Government narrows collective bargaining under implementation guidance, undermining the Yellow Envelope Law’s intent

The government has drawn accusations of undermining South Korea’s amended Trade Union and Labor Relations Adjustment Act on the first day of its implementation. New guidance says unions cannot bargain or strike over certain management decisions, including performance bonuses tied to operating profits and the construction of new factories.

The Ministry of Employment and Labor issued the guidance on Sept. 3. It defines the scope of matters subject to mandatory bargaining under the so-called Yellow Envelope Law. Demands for bonuses linked to sales, operating profit, or net profit do not qualify as strike issues, the ministry said. The rule directly affects demands by Samsung Electronics and SK hynix unions for bonuses based on a fixed share of operating profits.

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The government is trying to block fundamental labor rights by creating an artificial standard.

The ministry said company profits fund research and development, facility investment, dividends, and other management decisions. Requiring firms to distribute a fixed share in bonuses in advance could restrict their freedom to operate, it said. The ministry instead recommended that unions negotiate a fixed amount or a percentage of base pay or annual salary.

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If labor-management bargaining is postponed until staffing plans are finalized, room for negotiation will shrink, and unions may have no choice but to take more extreme action over restructuring.

The guidance also excludes a company’s decision to build a factory, sell or acquire a business, or introduce new technology such as artificial intelligence from labor disputes by itself. Bargaining becomes possible when those decisions objectively result in specific changes, such as layoffs, restructuring, reassignment, workplace relocation, job duties, work patterns, or relocation costs. A decision to build a semiconductor cluster in the Honam region would not itself be negotiable, for example, but resulting changes in work arrangements could be. The introduction of Atlas humanoid robots at a Hyundai Motor plant could become negotiable once shift changes or staff reductions become clear.

The guidance will serve as a standard for labor commissions deciding whether bargaining or disputes are permitted. If an issue does not create a bargaining obligation, it cannot enter labor commission mediation, making a lawful strike harder. The Korea Confederation of Trade Unions and the Federation of Korean Trade Unions called for the guidance to be withdrawn. Labor lawyer Jeong Gi-ho warned that delaying talks until staffing plans are finalized could reduce room for negotiation and push unions toward more extreme action. Professor Park Eun-jung said government efforts to decide which issues qualify for bargaining violate the principle of labor-management autonomy.

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Trying to distinguish the subjects of collective bargaining itself violates the principle of labor-management autonomy.