Editorial: As the Yellow Envelope Act Takes Effect, Minimize Confusion and Build Labor–Management Trust

Articles 2 and 3 of the amended Trade Union and Labor Relations Adjustment Act, widely referred to as the Yellow Envelope Act, will finally take effect on the 10th. The law expands the scope of responsibility for principal employers in principal–subcontractor structures and restricts damage claims related to industrial action. It has been at the center of fierce controversy. With enforcement just days away, supporters invoke the need to strengthen subcontracted workers’ bargaining rights, while opponents warn of an infringement on corporate management rights, leaving the two sides in a deadlock.
The enforcement of the law is now a given. The problem is that, in practice, it amounts to a train departing with the doors still open. Key issues remain unclear, including the criteria for determining whether a principal company is an employer, the scope of bargaining agendas, and the procedures for bargaining with subcontractor unions. Employers thus face the irony of having to comply with a law whose core elements are still ambiguous. To reduce confusion, the Ministry of Employment and Labor (MOEL) has released a manual on win-win bargaining procedures between principal contractors and subcontractors. However, the Korea Enterprises Federation (KEF) has voiced concern that subcontractors may infringe on management rights and trigger new disputes.
The timing of the law’s enforcement is even more troubling. Korean companies are already grappling with unprecedented external uncertainty, from U.S.-driven tariff risks and global supply chain realignment to a strong dollar, high interest rates, and mounting instability in the Middle East. In such circumstances, putting into effect a law as ambiguous as the Yellow Envelope Act will almost certainly make corporate management more chaotic. If labor–management conflict intensifies while a series of external shocks hit the economy regardless of our intentions, companies will find themselves cornered on all sides with no easy way out. The Yellow Envelope Act cannot simply be rejected out of hand. The concern is that, at a time when external conditions are steadily deteriorating, even the stability of labor–management relations could be shaken.
Taking these corporate concerns into account, the government has announced that it will operate the first three months after enforcement as an intensive inspection period. Koo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance (MOEF), plans to prepare a range of support measures aimed at minimizing confusion in workplaces and reducing uncertainty for businesses. This policy direction is appropriate. It is essential to reduce trial and error from the very start of the law’s implementation.
Yet it is doubtful that a three-month intensive inspection period will be enough to grasp the full extent of confusion on the ground. The impact of a law of this kind does not surface in a short span of time. Disputes at individual workplaces typically emerge only after months of bargaining and litigation, which reveal the actual situation. For this reason, there is concern that the government’s pledge to focus on inspections immediately after enforcement may end up as little more than a formality.
One particularly worrisome possibility is that unions may act solely to push through their own interests, straying from the law’s original intent. In Korea, union activities often display strong political and ideological overtones. Although the stated purpose of the Yellow Envelope Act is to improve substantive working conditions within principal–subcontractor structures, it could easily be transformed into a tool for exerting management pressure and for staging strikes. If the law is used not for its legitimate aims but as a means to flex union power, it will trigger serious social turmoil.
Labor and management are not enemies but partners that should pursue mutual growth through cooperation. As the Yellow Envelope Act is about to take effect, the most important task is to build trust between the two sides. Such trust, however, cannot be created overnight. If the confusion that arises in the early stages of enforcement is allowed to accumulate, it could instead inflict deep damage on labor–management relations. The government must identify problems in the law’s implementation at an early stage and correct them candidly and promptly. In particular, rather than limiting itself to a short-term intensive inspection period after enforcement, it should operate a practical and sustained on-site monitoring system through the end of the year.