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)
What is the Yellow Envelope Act?
- 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.
Inwoo LeeLeadership, communication, and performance management expert
Kyungtae KimHR expert · organizational culture and HR strategy consultantIn 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.
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.
- 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.
- 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.
- 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.'
- 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.”
- 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.