New law grants subcontracted workers more rights and protects striking employees
Business groups in South Korea have expressed concerns after the passing of the new "Yellow Envelope Bill" that introduces reforms to the country's Labour Union Act.
The bill, passed at South Korea's National Assembly on Sunday, aims to broaden workers' rights in collective actions and negotiations with employers, The Korea Times reported.
According to the report, the amendments will give subcontracted and indirectly employed workers the power to negotiate directly with parent companies on matters such as workplace safety.
It also expands the scope of labour disputes to include managerial decisions, such as restructuring or plant relocation, The Korea Economic Daily reported.
Additionally, it restricts companies from claiming damages from striking workers, effectively protecting unions and workers from some damage suits when they take action against an employer's unlawful conduct.
The "Yellow Envelope Bill,", which takes effect six months after promulgation, got its name from the yellow envelopes used to send money in support of union workers.
Business concerns over new law
The American Chamber of Commerce in Korea (AMCHAM), which opposed the bill when it was introduced last year, expressed concern over the new legislation.
"A flexible labour environment is essential to strengthening Korea's competitiveness as a business hub in the Asia-Pacific region," said James Kim, Chairman and CEO of AMCHAM, in a statement.
"If enacted in its current form, this legislation could influence future investment decisions by American companies considering Korea."
Kim added that the bill may add to the regulatory challenges faced by foreign-invested firms in South Korea.
"According to AMCHAM's 2024 Business Environment Survey, regulatory unpredictability remains one of the top challenges for foreign-invested companies in Korea," he said. "This legislation may add to that uncertainty and, in turn, undermine Korea's global competitiveness."
Business lobby groups in South Korea also urged the government for legislative efforts to minimise the "side effects" of the amendments.
"In order to guarantee a business environment free from speculative capital threats, we need to promptly establish protective measures that meet global standards," they said in a joint statement quoted by The Korea Times.
