Problems and Tasks of the Law (Yellow Envelope Law) Granting Impunity for Illegal Strikes by the KCTU

1. Key Provisions of the “Yellow Envelope Act,” Widely Viewed as Granting Immunity for Illegal Strikes

On February 21, the National Assembly’s Environment and Labor Committee (hereinafter “ELC”) passed a partial amendment to the Trade Union and Labor Relations Adjustment Act—commonly known as the “Yellow Envelope Act”—amid a collective walkout by lawmakers from the People Power Party. The bill expands the scope of lawful industrial action and limits companies’ ability to seek damages from workers. Joo Ho-young, floor leader of the People Power Party, strongly opposed the bill, calling it an “unconstitutional envelope bill” or a “universal strike-permission bill.” The Presidential Office also stated that if the bill passes the plenary session, it will consider exercising the President’s veto, citing the opposition parties’ unilateral handling of the legislation.

The Yellow Envelope Act is a committee substitute drafted by the ELC chair, reflecting elements of 12 separate bills, including those introduced by lawmakers such as Kang Byung-won, Kang Eun-mi, and Lee Eun-ju. It has been referred to the Legislation and Judiciary Committee for a review of legal wording and system consistency.

The bill’s major provisions can be summarized as:

expanding the definition of “employer”;

expanding the scope of “industrial action”; and

limiting liability for damages arising from industrial action by requiring courts to allocate liability individually based on each liable party’s fault and degree of contribution, while exempting guarantors from liability.

Overall, the bill appears to substantially broaden the range of employers and labor disputes, and effectively provide an “immunity shield” for various violent or political illegal strikes.

According to the Korea Economic Research Institute (2022), the illegal strike (collective refusal to transport) by the Cargo Truckers Solidarity Union at the end of last year caused direct and indirect economic losses in industries such as automobiles, steel, petrochemicals, cement, and tires, estimated at up to KRW 10.4 trillion. This issue report seeks to identify the problems and policy responses related to the Yellow Envelope Act pushed through the ELC under the leadership of the Democratic Party and the Justice Party.

2. Status of Labor Disputes, Workdays Lost, and Illegal Strikes (Damages Awards in Litigation)
◩ Labor Disputes Increasing, Especially at Large Workplaces; Average Workdays Lost Around 710,000 per Year Over the Past 12 Years

Korea’s labor disputes increased from 86 cases in 2010 to 119 cases in 2021—about a 1.4-fold rise—showing an overall upward trend. Disputes at workplaces with 300 or more employees also increased from 37 cases in 2010 to 61 cases in 2021, mirroring the overall trend and indicating that disputes are increasingly concentrated in larger workplaces.

In terms of workdays lost due to strikes and other labor disputes, the figure spiked to between 860,000 and 2.03 million days in years of severe conflict (notably 2012, 2016, and 2017), while generally remaining around 500,000 days in other years. Over the past 12 years, the annual average has been approximately 710,000 workdays lost.

◩ Among Major Countries, Korea at the Top Level in Strikes/Lockouts and Workdays Lost; Average Workdays Lost 75.4 Times Japan’s

According to International Labour Organization (ILO) statistics, the number of strikes and lockouts over the past 12 years in major countries has been about 60–80 cases in Japan, fewer than 10 in Sweden, roughly 90–100 in the United Kingdom, and fewer than 25 in the United States. By contrast, Korea recorded around 140 cases, a notably high level. While Japan, the UK, and Sweden show declining trends, Korea’s trend has increased.

Comparing average workdays lost due to strikes/lockouts over roughly 10–12 years, the figures are: Germany 258,000 days; Japan 9,400 days; Korea 707,000 days; Sweden 9,300 days; the UK 448,000 days; and the US 1,138,000 days. Excluding the United States—whose economic scale and employment base are far larger—Korea ranks at the highest level among major countries. Korea’s workdays lost are about 2.7 times Germany’s, 75.4 times Japan’s, 76.2 times Sweden’s, and 1.6 times the UK’s.

◩ Illegal Strikes: Total Damages Awarded Over 13 Years KRW 35.01 Billion—99.9% Associated with the KCTU

According to a survey on damages claims and provisional seizures by the Ministry of Employment and Labor’s Labor Relations Legislation Division (2022), over the past 13 years (2009 to August 2022), courts awarded a total of KRW 35.01 billion in damages (KRW 27.51 billion in concluded cases and KRW 7.5 billion in ongoing cases). Total damages claimed amounted to KRW 275.27 billion, and in awarded cases, courts recognized 58.4% of the KRW 59.95 billion claimed—well over half.

By umbrella organization, of the KRW 35.01 billion awarded, 99.86% was associated with the Korean Confederation of Trade Unions (KCTU): 94% of all cases, 99.6% of total claimed amounts, and 99.9% of awarded amounts. By contrast, damages awarded in cases associated with the Federation of Korean Trade Unions (FKTU) amounted to only KRW 50 million.

The award rate in damages lawsuits against unions was 67.1%, compared with 57.1% for civil damages lawsuits overall—suggesting that courts recognized damages more often in union-related cases involving violence and other unlawful conduct. By type of unlawful conduct, workplace occupation accounted for KRW 32.75 billion (93.5%), the largest share—KRW 19.52 billion for coercive occupation and KRW 13.16 billion for coercive occupation combined with assault/injury. This was followed by rallies/demonstrations/sit-ins at KRW 410 million, and strikes (including slowdowns) at KRW 60 million.

3. Key Problems Created by the Yellow Envelope Act
◩ Problems from Expanding the Definition of “Employer”: Confusion, Conflict, Higher Costs, and Weakened Competitiveness

If the definition of “employer” is broadly expanded, subcontractor unions may demand collective bargaining directly with prime contractors. This could generate serious confusion in labor relations, including disputes over the application of single bargaining-channel rules, and could also intensify conflicts among unions. Moreover, such changes disregard industrial realities in which lawful subcontracting is widely used, potentially undermining the foundation of the current legal framework. Direct bargaining with subcontractor unions would increase corporate costs, discourage subcontracting, and weaken corporate competitiveness (Federation of Korean Industries, 2022).

Because the criteria for determining “employer” status are not sufficiently specified, prime contractors would be unable to predict the scope of bargaining obligations. This could lead to prolonged bargaining, systemic disruption, increased litigation, and weakened legal stability (Ministry of Employment and Labor briefing, 2023).

◩ Problems from Expanding the Scope of Labor Disputes: De Facto Immunity for Illegal Strikes

If the scope of labor disputes expands from “matters concerning the determination of working conditions” to “matters concerning working conditions,” the range of labor disputes and lawful strikes could extend beyond what courts and labor commissions currently recognize through established legal procedures.

If unions attempt to improve working conditions through hardline strikes without going through lawful procedures, the costs of labor conflict could increase significantly. If conduct previously deemed illegal becomes ambiguous due to broader dispute coverage, the bill may effectively blur illegality standards or provide a shield from accountability. It could also encourage the tendency to treat issues beyond the employer’s authority as dispute subjects, or to resolve broad workplace issues through industrial action rather than negotiation and agreement (Kim Jong-hyeon, 2022).

◩ Limiting, Mitigating, and Individualizing Damages Liability: Excessive Protection for Unlawful Conduct by Certain Unions (Perpetrators)

A core revision requires courts to set individualized liability boundaries based on each party’s fault and contribution and exempts guarantors from liability altogether. In effect, this individualizes and reduces damages liability, functioning as an “immunity” mechanism for illegal strikes.

From the victim’s perspective (i.e., the employer), it is practically impossible to identify the precise extent of each perpetrator’s damage or fault. Courts also face significant difficulty in calculating individualized liability. For this reason, Supreme Court precedent has generally imposed joint liability in such cases—an approach the bill would contradict (Ministry of Employment and Labor briefing). Limiting damages in this way also conflicts with the general principle that damages liability should restore the victim as fully as possible. Ultimately, the bill could force employers to bear excessive losses, including infringements on property rights, while disproportionately protecting unlawful acts committed by certain unions affiliated with the KCTU.

4. Policy Responses: Withdrawal in Committee or Serious Consideration of a Presidential Veto

In conclusion, the Yellow Envelope Act is a harmful bill that excessively protects illegal strikes and reduces—or effectively waives—damages liability. It is also likely to increase labor costs, significantly weaken corporate competitiveness, and ultimately harm job creation prospects for future generations. Therefore, the bill should be withdrawn at the committee level or defeated in the plenary session. If the opposition parties push it through the plenary session by force of numbers, the President may have no choice but to seriously consider exercising veto power.

Going forward, it is necessary to introduce a制度 that mandates regulatory cost–benefit analysis and impact assessment for member-initiated legislation that does not align with workplace realities and is likely to worsen labor relations and harm future jobs and corporate competitiveness over the long term.

Korean version: https://www.cfe.org/bbs/bbsDetail.php?cid=issue&pn=1&idx=25484