'CU Incident' Dramatically Resolved... But the Yellow Envelope Act Has the Food Industry on Edge

As the strike by members of the Cargo Truckers Solidarity Division, who deliver goods to CU convenience stores, was resolved after 22 days, the so-called “Yellow Envelope Act” (the amendment to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act), which served as a catalyst for conflict between the sides, is now targeting the food industry. There are concerns that since product manufacturing and logistics (delivery) are core processes for the food and beverage industry, a recurrence of the CU incident is possible.

According to industry sources on April 29, the Public Transport Workers’ Union Cargo Solidarity Division (Cargo Solidarity) under the Korean Confederation of Trade Unions (KCTU) reached a tentative agreement on a collective bargaining agreement through negotiations with BFG Logis, the logistics subsidiary of BGF Retail, which operates CU. Cargo Solidarity plans to immediately lift the blockade of major centers after signing the agreement at a formal signing ceremony on the same day.

It is reported that during this round of negotiations, Cargo Solidarity demanded BGF Logis to agree to an increase in transportation fees, more days off, a ban on filing claims for damages, and a complete withdrawal of applications for injunctions against obstruction of work.

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Earlier, the CU branch of the Cargo Solidarity’s convenience store division began a strike on the 7th, urging direct negotiations with BGF Retail and BGF Logis. During protests, union members blockaded some of CU’s logistics centers and production factories, halting the shipment of goods. On April 20, at a Cargo Solidarity rally in front of the Jinju CU logistics center, a non-union cargo truck driver struck union members, resulting in one fatality and two injuries.

The Yellow Envelope Act allows a principal company to be recognized as an “employer” if it gives “substantive instructions” in the course of work, even if it does not have a direct employment contract with subcontractor workers. This means the principal company is now more obligated to respond to requests for negotiation from subcontractor unions, and refusal to comply could result in punishment as an unfair labor practice.

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For this reason, there are predictions that the Yellow Envelope Act could be applied in the food and beverage industry, where OEM (original equipment manufacturing) production and logistics divisions are often established as subsidiaries, allowing delivery workers to directly demand negotiations. Sangmidang Holdings, which operates Paris Baguette, is a representative example. This company has a logistics subsidiary called GFS, which exclusively handles logistics for Sangmidang Holdings. Currently, GFS negotiates labor conditions such as wages with drivers on its own, but there is talk that in the future, the principal company could be brought to the negotiating table.

In fact, in 2021, the Paris Baguette branch of Cargo Solidarity’s Gwangju Division under the KCTU staged a delivery refusal, demanding that Sangmidang Holdings, the principal company, adjust delivery routes.

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Food companies that do not have production facilities and manufacture products via OEM (original equipment manufacturing) arrangements are also subject to the Yellow Envelope Act. Companies like Ottogi and Paldo, which outsource production of certain products to OEM partners, could fall under the scope of the Yellow Envelope Act if they exercise control or supervision over the OEM companies, depending on the degree of intervention. The problem is that there is no clear standard for determining how much the principal company has intervened in the work of the OEM partner.

Kim Youngjin, an attorney at Kwangjang Law Firm who has mainly handled labor cases, said, “It is natural for principal companies to manage production schedules, but if they are perceived to control even the working methods or hours of subcontractor employees in detail, the likelihood of the Yellow Envelope Act being applied increases,” and added, “Companies should be mindful of the Yellow Envelope Act issue and exercise their right to oversee subcontractors with caution.”

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