President Yoon Questions Broad Scope of South Korea's 'Yellow Envelope Law'

South Korean President Yoon Suk Yeol has voiced concerns over the "Yellow Envelope Law," suggesting its scope might be too broad and could potentially disrupt business operations. His remarks at a State Council meeting targeted the law's expansion of what constitutes a labor dispute, particularly in relation to business management decisions.

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The Yellow Envelope Law has expanded the scope of labor disputes, hasn't it? It seems too broad.

The "Yellow Envelope Law," officially the revised Trade Union and Labor Relations Adjustment Act, came into effect on March 10. It aims to foster more balanced labor relations by introducing three key changes: obligating primary contractors to engage in collective bargaining with unions of their subcontractors, even if they lack direct control; restricting employers from pursuing excessive damage claims against unions during strikes; and broadening the definition of labor disputes. The President specifically pointed to this last change, noting that the scope now extends beyond traditional issues like wages, working hours, and welfare to include "business management decisions that affect working conditions."

This expansion is particularly significant for issues like large-scale layoffs. The article cites the 2009 SsangYong Motor case, where a massive layoff plan led to a prolonged and tragic conflict involving strikes, police crackdowns, and immense financial claims against the union, resulting in numerous suicides among affected workers and their families. By including such decisions within the purview of labor disputes, the Yellow Envelope Law aims to break this destructive cycle, compelling companies to negotiate with unions rather than implementing unilateral restructuring.

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The law mandates that primary contractors have a duty to engage in collective bargaining with subcontractors' unions and restricts employers from making indiscriminate damage claims against unions during strikes.

While the President suggested clarifying the law's scope through lower-level regulations, the Ministry of Employment and Labor had already issued interpretive guidelines in December. These guidelines acknowledge the complexity and variety of business decisions, stating that the determination of whether a decision constitutes a labor dispute should be made on a case-by-case basis, considering its impact on working conditions. The article suggests that rigidly defining labor dispute subjects could paradoxically hinder negotiation opportunities and lead to criticism of narrowing the law's scope after its expansion.

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In the past, large-scale layoffs were announced, leading to a vicious cycle of illegal strikes by the union, police intervention, and astronomical damage claims.

The author advocates for leaving the determination of labor dispute subjects to labor-management autonomy and the Labor Relations Commission. While acknowledging that demands for profit-sharing based on operating profit might be debatable, the article points to successful negotiations at SK Hynix and Samsung Electronics, where disputes over performance-based bonuses were resolved through negotiation and mediation. The piece concludes by expressing concern that the President's intervention, so early in the law's implementation, could undermine its purpose and send a negative signal, especially given the law's symbolic importance for the "labor-respecting" government.

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It is debatable whether demanding a certain percentage of operating profit as a performance bonus is a subject of negotiation.