European companies may ultimately withdraw from Korea over Yellow Envelope Bill: ECCK
Published: 25 Sep. 2025, 19:14
Updated: 25 Sep. 2025, 19:24
![European Chamber of Commerce in Korea (ECCK) Chairman Philippe van Hoof speaks during a press conference at the Korea Press Center in Jung District, central Seoul on Sept. 25. [EUROPEAN CHAMBER OF COMMERCE IN KOREA]](https://koreajoongangdaily.joins.com/data/photo/2025/09/25/8a598e7a-df01-409d-b54a-fbf54296ec6f.jpg)
European Chamber of Commerce in Korea (ECCK) Chairman Philippe van Hoof speaks during a press conference at the Korea Press Center in Jung District, central Seoul on Sept. 25. [EUROPEAN CHAMBER OF COMMERCE IN KOREA]
The European Chamber of Commerce in Korea (ECCK), which represents European companies operating in Korea, has once again raised concerns over the so-called "Yellow Envelope Bill," warning it could constrain foreign companies' operations.
At issue is the broadened definition of "employer," which ECCK says could expose companies to criminal liability in situations in which the appropriate bargaining counterpart is unclear.
“With the launch of the new administration, significant changes are expected in Korea's regulatory and market landscape, and foreign investors are concerned that, amid these transitions, they may be unintentionally involved in potential violations, or that reasonable business decisions could be treated as criminal offenses, which could discourage investment,” said ECCK Chairman Philippe van Hoof at a press conference marking the release of the ECCK White Paper 2025 in Seoul on Thursday.
“Before the [Yellow Envelope Bill] was passed, we had the great pleasure of meeting Minister Kim Young-hoon of the Ministry of Employment and Labor to convey European companies' concerns. The ministry responded positively and agreed to continue cooperative discussions to help address these issues,” said van Hoof.
Passed by the Cabinet in September and set to take effect in March next year, the Yellow Envelope Bill, an amendment to Article 2 of the Trade Union Act, expands the definition of employer to include "those who, even if not a party to the labor contract, can substantively and specifically control or determine working conditions." This will allow subcontracted workers to request negotiations with the primary contractor. The business community predicts that the unclear criteria for "substantial control" will inevitably lead to confusion in the workplace.
Business groups at home and abroad have warned that the threshold of “substantive control” is vague, potentially leading to confusion and disputes in the workplace.
In its white paper, ECCK argued the law “abstractly broadens the scope of legal liability, thereby undermining the principle of legal certainty,” and risks “[treating] business operators as potential criminals and significantly discourages business activity.”
![A section of the European Chamber of Commerce in Korea's white paper for 2025, which addresses the Yellow Envelope Bill, an amendment to Article 2 of the Trade Union Act [SCREEN CAPTURE]](https://koreajoongangdaily.joins.com/data/photo/2025/09/25/b9b1bff2-3132-4e0f-8853-a544b2e2eedc.jpg)
A section of the European Chamber of Commerce in Korea's white paper for 2025, which addresses the Yellow Envelope Bill, an amendment to Article 2 of the Trade Union Act [SCREEN CAPTURE]
The ECCK added that “if a company faces the risk of criminal penalties for refusing to engage in collective bargaining, it may ultimately choose to withdraw from the Korean market.”
"[We] urge reconsideration of the proposed proviso to Article 2 of the Trade Union Act, as it may pose serious threats to the employment of both current workers and future generations," the ECCK wrote.
Other business chambers, including the American Chamber of Commerce in Korea (Amcham), have raised similar alarms, heightening concerns that foreign investment could be discouraged.
Reported foreign direct investment in the second quarter fell 19.1 percent year-on-year to $6.7 billion, according to the Ministry of Trade, Industry and Energy. Actual inflows dropped 16.3 percent to $3.6 billion. While U.S. tariffs were a major factor, uncertainty in Korea’s business environment could accelerate capital flight.
The government has been seeking to allay concerns. Labor Minister Kim told business leaders at the Korea Chamber of Commerce and Industry on Wednesday that the law is “a growth law and a tool to promote dialogue.”
Industry Minister Kim Jung-kwan also promised Amcham, ECCK and five other chambers that "reasonable alternatives" would be developed.
But skepticism remains, with one business representative saying, “The government says it will supplement the law with manuals and guidelines, but the statute itself lacks delegation clauses for implementing decrees.”
![The Yellow Envelope Bill, an amendment to Article 2 of the Trade Union Act, passes in the National Assembly on Aug. 24. [KIM SEONG-RYONG]](https://koreajoongangdaily.joins.com/data/photo/2025/09/25/7a309668-2196-49df-90c9-6cfe60fdad1c.jpg)
The Yellow Envelope Bill, an amendment to Article 2 of the Trade Union Act, passes in the National Assembly on Aug. 24. [KIM SEONG-RYONG]
“That raises doubts about how effective any supplements will be,” the representative added.
At the same meeting on Thursday, chairs of ECCK's sectoral committees also presented industry-specific recommendations.
“Europe and Korea have long maintained a strategic defense partnership grounded in mutual trust, and enhancing the transparency and predictability of the offset framework is a crucial step toward reinforcing sustainable and trusted cooperation,” said Francois Piolet, the chair of the ECCK Aerospace & Defense Committee.
Andrew Hong-joong Kim, the chair of the ECCK Passenger Vehicles Committee, urged reform of Korea’s fleet-average emissions system, recommending that the current criminal penalty framework for regulating average vehicle emissions be converted into an appropriate administrative sanction, in line with the principle of proportionality in economic criminal law, and expressed hope for a positive review from the government.
Franz Hotten, the vice-chair of the ECCK Beer, Wine & Spirits Committee, criticized current e-commerce regulations, noting that "[excluding] most imported liquor products and is combined with an outdated ad valorem tax system, restricts market dynamics and limits consumer choice."
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.
BY NA SANG-HYEON [[email protected]]
with the Korea JoongAng Daily
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