simultaneous bargaining requests from multiple subcontractor unions due to the separation of bargaining units.

Law firms commonly recommend a thorough review of principal-subcontractor work structures, including all contracts for outsourcing and service prior to the enforcement of the law. One partner attorney at a law firm stated, "It is urgent to prepare objective documentation in advance to prove the absence of substantial control, and to establish in-house dedicated teams and manuals that can consistently respond to the multiple bargaining requests from subcontractor unions."

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