Following the implementation of the Yellow Envelope Law, the proportion of primary contractors recognizing the employer status of subcontractor labor unions has reached 70%. This trend is exemplified by recent rulings requiring major companies like Hyundai Motor and Hanwha Ocean to engage in negotiations with subcontractor unions.
As multi-level negotiations between primary and subcontractors become a reality in key industries such as automotive, shipbuilding, steel, construction, and logistics, companies are facing increased pressure to respond.
According to data obtained by the office of Rep. Jo Ji-yeon of the ruling People Power Party from the National Assembly's Environment and Labor Committee, a total of 451 cases related to the Yellow Envelope Law were filed from March 10, when the law took effect, to June 10. Of these, 384 cases have been processed, with 97 recognized, 42 dismissed, and 245 withdrawn.
Excluding withdrawn cases, the recognition rate of primary contractor employer status for subcontractor unions stands at 69.8% based on 139 substantive cases. The Yellow Envelope Law aims to expand the negotiation rights of subcontracted workers. If a primary contractor's employer status is recognized, they are required to negotiate with subcontractor unions.
Recognition of primary contractor employer status is not limited to specific industries. In the automotive sector, a ruling determined that Hyundai Motor must respond to negotiation requests from subcontractor unions. The Ulsan Regional Labor Commission upheld a request from the Metal Workers' Union regarding Hyundai's failure to announce the negotiation request. Industry insiders express concern that this could lead to similar demands from unions of other partner companies, as Hyundai has over 8,500 suppliers.
In the case of Hanwha Ocean, it was ruled that the union members operating the company cafeteria must engage in collective bargaining regarding industrial safety matters. The Central Labor Commission dismissed Hanwha Ocean's appeal against the ruling that recognized the employer status of the Wellive union, which operates the cafeteria.
Industry experts view the rulings involving Hyundai Motor and Hanwha Ocean as a potential catalyst for broader primary-subcontractor negotiations. Even at the appeal stage, the primary contractor's employer status appears to be largely upheld. As of June 10, a total of 26 appeal cases related to the Yellow Envelope Law have been filed with the Central Labor Commission.
The Central Labor Commission previously upheld a decision to dismiss the separation negotiation request from the subcontractor unions of Coupang Logistics Services and SK Energy. Conversely, it maintained the ruling from the Gyeongbuk Regional Labor Commission that determined Posco E&C must announce the negotiation requests from subcontractor unions. The employer status of the cleaning service workers at Chosun University Hospital was also recognized.
The Korean Tower Crane Operators Union's request for a negotiation announcement against Jungheung Construction and Jungheung Tokwon was overturned, recognizing the employer status of both companies.
The Central Labor Commission is set to rule on appeals involving major companies such as Posco, Incheon International Airport Corporation, and Korea Zinc on June 17. Next week, additional cases involving SK Eco Plant, Hyundai Steel, and Hyundai Engineering are also pending, suggesting that debates over the scope of primary-subcontractor negotiations will continue for the foreseeable future.
Experts assess that given the domestic industrial structure, where primary contractors exert significant influence over subcontractor wages and working conditions, the expansion of primary contractor responsibilities is an inevitable trend. The revised Article 2 of the Labor Union Act stipulates that even without a direct employment relationship, if a primary contractor has substantial influence over the wages and working conditions of subcontracted workers, their employer status can be recognized.
Lee Jong-seon, head of the Korea Employment and Labor Education Institute, stated, "In the domestic primary-subcontractor structure, the system is evolving to hold primary contractors accountable to some extent, as they have practical decision-making authority. If legally recognized as employers, they need to engage in sincere dialogue with subcontracted workers to seek solutions together."
* This article has been translated by AI.
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