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'Yellow Envelope' law takes effect tomorrow, and the industry must avoid confusion

Published: 09 Mar. 2026, 00:00

Union members and Progressive Party supporters celebrate after the National Assembly passes a revision to the Trade Union and Labor Relations Adjustment Act, widely known as the “Yellow Envelope" law, during a plenary session on Aug. 24, 2025. [YONHAP]

Amendments to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act, widely known as the “Yellow Envelope” law, will take effect tomorrow following a six-month grace period. The legislation aims to strengthen the rights of subcontracted workers by expanding their bargaining rights and limiting the liability for damages of workers involved in strikes.

The intent behind the law is understandable. However, the possibility of increased labor-management conflict calls for careful preparation.

The government has issued guidelines regarding the enforcement rules to reduce confusion. Even so, tension is already building in industrial workplaces. Because subcontracted unions can now demand direct negotiations with primary contractors, labor groups say they will intensify any actions against companies that refuse such requests. Some unions have even announced plans for a general strike in July.

Business groups have reacted with alarm. The Korea Enterprises Federation distributed a guideline to member companies, outlining procedures for collective bargaining between main contractors and subcontractors ahead of the law’s implementation. But concerns remain that without additional institutional safeguards, companies alone will struggle to prevent labor disputes.

In some workplaces, subcontracted unions have already demanded negotiations and staged sit-ins, highlighting the potential for wider conflict once the law is fully enforced.

Companies are particularly concerned that management decisions may face new obstacles, as the revised law allows matters related to business operations to become subjects of negotiation if they affect working conditions.

This could become especially sensitive in manufacturing industries, in which the adoption of AI-based robotics is expanding. Labor disputes over such changes could slow technological innovation and operational restructuring.

Another risk is conflict between different unions. Primary contractor unions and subcontractor unions may clash over bargaining priorities or workplace decisions. If negotiations become prolonged or disputes occur frequently, corporate competitiveness could suffer.

The government must work to minimize such confusion and disagreement in the industrial sector. Issues that do not meet the criteria for employer responsibility, as well as core management decisions directly related to corporate competitiveness, should not become targets of indiscriminate bargaining demands.

When disputes arise, authorities should also ensure swift review and mediation to reduce the social costs of labor conflict. Of course, labor groups bear responsibility for this too, and limits on liability for strike-related damages should not lead unions to engage in illegal actions.

The law will soon reshape labor relations in Korea’s industrial sector. Ensuring that its implementation strengthens workers' rights without undermining stability will require restraint and responsibility from government, businesses and workers alike.

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.