Impact of Yellow Envelope Law: First Denial of Primary Employer Status in South Korea

[Herald Economy reporter Kim Yong-hoon] The momentum to treat primary contractors as employers — a trend that had grown after the enactment of the “Yellow Envelope Act” (an amended labor union law) — has stalled.

On the 10th, the Jeonnam Regional Labor Relations Commission dismissed a petition filed by the Korea Tower Crane Operators’ Union, affiliated with the Federation of Korean Trade Unions (FKTU), seeking a ruling that Jungheung Construction and Jungheung Togeon qualify as employers. This is the first decision since the Yellow Envelope Act took effect in which authorities declined to recognize a prime contractor’s employer status.

The union had requested collective bargaining with the two companies on the 24th of last month. When the companies did not respond, the union filed a petition with the labor commission. The regional commission concluded that, based on how tower crane operators are employed, it would be difficult to find that the contracting firms exercised meaningful, concrete control over wages or work methods.

As a result, Jungheung Construction and Jungheung Togeon are not obligated to engage in collective bargaining with the union. If the union objects to the ruling, it may request a rehearing at the Central Labor Relations Commission.