European firms denounce 'yellow envelope law' as threat to jobs

European Chamber of Commerce in Korea (ECCK) Chairman Philippe van Hoof, right, and ECCK President Stefan Ernst, fourth from left, pose with participants in a press conference for the publication of the chamber's 2025 white paper at the Korea Press Center in Seoul, Thursday. Korea Times photo by Park Jae-hyuk

European companies doing business in Korea have once again urged the government to reconsider the planned amendment to the Trade Union and Labor Relations Adjustment Act — better known as the "yellow envelope law" — warning that they may withdraw from the Korean market if the changes proceed.

The companies have also recommended establishing a system for proactive oversight of dominant digital platform providers, puzzling Seoul, which is facing strong U.S. opposition to the regulations.

"Questions have been raised about whether criminal liability on top of existing economic and financial sanctions aligns with international standards. This year's white paper reflects these concerns," European Chamber of Commerce in Korea (ECCK) Chairman Philippe van Hoof said Thursday during a press conference for the publication of the chamber's 2025 white paper, which includes the abovementioned suggestions.

According to the ECCK, the latest edition of the white paper includes a total of 70 recommendations submitted by 15 committees and two forums.

European Chamber of Commerce in Korea (ECCK) Chairman Philippe van Hoof, third from right, listens to Labor Minister Kim Young-hoon, third from left, during a meeting at ECCK headquarters in Seoul, Aug. 14. Courtesy of Ministry of Employment and Labor

While some suggestions have continuously been submitted over several years, the chamber's HR & Compliance Forum recommended a reconsideration of the yellow envelope law, particularly criticizing a proviso that states, "Even if a person is not a party to an employment contract, a person who is in a position to substantially and specifically control and determine the working conditions of a worker shall be regarded as an employer within that scope."

The amendment was passed last month at the National Assembly, which is dominated by the ruling Democratic Party of Korea. Since then, the government has repeatedly tried to convince foreign business leaders to accept the new law, which would empower subcontracted workers to negotiate directly with their employers' clients and which would prohibit management from seeking compensation for damage caused by certain labor strikes.

After the Ministry of Employment and Labor formed a task force to collect opinions from foreign companies on the law, the Ministry of Trade, Industry and Energy promised to seek ways to address their concerns.

However, the ECCK warned that the proposed proviso may pose "serious threats" to the employment of current workers and future generations.

"This vague and expanded definition may treat business operators as potential criminals and significantly discourage business activity," the organization said in its white paper. "If a company faces the risk of criminal penalties for refusing to engage in collective bargaining — especially in situations where it is unclear which union to negotiate with — it may ultimately choose to withdraw from the Korean market."

Meanwhile, the chamber's Digital Committee recommended reenacting the previously drafted Platform Competition Promotion Act, urging Korea to follow the lead of the European Union, the United Kingdom and Japan in safeguarding consumer interests by introducing a set of obligations for dominant platforms.

"Relying solely on current ex-post antitrust or competition laws will not be sufficient to address the issues raised in the digital platform sector," the committee said.

The recommendation comes amid strong opposition from the U.S. government and American tech firms to Korea’s efforts to regulate online platforms, which has caused related legislation to stall. Fair Trade Commission Chairman Ju Biung-ghi also acknowledged the difficulty of advancing regulations on global online platforms, citing the potential for a tariff-related backlash from Washington.

Against this backdrop, the ECCK said it will continue representing European companies and actively engage in close dialogue and cooperation with various government ministries to help improve Korea’s business environment.

"The strong call for alignment with international standards underlines the need for Korea to maintain sustainable competitiveness in the global market," ECCK President Stefan Ernst said. "I hope today's briefing will serve as a constructive starting point contributing to the creation of an even better business environment for both Korean and European companies."