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European chamber warns 'Yellow Envelope Bill' may drive businesses out of Korean market

Published: 29 Jul. 2025, 12:01

European business leaders from the European Chamber of Commerce in Korea (ECCK) attend a press conference on business regulation environment in Korea at the Seoul Press Center in Jung District, central Seoul on Sept. 21, 2023. [YONHAP]

European companies operating in Korea voiced strong opposition to the "Yellow Envelope Bill" — an amendment to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act — being pushed by the Democratic Party, warning it could turn business executives into “potential criminals.”

The "Yellow Envelope Bill" aims to limit companies from making claims for damages against legitimate labor union disputes.

The companies also signaled that if legal risks from the bill rise, some may consider pulling out of the Korean market.

The European Chamber of Commerce in Korea (ECCK), which represents European firms operating in the country, issued a statement titled “Restriction on Ambiguous Expansion of Employer Definition under Trade Union Act” on Monday, criticizing the bill.

“The amendment expands the definition of an 'employer' to include those who substantially and specifically influence working conditions, regardless of whether they are party to an employment contract,” the ECCK said in the statement. “This expansion abstractly broadens the scope of legal liability, thereby undermining the principle of legal certainty, particularly the requirement of clarity under the principle of legality.

“This vague and expanded definition may treat business operators as potential criminals and significantly discourage business activity,” the statement read. “The impact is particularly severe for foreign-invested companies, which are highly sensitive to legal risks stemming from labor regulations.”

The ECCK further expressed concern that the bill could result in “heightened conflict between principal contractors and subcontractors.” It urged a reconsideration of the amendment, warning that it may “pose serious threats to the employment of both current workers and future generations.”

It is unusual for a major association representing foreign firms to take an official stance on a bill promoted by the ruling party, underscoring fears of its potential economic impact.

The Korea Enterprises Federation also released a statement on Tuesday, saying “If the bill leads to more frequent strikes by subcontractor unions, it could destabilize the industrial ecosystem, reduce jobs and seriously undermine the competitiveness of Korean industry.”

The federation warned that “if major business decisions such as investments, relocations or restructuring become subject to collective bargaining and industrial action, companies will struggle to adapt to rapidly changing industrial environments — negatively affecting the national economy.”

The "Yellow Envelope Bill" expands the definition of "employer" to hold parent companies more accountable for subcontracted workers and limits the scope of damage claims that can be filed against labor unions or individual workers.

Though the bill passed the National Assembly twice under the previous Yoon Suk Yeol administration, it was ultimately scrapped after being vetoed. However, it is being revived under the new administration amid strong demands from the labor sector.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY NA SANG-HYEON [[email protected]]