[Yellow Envelope Act Clears Committee: A Structural Shift in Korean Labor Law]

📅 Date

July 28, 2025 (published July 29)

✍️ Author & Source

Nam Ji-hyun (남지현 기자) – The Hankyoreh (한겨레)

🧾 Summary (Non-Simplified)

The National Assembly’s Environment and Labor Committee approved amendments to Articles 2 and 3 of Korea’s Labor Union and Labor Relations Adjustment Act—commonly referred to as the “Yellow Envelope Act.”

Key structural changes include:

• Redefinition of “employer” to include companies that substantively control working conditions, even without direct contracts (e.g., subcontractors vs. original contractors).

• Expansion of legitimate strike grounds, now covering managerial decisions that affect working conditions (e.g., layoffs).

• Limitation of retaliatory lawsuits (손해배상소송) against unions and workers for damages caused during labor disputes when actions were aimed at defending workers' rights.

• Creation of a proportional liability standard, taking into account worker status, income, role, and context.

Labor unions (both KCTU and FKTU) praised the reform as a historic advance, though they noted some limitations. Implementation is scheduled in 6 months instead of 1 year.

⚖️ Five Laws of Epistemic Integrity

1. ✅ Truthfulness of Information
   – Clear, verified legislative event with documented legal language and timeline.

2. 📎 Source Referencing
   – Reported by Hankyoreh with quotes from union leaders, law professors, and committee chair. Traceable to legislative process.

3. 🧭 Reliability & Accuracy
   – Covers key clauses and implications, avoiding editorial distortion. Legislative articles (2, 3) are correctly identified.

4. ⚖️ Contextual Judgment
   – Integrates historical precedents (Ssangyong layoffs, 28-year delay) and the unique Korean subcontracting environment. Provides union and academic views.

5. 🔍 Inference Traceability
   – Explains how the expanded employer definition and narrowed damage claims may shift corporate-union dynamics. No speculative leaps.

🧾 REFERENCES FOR BBIU ANALYSIS: Yellow Envelope Act (South Korea, July 2025)

1. LABOR UNIONS QUOTED

• KCTU (Korean Confederation of Trade Unions / 민주노총)
  → Issued an official statement calling the passage of the Yellow Envelope Act a “historic advancement” in guaranteeing workers’ constitutional rights (unionization, collective bargaining, and industrial action).

• FKTU (Federation of Korean Trade Unions / 한국노총)
  → Expressed general support for the bill, stating that while “some aspects are disappointing,” it represents a significant step forward for labor rights.

2. ACADEMIC REFERENCE

• Professor Jeong Young-Hoon (정영훈 교수)
  → Affiliation: Pukyong National University (부경대학교)
  → Assessment: The amendment provides subcontracted workers with meaningful access to collective bargaining, and marks a positive structural shift in addressing previously unprotected labor segments.

🧩 BBIU Structured Opinion: Yellow Envelope Act

The passage of the Yellow Envelope Act represents a short-term political maneuver to resolve long-standing labor tensions without undertaking the deeper structural reforms South Korea urgently needs. While the law may be seen as a symbolic gesture toward subcontracted workers’ rights, it introduces significant risks to private property, contractual clarity, and enterprise-level meritocracy.

⚠️ Core Problems Identified:

1. Blurring of Employer Responsibility
   The revised definition of "employer" now includes upstream companies with de facto influence over working conditions. This creates legal ambiguity and may lead to an overextension of liability, reducing incentive for firms to engage in outsourcing or support the SME ecosystem.

2. Exemption from Damages for Union Actions
   The clause stating that unions or workers causing damage while “defending their interests” bear no liability undermines the foundational principle of property rights and opens the door to unpenalized sabotage under the guise of protest.

3. No Leadership Accountability in Unions
   The absence of term limits or rotation mechanisms for union leadership perpetuates internal ossification, corruption, and political capture within labor structures—often turning unions into de facto political actors rather than transparent worker representatives.

4. Evasion of Comprehensive Labor Reform
   Rather than dismantling the inefficient dual structure of regular vs. irregular workers, this law circumvents the hard choices by expanding legal protections unevenly, and reinforcing union power without demanding reciprocal responsibility or modernization.

🛠️ BBIU Recommendations:

1. Abolish the “Irregular Worker” Category
   Replace it with a performance-based, flexibly tiered employment model that protects workers' dignity while incentivizing productivity and long-term career development.

2. Mandate Union Leadership Rotation
   Introduce maximum one-term leadership mandates with transparent financial audits and performance reporting to restore public trust and reduce political entrenchment.

3. Restore Property and Contractual Integrity
   Amend the controversial damage liability clause to reintroduce proportional accountability based on role, intentionality, and scale of disruption.

4. Conditional Expansion of Bargaining Rights
   Allow bargaining rights for subcontracted workers only if paired with productivity-linked metrics and dispute resolution mechanisms that do not impose systemic costs on unrelated stakeholders.

🎯 Final Position

The Yellow Envelope Act is an emotionally resonant but structurally insufficient response. It prioritizes narrative appeal over economic integrity, and risks detaching South Korea’s labor market further from global competitiveness. True progress requires dismantling structural hypocrisy, not expanding legal asymmetries under political pressure.