Subcontractor unions ramp up demands after passage of ‘yellow envelope law’

Unionized workers employed by subcontractors of Hyundai Steel hold a protest near the Supreme Prosecutors' Office in Seoul, Wednesday. Yonhap

Subcontractor unions across Korea have intensified their demands for greater accountability and direct negotiations from parent companies after the passage of the so-called “yellow envelope bill,” a pro-labor law intended to expand union rights and redefine employer obligations.

The legislation, scheduled to take effect in six months, will expand the definition of “employer” to an entity that “substantially controls” the working conditions of subcontracted workers. Even before its implementation, the law has already triggered a flurry of action by subcontractor unions nationwide and prompted concerns from the business sector.

On Wednesday, more than 1,800 workers employed by subcontractors of Hyundai Steel, the nation’s second-largest steelmaker, filed a criminal complaint with the prosecution, accusing management of conducting unfair labor practices, including unlawful subcontracting.

“Despite the Ministry of Employment and Labor’s direct employment order in 2021 and the court ruling issued in favor of it in 2022, Hyundai Steel has failed to rectify its unfair labor actions,” the union said. It vowed to bring the parent company to the negotiation table with subcontract workers once the law comes into force in February 2026.

Notably, the union filed complaints not just against current and former Hyundai Steel CEOs, but also against Hyundai Motor Group Executive Chair Chung Euisun, who they believe exerts influence over Hyundai Steel.

The revised law ― an amendment to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act ― includes broadening the definition of “employer” to encompass not only direct employers, but also parent corporations and contracting firms that “substantially and specifically” control the working conditions of subcontracted workers. It is expected to allow these workers to negotiate directly with the parent company management. It also restricts companies from seeking large-scale damages for losses resulting from lawful strikes.

Unionized workers employed by subsidiaries of Naver hold a rally in front of Naver's headquarters in Seongnam, Gyeonggi Province, Wednesday. The sign reads, "Stop welfare discrimination and recognize us as Naver." Newsis

Major employers, particularly those that depend heavily on extensive subcontractor networks such as the construction and shipbuilding sectors, are growing increasingly anxious about a tide of collective action from subcontracted workers.

The day the complaint was filed against Hyundai Steel, about 400 workers employed by six subsidiaries of IT giant Naver held a protest in front of the parent company’s headquarters in Seongnam, Gyeonggi Province, demanding the elimination of what they see as pay and benefits disparities with workers hired directly by Naver.

Major retailers, including Lotte Shopping and Shinsegae, also face bargaining demands from workers employed by their subcontractors, with unions calling for the parent companies to directly intervene to resolve issues around their working conditions.

Following the passage of the yellow envelope law, these demands have been gaining traction and could lead to a significant number of legal claims in the coming years.

According to a recent survey conducted by the Korea Foreign Enterprises Association, 35.6 percent of foreign companies here said they were considering scaling back or withdrawing investments due to the law, with nearly half expressing negative views of the new limits on union liability for damages related to labor actions.

In response to escalating labor activism, President Lee Jae Myung addressed the issue at a Cabinet meeting on Friday, calling for mutual respect and cooperation from labor.

“The genuine purpose of the law is to foster trust and cooperation between management and labor,” Lee said. “I hope labor representatives will uphold the spirit of coexistence and contribute responsibly to economic growth.”