[HRS Report] Yellow Envelope Act: Core Meaning and Key Q&A(English Ver.)
Yellow Envelope Law: Core Meaning and Major Q&A 『Core Meaning of the Yellow Envelope Law』 1. Bargaining and Strikes Possible for Disagreements on 'Working Conditions’ Previously, bargaining and strikes were only possible for undecided working conditions (interest disputes) limited to the subject matter of 'collective bargaining'. However, going forward, bargaining and strikes will be possible even for matters that have already been decided. Therefore, the scope of bargaining and strikes is expected to expand to include cessation of unfair labor practices, wage arrears, reinstatement of dismissed workers, etc. Strikes will be possible even when labor-management disputes arise over the interpretation and application of work rules and collective agreements that have been agreed upon and implemented between labor and management.CurrentAmendedArticle 2 5. "Labor dispute" means a state of dispute arising from disagreements between a trade union and an employer or employers' organization (hereinafter referred to as "parties to labor relations") regarding the determination of working conditions such as wages, working hours, welfare, dismissal, and other treatment. In this case, disagreement means a case where there is no room for agreement through autonomous negotiations even if the parties continue their efforts to reach an agreement.Article 2 5. "Labor dispute" means a state of dispute arising from disagreements regarding the determination of working conditions such as wages, working hours, welfare, dismissal, workers' status, and other treatment, and business management decisions affecting working conditions, and from an employer's clear violation of collective agreements on matters specified in Article 92(2)(a) through (d) between a trade union and an employer or employers' organization (hereinafter referred to as "parties to labor relations"). In this case, disagreement means a case where there is no room for agreement through autonomous negotiations even if the parties continue their efforts to reach an agreement. Additionally, if a collective agreement has been concluded between labor and management on the following matters, bargaining and strikes will be possible if the company violates the collective agreement: a. Wages, welfare benefits, and retirement allowancesb. Working and rest hours, holidays, and vacationsc. Reasons for disciplinary action and dismissal and important proceduresd. Safety and health and disaster reliefe. Facilities, convenience provisions, and meeting attendance during working hoursf. Strike activitiesComment of HRS Expert※ Simple investment or factory expansion alone will not be included in labor disputes. Cases that are closely related to working conditions and inevitably involve changes in working conditions, such as layoffs, will be subject to labor disputes. 2. Expanded Scope of Immunity with 'Other Union Activities', Limitation, Immunity, and Prohibition of Employers' Damage Compensation Claims Against Unions CurrentAmendedArticle 3 (Limitation of Damage Compensation Claims) An employer cannot claim compensation from a trade union or workers for damages incurred due to collective bargaining or industrial action under this Act.① An employer cannot claim compensation from a trade union or workers for damages incurred due to collective bargaining or industrial action, or other trade union activities under this Act.② A trade union or workers who unavoidably cause damage to an employer to defend the interests of the trade union or workers against the employer's illegal acts shall not be liable for compensation.③ When a court recognizes damage compensation liability against workers due to collective bargaining, industrial action, or other trade union activities, it must determine the liability ratio for workers who are liable for damage compensation according to the following: 1. Position and role in the trade union 2. Circumstances and degree of participation in industrial action, etc. 3. Degree of involvement in damage occurrence 4. Wage level and amount of damage compensation claim 5. Cause and nature of damage 6. Other matters deemed necessary for fair distribution of damage④ Trade unions and workers liable for compensation under paragraph 3 may request the court to reduce or exempt the compensation amount. In this case, the court must consider the debtor's economic condition, family relationships such as support obligations, guarantee of minimum living expenses, and maintenance of existence when determining the reduction or exemption and degree for each debtor.⑤ Notwithstanding Article 6 of the "Personal Guarantee Act," personal guarantors shall not be liable for compensation for damages arising from collective bargaining, industrial action, or other trade union activities.⑥ An employer shall not exercise the right to claim damage compensation for the purpose of endangering the existence of a trade union or interfering with its operation, or for the purpose of interfering with union members' trade union activities and causing damage.Article 3-2 (Exemption of Liability) An employer may exempt trade unions or workers from liability for damage compensation arising from collective bargaining, industrial action, or other trade union activities. Previously, trade unions received civil and criminal immunity only for 'legitimate bargaining and industrial action', but according to amended Article 3, paragraph 1, trade unions will be immune even when companies suffer damages due to 'other trade union activities' in addition to bargaining and industrial action. According to paragraph 2 of the same article, trade unions will be immune even when they unavoidably cause damage to companies through strikes, etc., in response to companies' illegal acts. According to paragraph 3 of the same article, when workers are held liable for damage compensation for participating in strikes through trade union activities, a mandatory provision has been established for courts to calculate damage compensation amounts according to individual workers' specific liability ratios. In the future, courts must consider all of the following when determining damage compensation amounts: "position and role in the trade union, circumstances and degree of participation in industrial action, degree of involvement in damage occurrence, wage level and damage compensation claim amount, cause and nature of damage, and other matters deemed necessary for fair distribution of damage.“Comment of HRS Expert※ This can also be interpreted as strengthening the employer's burden of proof. In reality, employers filing damage compensation lawsuits must prove each individual worker's degree of strike participation, damage contribution, and fault, which will require considerable effort. This is expected to significantly lower the damage compensation recognition rate compared to before. According to paragraph 4 of the same article, a 'right to request reduction of compensation amount' for trade unions and workers liable for damage compensation has been newly established. When trade unions and workers exercise the right to request reduction, courts will judge the reduction based on "the debtor's economic condition, family relationships such as support obligations, guarantee of minimum living expenses and maintenance of existence." This reflects the social impact of cases like the Ssangyong Motor incident, which was the biggest reason for proposing the Yellow Envelope Law - court decisions ordering massive damage compensation amounts that trade unions and workers cannot bear. According to paragraph 5, personal guarantors shall not be liable for compensation for damages arising from collective bargaining, industrial action, or other trade union activities. With the establishment of paragraph 6 of the same article, employers are 'prohibited' from exercising the right to claim damage compensation that endangers the existence of trade unions or involves frequent or large damage compensation claims, or interferes with trade union operations and activities, or causes damage without legitimate reason. According to Article 3-2, the employer's discretionary right to exempt trade unions or workers from damages caused to the employer has been specified. 3. Expansion of Employer Scope under Trade Union Act Previously, only those who were parties to employment contracts had bargaining obligations, but with this law amendment, even if a prime contractor is not a party to an employment contract with subcontractor workers, if the prime contractor is in a position to 'substantially and specifically control and determine' the subcontractor workers' working conditions, they will be considered an employer under the Trade Union Act and have bargaining obligations within that scope.Comment of HRS Expert※ Industries with many subcontractors, such as the finished car industry, may receive bargaining requests from dozens of subcontractor trade unions to the prime contractor.▶ However, not all prime contractors will have bargaining obligations with subcontractor workers. Bargaining obligations will only arise for those 'in a position to substantially and specifically determine subcontractor workers' working conditions.'▶ When prime contractors refuse to bargain, trade unions can file an unfair labor practice relief application with the Labor Relations Commission to determine whether the prime contractor is an employer under the Trade Union Act before bargaining with the prime contractor. In this case, if there is a bargaining obligation but bargaining is unfairly refused, it becomes 'unfair labor practice of refusing to bargain' and may even result in criminal punishment. 4. Previously Impossible Occupations Can Now Form Trade Unions: Special Employment Workers, Platform Workers, etc. Previously, only workers who were recognized as having relatively high exclusivity and considerable subordination - key elements of workers under the Trade Union Act - could establish and join trade unions as workers under the Trade Union Act. However, after the amendment, platform workers, special employment workers, etc., who were previously denied worker status under the Trade Union Act, can now establish trade unions.Comment of HRS Expert※ However, this does not mean that cases composed of self-employed persons are recognized as trade unions. The premise that the subject of trade unions must be 'workers' is maintained even after the amendment. 『Major Q&A』 Now, do subcontractor trade unions have to go through bargaining channel unification procedures including the prime contractor's trade union? Article 29-2, paragraph 1 of the Trade Union Act stipulates that when there are two or more trade unions established or joined by workers in one business or workplace regardless of organizational form, bargaining channel unification procedures must be followed. With the implementation of the Yellow Envelope Law, as trade union employer status extends partially to non-employment contract parties, subcontractor trade unions may have to go through bargaining channel unification procedures including the prime contractor's trade union recognized as an 'employer under the Trade Union Act' during channel unification procedures. How far should fair representation duties be recognized between prime contractors and subcontractors?After the law amendment, prime contractors recognized as employers under the Trade Union Act for subcontractor workers are expected to have to fulfill fair representation duties without substantial or procedural discrimination without reasonable grounds between the bargaining representative trade union and minority trade unions regarding 'relevant working conditions.'It will be necessary to comprehensively observe the government's Yellow Envelope Law Task Force, legislative supplementary amendments, and judicial judgments in the future. Does the law amendment make it impossible for prime contractors to use substitute workers brought from outside during subcontractor trade union strikes? Article 43 of the Trade Union Act states that 'employers cannot hire or substitute persons unrelated to the business to perform work interrupted by industrial action during the industrial action period, and cannot subcontract the interrupted work.'Previously, in in-house subcontracting relationships, prime contractors could deploy substitute workers brought from outside during subcontractor trade union strikes because prime contractors were not employers under the Trade Union Act for subcontractor workers. However, after the amendment, in the same in-house subcontracting relationship, when prime contractors are recognized as employers under the Trade Union Act for subcontractor workers, prime contractors will not be able to use workers brought from outside as substitutes for subcontractor strikes. However, since the Trade Union Act states that 'substitute work by persons related to the business - prime contractor workers - is possible,' prime contractor employees can be deployed as substitutes. Comment of HRS Expert※ To minimize legal risks, prime contractors should deploy 'prime contractor employees' as substitute workers during subcontractor trade union strikes. Whether substitute work is possible during strikes varies depending on business characteristics and should be accurately reviewed by experts separately. ▶ This law amendment increases the management burden on companies, so there is a possibility of legislative supplementation regarding substitute work in the future. ※ Review opinions may vary depending on individual companies and labor-management relations in each case. Also, this document cannot be used as legal basis or for external submission without the consent of HRS Labor Law Firm.
2025. 08. 25