Businesses urge president to veto pro-labor amendment

Major business associations are urging President Yoon Suk Yeol to veto a pro-labor bill that would allow unions to stage more industrial actions and restrict striking workers' liability for damages.

The ″yellow envelope law″ was passed at the National Assembly's plenary session on Thursday. [YONHAP]

Korea’s major business associations requested Monday that President Yoon Suk Yeol veto the pro-labor bill that the opposition unilaterally passed in the National Assembly's plenary session last week.

The amendment, better known as the “yellow envelope law,” allows labor unions to stage industrial actions against employers in a broadened scope of working conditions and employment arrangements and restrict striking workers' liability for damages.

Companies are most reluctant about the revision to Article 2, which concerns the expansion of the subject of labor disputes, than they are about the revision to Article 3, which covers restrictions on claims for damages and is directly connected to the amendment's original aim, National Assembly members and laborers said Sunday.

The current law only recognizes the people who directly sign a labor contract as employers and employees. But the amendment would also characterize any “party who is in a position to rule over and make decisions in a practical and concrete manner” as an employer.

For example, under this amendment, a labor union at a small to mid-sized business that supplies parts to Samsung Electronics could directly ask Samsung Electronics for the collective bargaining of wage hikes and extra benefits. Should Samsung Electronics refuse, labor strikes such as workplace occupations could legally take place. Second, third and fourth-party subcontractor labor unions can also demand negotiations with upper-level companies under the same law.

“Most industries, including environmental beautification; car manufacturing, which requires thousands of parts; and IT services for construction, supply chain management and security are based on subcontract relationships. If multiple negotiation requests come through from many places at once, there will be massive chaos,” said an employee of a domestic electronics company.

The amendment also opens the door for labor unions to participate in industrial action. Previous labor disputes have mainly concerned wages, working hours and welfare. The amendment expands that scope to “disagreements on working conditions.” This means management decisions such as human resource arrangements, voluntary retirement and mergers and acquisitions (M&A) that “influence working conditions” could also become subject to strikes.

Subcontract workers also expect the amendment to allow negotiations with the “real boss,” which would reduce rule violations activity.

But the government thinks the law only serves to protect certain groups by making exceptions to the basic principles for illegal activity (semi-true joint and several obligations), as legal industrial action is exempt from civil and criminal liability under current legislation.

The Ministry of Employment and Labor’s analysis of lawsuits for damages showed that the Korean Confederation of Trade Unions (KCTU) charged 99.6 percent of the billed amount, or 275.3 billion won ($207.8million), and 99.6 percent of the quoted amount, or 35.01 billion won between 2009 and August of 2022. For that reason, some have interpreted the amendment as exonerating the KCTU from responsibility.

Even the Moon Jae-in government held concerns over such side effects. “There are a lot of special provisions that can shake up the concerned law’s principles, such as civil liability principles and issues surrounding the Civil Execution Act and Fidelity Guarantee Act,” then-Vice Labor Minister Park Hwa-jin said to the legislation and judiciary subcommittee under the Environmental and Labor Committee at the December 2020 National Assembly in regards to the amendment. The current government has taken the same stance on the matter.

“Methods that allow a ‘win-win’ situation for both labor unions and management should be considered,” said Park Ji-soon, director at Korea University’s Graduate School of Labor Studies.

BY LEE SO-AH, NA SANG-HYEON, KIM JU-YEON [kim.juyeon2@joongang.co.kr]