Knowledge · HR & Labor

Yellow Envelope Act · Amended Trade Union Act, Articles 2 and 3

Yellow Envelope Act (Amendment to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act)

📂HR & Labor⏱2 min read📊Advanced🔗Related 7

What is the Yellow Envelope Act?

In one line
This is the name for the amendment that widens the definitions of employer and worker in Article 2 of the Trade Union and Labor Relations Adjustment Act and limits damage claims for industrial action under Article 3. Its core points are opening a path for subcontract and partner-company workers to bargain with the principal contractor, and restricting large damage claims over strikes.
⚡ Summary in 3 lines
  • Bargaining shifts from the contracting party to the actual employer
  • Individual joint liability for strike damages is limited
  • How on-site managers give instructions is what counts

What this amendment really changes is who you bargain with. Until now, a principal contractor would not come to the table when a subcontractor’s labor union asked to bargain, because it was not the contracting party. The amended Trade Union Act treats whoever actually determines working conditions as the employer, opening the way for the principal contractor to become the bargaining counterpart of a subcontractor’s union. Companies without a union are not exempt either: if you effectively control subcontractor workers’ task instructions, safety, or working hours, your company can be named as the employer.

The issues turn on two articles. Article 2 widens the definition of employer from the contracting party to anyone with actual control, and also opens up the test for whether specially employed and platform workers count as employees. Article 3 limits damage claims arising from industrial action: if the action followed the union’s decision-making, individuals are not held jointly liable, and each participant’s degree of responsibility must be assessed individually. The effective date and detailed criteria are still being filled in by subordinate regulations and by rulings of the Labor Relations Commission and the courts, so rather than reading the articles and concluding “this is how it will work,” check the Ministry of Employment and Labor’s latest guidance together with labor counsel.

The training manager’s first priority is manager training. How on-site managers speak to and instruct subcontractor employees directly can be evidence of employer status, so teach them where to draw the line between giving orders and safety communication. For labor relations staff, the new subjects are the procedure when a bargaining demand arrives, statements that amount to an unfair labor practice, and how to respond during industrial action. If you add a labor relations course to next year’s training plan, put scenario-based response drills ahead of legal explanations.

Two points often go wrong in practice. One is the assumption that “we have no union, so this doesn’t apply to us.” If you use subcontractor, outsourced, or platform workers, bargaining demands come from the outside. The other is the opposite: overreaction. Cutting off all communication with subcontractor employees raises the risk of safety incidents and exposes the company to greater liability under serious accident rules. Summarizing the amendment in a single internal notice and distributing it is also risky, because if the summary is wrong, the notice can be cited in a dispute as the company’s own position.

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💡 In plain English
It is like a building owner who directly assigns work to a tenant’s employees: from that moment, liability follows who actually gives the orders, not what the lease says.
Why it matters in practice
If you use subcontractor workers, a single remark from a site manager can become evidence that you’re their employer. Next year’s manager training will need different topics.
Origin and sources

In 2014, after a court ruling on damages from the Ssangyong Motor strike, a citizen sent KRW 47,000 (≈ US$35) in a yellow envelope. The gesture grew into a fundraising campaign and gave the 'Yellow Envelope Act' its name. Amendments to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act (TULRAA) were proposed and dropped several times, until one was enacted that broadens the definition of employer and limits damages claims. That law is the focus of today’s debate.

An example

Consider a hypothetical case. Company A, an auto parts maker, has 1,800 employees, 14 on-site subcontractors, and 2,400 subcontractor workers at the same plant. This October, a subcontractor union sent Company A, the principal contractor, an official letter demanding bargaining. The CEO’s first question to HR was what to include in next year’s training plan.

  1. Together with a labor law firm, the HR director spent two weeks reviewing how the 86 on-site managers instruct subcontractor employees. They found more than 30 cases a day, on average, of managers directly changing the work sequence.
  2. The production director said, “We can’t stop talking to them just for safety’s sake,” so the labor attorney wrote criteria that separate safety communication from work instructions and formally opened a channel that runs through the subcontractors’ managers.
  3. In designing a 4-hour course for managers, the training team cut the legal commentary to 40 minutes and filled the rest with role-play across 12 situations, such as 'a subcontractor’s employee asks you to approve overtime.'
  4. Six labor relations staff ran a simulation covering everything from receiving a bargaining demand letter to the procedure for unifying bargaining channels. The manager in charge said, “It was the first time I really felt that a single remark could become an unfair labor practice.”
  5. In the two months after training, direct instructions from prime-contractor managers fell from around 30 a day to about 4, and the first working-level talks with the subcontractor’s union ended without a strike, with agreement on 2 items of safety equipment.
Related terms
Labor UnionAn organization that workers form voluntarily to maintain and improve working conditions and raise their status. Its activities rest on the three labor rights guaranteed by the Constitution.Collective BargainingThe process in which a labor union and an employer negotiate working conditions and related matters. The employer may not refuse or stall bargaining without a justifiable reason.Industrial Action · StrikeAction by a union that disrupts normal operations to press its demands. It is protected only if its purpose, parties, procedure, and means are legitimate.Unfair Labor PracticeEmployer conduct that interferes with workers’ exercise of their labor rights. The law prohibits disadvantageous treatment, yellow-dog contracts, refusal to bargain, and interference with the union.Dispatch vs. Subcontracting · Illegal DispatchTwo ways of using outside workers. Whoever gives the directions and orders determines whether an arrangement is dispatch or subcontracting, and when form and substance differ, illegal dispatch becomes an issue.Labor Relations Commission · Remedy ApplicationA quasi-judicial administrative body that mediates and rules on labor disputes. It handles remedy applications for unfair dismissal and unfair labor practices, and mediates labor disputes.Serious Accidents Punishment ActA law that imposes criminal penalties on business owners and executives responsible for management who fail to meet their safety and health obligations when a serious accident, such as a fatality, occurs. The key point is that responsibility for safety falls directly on management, not on the site.
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Last updated 17 Oct 2026 · Reviewed by John Kim

FAQ

If you use subcontractor, outsourced, or platform workers, you’re affected. Bargaining demands can come from a subcontractor’s union rather than your own, and if you were giving instructions directly on site, you could be named as the employer.
Many points aren’t settled by the statutory text alone. Standards keep getting more specific as subordinate regulations and rulings by labor relations commissions and courts accumulate, so it’s safest to check the Ministry of Employment and Labor’s latest guidance alongside labor counsel.
No. The intent is not to impose joint liability on individuals for actions taken under a union’s decision, but to limit claims so that each participant’s share of responsibility is assessed. Unlawful acts themselves are not exempted.
Start with the on-site managers who deal with subcontractor employees every day. Next come the labor relations and HR staff who will handle bargaining demands and industrial action. For executives, a short briefing focused on decision-making issues works best.