“Yellow Envelope Act” Passes the National Assembly’s Environment and Labor Committee

On July 28, 2025, an amendment to the Trade Union and Labor Relations Adjustment Act (the “TULRAA”), often referred to as the “Yellow Envelope Act,” passed the National Assembly’s Environment and Labor Committee. As you may recall, the Yellow Envelope Act previously passed in the National Assembly but was vetoed by former President Yoon.

The key points regarding the current version of the proposed amendment are outlined below.

Expansion of the Scope of “Employer” under the TULRAA (Article 2, Subparagraph 2)

The proposed amendment recognizes an entity as an “employer” under the TULRAA if it has substantial and specific control over working conditions, even if it is not the direct employer under an employment contract. Accordingly, if a contracting entity can substantially and specifically control or determine the working conditions of a subcontractor’s employees, it may be deemed an employer and be obligated to engage in collective bargaining with the subcontractor’s union.

Current Provision

Proposed Amendment

The term “employer” means a business owner, a person responsible for the management of a business, or a person who acts on behalf of a business owner with regard to matters concerning workers in the business. In this case, an entity that is in a position to substantially and specifically control or determine the working conditions of workers shall also be considered an employer, even if it is not a party to the employment contract.

Expansion of the Scope of “Union Membership” under the TULRAA (Article 2, Subparagraph 4)

Currently, the TULRAA stipulates that an organization is not considered a trade union if it allows non-employees to join. The proposed amendment deletes this provision, making it possible for individuals who are not “employees” as defined by the TULRAA to join a trade union.

Current Provision

Proposed Amendment

The term “trade union” means an organization or a federation of organizations, which is formed in a voluntary and collective manner by workers for the purpose of maintaining and improving their working conditions and enhancing their economic and social status. Provided that, an organization shall not be regarded as a trade union in any of the following cases:
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d. Where the organization allows the participation of persons other than workers.

Expansion of the Scope of “Industrial Dispute” under the TULRAA (Article 2, Subparagraph 5)

The previous versions of this bill proposed deleting the word “determination,” which would have expanded the scope of industrial disputes to include not only disputes of interest (matters concerning the determination of working conditions) but also disputes of right (matters concerning the implementation of determined conditions). However, the current amendment retains the word “determination” but expands the scope of industrial disputes to include matters related to the “status of workers,” “business management decisions that affect working conditions,” and “violations of a collective bargaining agreement by the employer.”

Notably, by explicitly including “business management decisions that affect working conditions” as a subject of industrial disputes, the amendment makes it likely that union demands for collective bargaining or industrial action over management decisions—such as mergers, spin-offs, business transfers, factory relocations, or restructuring that impact employees—will be regarded as legitimate actions.

Current Provision

Proposed Amendment

The term “industrial dispute” means any controversy or difference arising from a disagreement between a trade union and an employer or employers’ association with respect to the determination of terms and conditions of employment such as wages, working hours, welfare, dismissal, worker status, other treatments, business management decisions that affect working conditions, and the employer’s violation of a collective bargaining agreement as described in Article 92, Subparagraph 2, items (a) through (d).

Limitation on Damages Claims Against Unions (Articles 3 and 3-2)

While the current TULRAA grants immunity from liability for damages resulting from legitimate collective bargaining and industrial actions, the amendment broadens this protection to cover damages arising from “other activities of the trade union” as well. It also clarifies that a union or worker is not liable for damages caused to an employer when acting to defend against the employer’s illegal acts. In addition, the amendment outlines specific factors that courts must consider when determining the extent of individual liability for illegal acts committed by the union and/or workers and provides a framework for such union and/or workers to request a reduction in damages.

Current Provision	Proposed Amendment
Article 3 (Limitation on Claims for Damages) An employer shall not claim damages against a trade union or workers for losses incurred from collective bargaining or industrial action under this Act.	Article 3 (Limitation on Claims for Damages) 1. An employer shall not claim damages against a trade union or workers for losses incurred from collective bargaining, industrial action, or other activities of the trade union under this Act. 2. A trade union or worker shall not be liable for damages caused to an employer when it was necessary to defend the interests of the trade union or workers against the employer’s illegal acts. 3. When a court finds a worker liable for damages arising from collective bargaining, industrial action, or other activities of the trade union, it must determine the proportion of liability for each liable worker according to the following factors: 1) Position and role within the trade union; 2) Circumstances and degree of participation in the industrial action, etc.; 3) Degree of involvement in causing the damage; 4) Wage level and the amount of damages claimed 5) The cause and nature of the damage; and 6) Other circumstances deemed necessary for the fair distribution of damages. 4. A trade union and workers liable for damages under Paragraph (3) may request the court to reduce the amount of damages. The court shall then determine whether to grant a reduction and to what extent for each liable party, considering their financial status, family status such as number of dependents, guarantee of minimum living expenses, and the continued existence of the trade union. 5. Notwithstanding Article 6 of the Fidelity Guarantee Act, a guarantor shall not be liable for damages arising from collective bargaining, industrial action, or other activities of the trade union. 6. An employer shall not exercise its right to claim damages for the purpose of endangering the existence of a trade union, interfering with its operation, or for the purpose of disrupting the union activities of its members and causing harm.
	(Newly Added) Article 3-2 (Waiver of Liability) An employer may waive the liability, including for damages, of a trade union or workers arising from collective bargaining, industrial action, or other activities of the trade union.
	(Newly Added) Addendum Article 2 (Applicability of Provisions on Limitation of Damage Claims) The amended provisions of Article 3 shall apply to damages arising from collective bargaining, industrial action, or other activities of the trade union that occur after this Act enters into force. However, the amended provision of Article 3-2 shall apply to damages that occurred before the effective date of this Act.

The above proposed amendment to the TULRAA will now proceed to the National Assembly’s Legislation and Judiciary Committee before being debated in a plenary session of the National Assembly, which, depending on the circumstances, can be held next week. Although adjustments may be made during future deliberations, if the amendment passes the plenary session in its current form, it is expected to take effect six months after its promulgation.

If enacted, the amendment will bring substantial changes to labor-management relations in Korea. Therefore, it is crucial to closely monitor the legislative process and prepare for the potential changes that will follow its enactment.

[Korean Version]

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