The ruling Democratic Party recently announced that it will reintroduce bills in the July session of the National Assembly that had been vetoed by the former president. The amendment to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act (“TULRAA”), commonly known as the “Yellow Envelope Act,” is one of the bills to be discussed in the July session.

As covered in Part 1 of this series (Link), the Yellow Envelope Act is a legislative proposal that aims to: (i) expand the scope of “employee” and “worker eligible for union membership” under the TULRAA, (ii) expand the scope of “employer” under the TULRAA, (iii) widen the concept of “industrial disputes,” and (iv) limit or exempt unions from liability for damages resulting from industrial action. In Part 2 of this two-part newsletter series, we will cover points (iii) and (iv).
 

For labor unions to engage in strikes and other industrial actions, there must be an industrial dispute where negotiations between labor and management have reached an impasse with no possibility of resolution. The TULRAA currently defines “industrial disputes” narrowly as disputes arising from disagreement over the “determination” of working conditions. This means unions can only strike when negotiating new working conditions that will apply to all union members.

However, the Yellow Envelope Act removes the word “determination” from the definition, significantly broadening what constitutes an industrial dispute. This change would allow unions to strike over disputes regarding how already-determined working conditions are applied, implemented, or interpreted. Effectively, unions could use industrial actions to resolve issues that are currently handled through courts or the Labor Relations Commission, such as unpaid wage claims, wrongful dismissal cases, enforcement of existing collective agreements, and opposition to layoffs.

The change also affects what are known as “peace obligations.” Currently, when unions sign collective agreements, they promise not to strike over those issues during the agreement’s term. The Yellow Envelope Act would effectively end this practice, as unions would be able to strike if they disagree with how the employer interprets or applies the agreement terms. For businesses, this could mean significantly more strikes and work stoppages. Employers will thus need to prepare action plans for industrial actions and ensure their rules of employment and collective agreements are crystal clear to avoid giving unions reasons to engage in disputes regarding their interpretation.
 

The TULRAA already protects unions from damages claims when they engage in lawful collective bargaining or strikes. The Yellow Envelope Act proposes to expand this immunity in two significant ways.

First, it expands this protection by adding “other union activities” to the list of protected actions, beyond lawful collective bargaining and industrial action.

Second, the Yellow Envelope Act makes it harder for employers to recover damages even when unions engage in illegal industrial actions. Under the proposed bills, employers would be subject to a higher bar of proving the specific fault and individual contribution of each person involved in the illegal activity. If employers cannot meet this demanding burden of proof for each person involved, they cannot recover any damages. As a result, employers will need to invest significantly more resources in preventing and responding to illegal industrial actions, including more comprehensive legal preparation and documentation of any unlawful union activities.

Given these significant proposed changes, we advise businesses to closely monitor the legislative progress of the Yellow Envelope Act to plan ahead for appropriate response strategies.
 

[Korean Version]