Analysis of Yellow Envelope Act
Set to take effect around January or February 2026, the Yellow Envelope Act introduces major reforms to Korea’s labor laws by limiting excessive compensation liabilities for industrial actions and expanding protections for union activities. The name of the Act stems from a 2014 incident where a citizen sent KRW 47,000 in a yellow envelope to a media outlet in support of Ssangyong Motor workers who had been ordered to pay KRW 4.7 billion in damages following a strike. The gesture sparked a nationwide fundraising campaign and became a symbol of solidarity with workers.
Under the Act, any party who exercises substantial and specific control over working conditions can be legally regarded as an “employer.” This redefinition means that principal contractors, franchisors, and platform operators could now be held accountable under labor law, even if they are not the direct employer.
The scope of labor disputes is also expanded to include rights-based conflicts such as the withdrawal of unfair labor practices and enforcement of collective bargaining agreements. This change is expected to increase both the frequency and intensity of strikes. Furthermore, courts must assess damage liabilities on an individual basis, considering each person’s fault and contribution. The Act explicitly exempts guarantors—such as family members—from liability related to union activities.
📌 Key Provisions Summary
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Broader employer definition: Includes those with actual control over working conditions
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Expanded labor dispute scope: Covers rights-based actions as legitimate industrial activity
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Individualized damage assessment: Based on fault and level of contribution
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Guarantor exemption: Family members are not liable for union-related damages
Companies that contract with unionized subcontractors may face direct legal responsibilities under this law. Businesses should review subcontracting structures, verify union status, and reassess how working conditions are determined.
(Source: Kayen Consulting)
