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Ruling and opposition parties are expected to clash regarding the passage of the Amendment to the Labor Union and Labor Relations Adjustment Act (also known as the ‘Yellow Envelope Act’) in the upcoming regular session of the National Assembly.
In the wake of the strike by the labor union of Daewoo Shipbuilding & Marine Engineering’s (DSME) subcontractors, the passage of the amendment bill of the Trade Union and Labor Relations Adjustment Act that limits company claims for compensation on the damages of strike workers, also known as the “Yellow Envelope Law,” became a hot topic in this regular session of the National Assembly.
The Subcontracting Branch of the Korean Confederation of Trade Unions’ Metal Workers’ Union went on strike on June 2nd for 51 days in the DSME Okpo Shipyard in Geoje, Gyeongsangnam-do, demanding a wage increase. DSME has filed a lawsuit against the union for 47 billion won worth of compensation in damages that occurred during the strikes.
The “Yellow Envelope Law” originated from the yellow envelope that contained a donation for the unionized workers involved in the illegal strike against Ssangyong Motor when they were sentenced to KRW 4.7 billlion in damages back in 2014. The law restricts companies that have suffered damage due to labor union disputes from directly claiming compensation for damages and executing provisional seizures on workers. Eight amendments have been proposed to the National Assembly to amend Articles 2 (the definition of workers and employers) and 3 (restrictions on claims for damages) of the Labor Union Act. Currently, they are pending at the Environment and Labor Committee.
The opposition party is determined to push ahead with the passage of the “Yellow Envelope Law,” as it was proposed in the 19th and 20th National Assembly but failed alongside the Committee on Environmental Labor. The Democratic Party of Korea selected the “Yellow Envelope Act” as a key legislative task in the regular session of the National Assembly. The Justice Party also expanded the scope of the existing proposal to subcontractors, special employment workers, freelancers, and platform workers, further promoting their opinion.
On the other hand, the ruling People Power Party maintains its opposition, saying that illegal strikes and conflict-raising by strong labor unions could dampen corporate management activities and paralyze the industry. The People Power Party and the government convened a high-level party-government meeting in which they defined the “Yellow Envelope Act” as a populism bill and decide to forestall legislation.
The confrontation between the ruling and opposition parties is expected to intensify as the topic of the president’s veto is rising up to the surface of some conversations. If the president vetoes the bill, the National Assembly needs the majority attendance of incumbent lawmakers and the approval of more than two-thirds of those present.
The business and labor fields are also sharply divided. The Korea Employers Federation, the Korea Federation of Small and Medium Enterprises, and the Federation of Korean Industries have expressed concerns over the legislation to the National Assembly’s Environment and Labor Committee, while the Korean Confederation of Trade Unions, Solidarity for Participation, and Lawyers for a Democratic Society argue that the bill should be legislated to prevent companies from claiming compensation from labor unions.
At the regular session of the National Assembly, the ruling and opposition parties are expected to have a heated debate over whether to legislate the “Yellow Envelope Act.” If the differences in positions between the ruling and opposition parties prolong without progression, the tug-of-war of conflicting opinions could continue until the end of the regular sessions of the National Assembly. Thus, companies need to keep an eye on whether the ‘ the National Assembly passes the bill.
As the first-ever Korean law firm to issue specialized legislative journals, DR & AJU LLC has been publishing the monthly Policy & Business Report since August 2019. The September 2022 issue of the P&B Report conducted a full inspection of legislation proposed to the National Assembly Subcommittee, Standing Committee, and Plenary Session from August 15, 2022, to September 14, 2022, and selected and analyzed legislation with a significant impact on corporate activities. In the case of major legislation, key mentions of legislators, members of the Standing Committee, and government officials are included.
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