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Preventing bargaining overload key to settling “Yellow Envelope Bill"

Published: 30 Oct. 2025, 00:04

Lim Seo-jeong

The author is a former vice minister of employment and labor.

The so-called “Yellow Envelope Bill,” an amendment to the Labor Union and Labor Relations Adjustment Law that passed the National Assembly, was promulgated in September and will take effect next year. The bill’s most notable feature is its groundbreaking expansion of the legal definition of an employer. It recognizes as an employer not only a direct party to an employment contract, but also as anyone who can substantially and specifically control or determine working conditions. Such persons are considered “deemed employers” under the bill, and are legally obliged to respond to collective bargaining requests from labor unions.

This change aims to address the diversification of employment structures, including multi-tier subcontracting, dependent contracting and platform labor. In that sense, the reform is meaningful. Yet within management circles and on factory floors, there is growing concern about procedural gaps that could create confusion and intensify labor disputes. Although the bill’s intent — to expand the notion an employer — is clear, the absence of procedural detail risks undermines its effectiveness.

Members of the Korean Confederation of Trade Unions, including its chief Yang Kyung-soo, celebrate after the passage of the “Yellow Envelope Bill” — an amendment to the Labor Union and Labor Relations Adjustment Law — during a plenary session at the National Assembly on Aug. 24. [YONHAP]

The most serious shortcoming lies in how the law fails to establish a coherent framework for unifying bargaining channels when these deemed employers are involved. The system of “single bargaining channels” is designed to consolidate multiple unions within a workplace into one representative channel to negotiate with management. The purpose of this system is to prevent chaos from repetitive bargaining, rising costs and administrative burdens that occur when multiple unions demand separate negotiations. Under current labor law, this principle applies within a single workplace or business unit.

However, the Yellow Envelope Bill is silent on how bargaining channels should be structured between principal contractors and subcontractors. For example, when a subcontractor’s union seeks to bargain with the principal contractor, it remains unclear whether it should join a unified channel alongside unions representing the principal company’s workers, or instead form separate channels for each subcontractor. Relying solely on interpretation of existing labor law to fill this gap could result in excessive costs and uncertainty.

The labor community appears to favor a model where unions at the principal contractor are merged into a single channel, while each subcontractor’s union negotiates separately. But collective bargaining is a highly complex coordination process among people and organizations. It is unrealistic to expect one principal company to conduct simultaneous negotiations with dozens or even hundreds of subcontractor unions. Such an approach would delay bargaining, lead to inconsistent agreements and fuel unrest at worksites — ultimately working against the very interests of subcontractor unions.

The Constitutional Court has long recognized the need for unified bargaining channels to avoid the dysfunctions of fragmented negotiations. In its ruling 2011Hun-Ma338, delivered on April 24, 2012, the court reaffirmed that separate bargaining by multiple unions can result in delays, refusals to negotiate and factional conflicts. The central question now is how to apply the single bargaining channel system when deemed employers are introduced.

Without legislative clarity, the system could backfire on both labor and management. The Yellow Envelope Bill’s stated goal is to give subcontracted workers a genuine path to collective bargaining. But without procedural safeguards, it may only deepen mistrust and confrontation. Principal contractors could end up locked in endless disputes over whether they qualify as deemed employers in each individual case, consuming vast resources while doing little to improve working conditions for subcontracted workers.

The solution is straightforward. Bargaining channels should be unified at the level of the principal contractor, while maintaining protective provisions already established under existing labor law — such as those allowing for separate bargaining units, individual negotiations and fair representation. These mechanisms can prevent the negative effects of imposing single-channel bargaining too rigidly. This approach aligns with the Constitutional Court’s reasoning in its 2012 and 2014 decisions, which emphasized the need for efficient, stable bargaining structures and consistent working conditions across workplaces.

Lee Dong-geun, vice chairman of the Korea Enterprises Federation, answers questions from reporters after delivering a joint statement with industry associations, calling for a halt to the revision of the so-called "Yellow Envelope Bill" at the federation’s headquarters in Mapo District, western Seoul, on July 30. [NEWS1]

Institutions function through procedures, and the unification of bargaining channels is the core procedure for realizing the expanded concept of an employer in practice. If bargaining is organized coherently around the principal contractor and procedural gaps are filled through subsequent legislation or implementing decrees, the intent of the lawmakers will be fulfilled.

If we want the Yellow Envelope Bill to become not a catalyst for confusion but a mechanism for cooperation, then this is the moment to refine its procedures and ensure a stable settlement. The Ministry of Employment and Labor must act swiftly and precisely to prepare follow-up measures.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.