Companies say 'Yellow Envelope' act turns safety compliance into excessive liability, lengthy negotiation
A business survey found that companies say that revisions to the Trade Union Act have extended parent firms’ bargaining obligations beyond workplace safety to wages and bonuses.
Unionized laborers working in the heavy metal industry demand expanded employer liability at a rally held in central Seoul on July 8.NEWS1
Four in 10 companies say labor commission rulings that hold parent companies responsible for bargaining with subcontractors’ unions go beyond what the “Yellow Envelope” act and government guidelines require.
Companies complain that fulfilling their legal obligations has only added to their burdens. Even routine workplace safety inspections have been used to substantiate parent companies’ obligation to bargain with subcontractors’ unions.
What is commonly called the Yellow Envelope act is really an amendment to the Trade Union and Labor Relations Adjustment Act that took effect in March this year. It guarantees collective bargaining rights for indirectly employed and subcontracted workers and restricts companies from seeking damages against unionized workers.
A total of 40.3 percent of companies viewed labor commission rulings as inconsistent with the revised labor law and government guidelines, 12.9 percentage points above the 27.4 percent that considered them consistent, according to a Korea Enterprises Federation’s (KEF) survey released Wednesday. The respondents were 62 companies that have faced labor commission rulings in parent-company-subcontractor disputes.
The biggest grievance among companies is that fulfilling their legal safety obligations has become a liability, a concern cited by 52.0 percent of those critical of the commission’s rulings.
They say labor commissions have treated routine workplace inspections and joint health and safety checks conducted under the Occupational Safety and Health Act and other laws as evidence that parent companies qualify as employers of subcontracted workers.
Companies were also concerned that subcontractors’ unions could expand their bargaining demands beyond the scope of parent companies’ legal responsibilities. That was the leading concern for 66.1 percent of respondents, followed by demands over wages and union activities traditionally handled by subcontractors, at 43.5 percent, and the growing costs of separate, prolonged negotiations with multiple unions, at 33.9 percent.
The revised Trade Union Act defines an employer to include entities that exercise substantial and specific control over working conditions, even without a direct employment contract, but only within the scope of that control. If a parent company is deemed an employer solely on workplace safety issues, it is required to bargain only on those issues.
Demonstrators rally to support the “Yellow Envelope” act in central Seoul on March 10.YONHAP
In practice, however, subcontractors’ unions have demanded higher wages, performance bonuses and guarantees of union activities from parent companies even when their bargaining obligations have been limited to workplace safety issues, according to the federation.
Companies identified clearer criteria for determining parent companies’ employer status as the most urgent priority, cited by 67.7 percent of respondents. Another 54.8 percent called for excluding management decisions, such as investments, business restructuring and organizational changes, from the scope of labor disputes.
“Uncertainty over labor commission rulings continues even after the revised labor act took effect,” said Lee Dong-geun, vice chairman of the KEF. “We need clear, rigorous standards for determining how far parent companies’ responsibilities extend, along with amendments to the law.”
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
