[Editorial] 100 Days of the Yellow Envelope Act: Strict Judgment Is the Way to Reduce Confusion

It has been 100 days since the so-called Yellow Envelope Act, or the revised Trade Union and Labor Relations Adjustment Act, took effect. As expected, subcontractor unions have been flooding prime contractors with bargaining requests, putting companies under strain. Confusion has also emerged as the ministry in charge, MOEL, and the Central Labor Relations Commission have issued differing judgments.
The core of the Yellow Envelope Act is the expansion of employer status. If a prime contractor is recognized as an employer, a subcontractor union can bargain directly with it. So far, 1,161 subcontractor unions have requested bargaining with 439 prime contractors. Now that the law has been in effect for only 100 days, those numbers could rise further. If companies already facing difficult business conditions are also forced to shoulder bargaining duties with subcontractor unions, their financial strain will deepen.
In the course of rehearing cases at the Central Labor Relations Commission, employer status was recognized in 9 of 13 cases. In other words, more cases have been upheld than disputed cases in which employer status was contested. Beyond the numbers, business groups are growing increasingly concerned that bargaining rights are being granted even to support roles unrelated to production.
The commission also ruled that the 'real employer' of cafeteria workers was the prime contractor. On the 15th, it recognized Hanwha Ocean's employer status in a case filed by a partner company handling meal service and laundry work. With this ruling, workers whose jobs have nothing to do with shipbuilding at Hanwha Ocean can also enter bargaining.
The problem is that if the Hanwha Ocean case becomes a precedent, it could spread to other companies as well. Demands to recognize employer status in sectors unrelated to production, such as cleaning, commuter buses, and landscaping, are likely to increase, and more cases will be brought before the commission. If companies or unions reject the commission's decisions, they will have to seek resolution through the courts, which could trigger a flood of lawsuits.
Business leaders are frustrated that MOEL's interpretive guidelines for the Yellow Envelope Act cite factory cafeterias as a representative example of something that does not amount to a prime contractor's structural control, yet the commission has issued a contrary decision. Of course, each company has its own circumstances, but the commission can be seen as leaning toward rulings favorable to subcontractor unions.
Even so, the government's assessment of the first 100 days is positive. It says the feared wave of indiscriminate split bargaining demands has not materialized. Views on the same issue can differ. But this assessment may also be criticized as reflecting the labor side's perspective. The government must stand between companies and unions and maintain balance. It must not become a government biased toward unions.
Now that the Yellow Envelope Act has been implemented, the best outcome would be for labor and management to resolve disputes through voluntary agreement. Issues that cannot be settled that way must be left to the Central Labor Relations Commission and the courts, but the social costs are far from small. MOEL must interpret the purpose of the law accurately and issue clear guidelines, and the commission must follow them to avoid policy contradictions. Now that the law has been in force for 100 days, it is necessary to watch how implementation unfolds. If loopholes in the law are exposed, revisions should be made quickly.
The purpose of the Yellow Envelope Act is mutual growth between labor and management. Its goal is to improve the rights and interests of subcontractor unions that have not been properly protected. However, it is difficult for prime contractors to bargain with and take responsibility for unions that have nothing to do with production. When regulations are ambiguous, applying them narrowly is the way to comply with the law. Overly broad application creates legal problems.