Why Amended Trade Union Act is Fueling Conflict

Kim, Dug Ho

Professor, Sungkyunkwan University

Former Standing Commissioner of the Economic,

Social and Labor Committee

1. Introduction

Since the amended Trade Union Act (the so-called “Yellow Envelope Act”) came into force, industrial sites have begun to fluctuate rapidly. The intent of the amendment is to bring entities with substantive influence in the context of subcontracting structures and indirect employment into the collective bargaining framework, thereby absorbing conflicts outside the system into institutional processes. However, a system introduced without sufficient social consensus is bound to encounter resistance in practice. No matter how sound the intent, if the design lacks precision, the law becomes not a mechanism for dispute resolution but a new source of conflict. Current developments clearly demonstrate this.

Within just one month of enforcement, approximately 1,011 subcontracted trade unions-representing around 146,000 workers-have demanded bargaining with 372 principal contractor workplaces nationwide. The Labor Relations Commission(LRC) has also issued a series of decisions recognizing employer status and allowing the separation of bargaining units. This indicates that both the scope of bargaining parties and the range of bargaining issues are expanding far more rapidly than anticipated.

In the public sector, care workers have demanded joint collective bargaining with central government ministries and local governments. In manufacturing, simultaneous bargaining demands have been directed at major principal contractors such as Hyundai Motor, Hyundai Mobis, POSCO, and Hanwha Ocean. Tensions have also risen in logistics and distribution industries over principal employer responsibility. In one case, a transport union demanded bargaining with BGF Retail, leading to a confrontation involving transport refusals and the deployment of substitute vehicles, creating an extremely tense situation. Tragically, a fatal accident occurred in the process. While a thorough investigation must come first, the incident demonstrates the social costs incurred when institutional frameworks fail to keep pace with reality. It is deeply concerning that a law intended to prevent conflict has, from the outset, become a backdrop for confrontation.

2. Key Issues in the Amended Act

If labor disputes expand beyond individual workplaces to entire industries, the economic costs increase exponentially. Both labor and management must not underestimate the initial confusion caused by the law’s implementation. The problem is not the expansion of bargaining per se, but the lack of sufficient standards and procedures to manage it. The pace has been rapid, but the design has lagged behind.

First, there is ambiguity in the concept of employer status. The amended Act defines an employer as a person who, even without being a party to an employment contract, is in a position to “substantially and specifically control or determine working conditions.” The problem is that this definition is overly abstract. It is unclear whether delivery deadlines constitute mere commercial requirements or control over working hours. Safety instructions may be seen either as compliance with occupational safety obligations or as evidence of employer status. The use of a principal contractor’s IT systems, access controls, or standardized work procedures also raises questions. Interpretations vary even among legal experts, and confusion is greater on the ground.

Trade unions tend to interpret employer status broadly to assert principal contractor responsibility, while companies interpret it narrowly to emphasize the absence of a direct employment relationship. Ultimately, decisions are deferred to the Labor Relations Commission and the courts. However, labor relations are urgent, while adjudication is slow this time gap amplifies conflict. Furthermore, recognition of employer status under the Trade Union Act may be linked to determinations of illegal dispatch under the Act on the Protection, etc. of Dispatched Workers. Claims that a principal contractor substantially intervened in working conditions may lead directly to obligations of direct employment. For companies, this creates a structure in which both accepting and refusing bargaining carry legal risks.

Therefore, the determination of employer status must not remain declaratory but must be based on predictable criteria. At a minimum, detailed standards should be established across key elements such as wage determination authority, working hours arrangement, work direction and supervision, personnel authority, and safety budget decisions. A system in which the identity of the employer is unclear ultimately risks becoming one in which no one bears responsibility.

Second, there is concern over weakened competitiveness due to the expansion of the scope of industrial disputes. The amended Act extends the scope beyond traditional working conditions such as wages, working hours, and welfare to include “managerial decisions affecting working conditions.” While this may seem reasonable, it allows for extremely broad interpretations in practice. Restructuring, business transfers, production line reorganization, outsourcing, reductions in hiring, facility automation, AI adoption, and plant relocation can all be linked to working conditions.

In times of industrial transition, firms must invest quickly and restructure production systems in response to technological change. In globally competitive sectors such as semiconductors, shipbuilding, automobiles, and logistics, speed determines survival. If investment and restructuring decisions become subject to industrial disputes and potential strikes, firms may delay decisions or relocate abroad. Automation and AI are inevitable global trends; turning them into constant sources of labor conflict risks placing domestic industries at a disadvantage. While the protection of labor rights is essential, it must not obstruct innovation.

Many advanced economies are strengthening labor-management consultation during industrial transitions while maintaining investment decisions as the responsibility of management. It is worth examining whether we are blurring the boundaries between consultation and bargaining, and between bargaining and industrial action.

Third, the fragmentation of bargaining units and agendas in principal subcontractor relations may create a structure of continuous disputes. Within a single principal contractor workplace, multiple actors coexist: the principal contractor’s union, numerous subcontractor unions, industrial unions, and regional branches each with different interests. Regular employees’ unions emphasize existing wage systems and job security, while subcontractor unions demand direct employment, wage parity, and expanded welfare. Even among subcontractor unions, differences in industry, contract conditions, union size, and strategy lead to divergent demands.

If bargaining agendas are further subdivided into wages, welfare, safety, working conditions, employment type, business restructuring, outsourcing, and responses to automation, workplaces may face year-round negotiations and disputes. Different unions may engage in separate bargaining and industrial action over different issues.

This raises the possibility of sequential partial strikes, rotating strikes, and relay industrial actions within a single workplace. Companies face difficulties in production planning, subcontractors bear delivery uncertainties, and the costs are ultimately passed on to consumers and the national economy. Labor disputes may escalate into inter-union conflicts, principal?subcontractor conflicts, and even inter-firm conflicts.

In industries such as shipbuilding, automobiles, and construction where dozens of subcontractors are interlinked disruption in a single process can delay the entire production chain. Even partial strikes in some workplaces can trigger cascading disruptions, making the impact far greater than traditional workplace-level disputes.

3. Tasks Ahead

What, then, must be done? First, labor must accept that expanded rights come with corresponding responsibilities. Legitimate industrial action must be protected, but illegal acts involving violence, occupation, blockades, or harm to third parties must not be justified. The normalization of constant struggle erodes public support.

Management, too, must move beyond defensive attitudes. Rather than hiding behind formal subcontracting structures, firms must engage responsibly where they exercise substantive control. Ignoring the safety, working conditions, and welfare of subcontracted workers while focusing solely on cost reduction is no longer sustainable.

The role of government is even more critical. Having enacted the law, it must not leave field-level confusion unaddressed. It should provide prompt and predictable administrative guidelines on key issues such as employer status determination, public notice of bargaining requests, separation of bargaining units, and the scope of industrial disputes. The Labor Relations Commission should also strengthen expedited adjudication mechanisms.

Above all, supplementary legislationis urgently required. First, the criteria for determining employer status should be specified for each category, such as wages, hours, safety, and personnel management. Second, the scope of disputes should be reasonably adjusted to distinguish between management decisions that directly impact employment and general investment or technological implementation. Third, it must be ensured that the current single bargaining window system is not undermined by prime-subcontractor bargaining. Finally, the agenda at the bargaining request stage must be clearly specified to prevent the unlimited expansion of negotiations.

A law should be a functional structure, not a mere declaration. Rights based on ambiguous standards lead to confusion, and authority without accountability fosters deeper conflict. For the amended Trade Union Act to truly reduce conflict, we must move beyond ideological debates and focus on realistic, sophisticated supplementation. What we need now is not louder slogans, but a more sophisticated design that works in the field and effectively mitigates conflict.

Note: The views expressed herein may differ from those of the Hansun Foundation.

(※ It's a translation based on machine translation)