On August 24, 2025, the National Assembly of Korea passed the Yellow Envelope Act, marking a significant turning point in the country’s labor system. The name refers to the labor union movement that used yellow envelopes to collect signatures of support. This is a major amendment to the Trade Union and Labor Relations Adjustment Act (TULRAA), aimed at expanding the rights of non-regular workers and strengthening the protection of labor unions. For workers employed in Korea under temporary contracts or through subcontracting arrangements, the Act brings significant implications for both businesses by increasing legal liability and foreign workers, by providing greater opportunities for collective bargaining. This article analyzes the key amendments, focusing on the expanded definition of “employer,” the requirement for direct negotiations with non-regular workers, the enhanced protection measures for labor unions, and the legal consequences of non-compliance, while also assessing their practical implications. 

I. Legal basis

• The amended Trade Union and Labor Relations Adjustment Act (TULRAA) will take effect six months from the date of enactment, expected in February 2026.
• International Labour Organization (ILO) Conventions

II. Analysis of key amendments

The Yellow Envelope Act introduces transformative changes, emphasizing the expansion of responsibilities and rights, thereby empowering foreign workers who are often non-regular employees with a stronger voice.

1. Expansion of the definition of “employer” to include the principal contractor and client company

Previously, only the entity directly hiring the workers was considered an “employer.” Under the new provisions, the definition has been expanded to include entities that “substantially control the working conditions,” encompassing principal contractors and client companies within the supply chain. For example, a large manufacturing company that outsources labor through subcontractors will now bear joint responsibility for negotiating wages and working conditions. This change aims to eliminate the practice of “avoiding” liability through intermediary layers, which is particularly prevalent in the manufacturing and construction sectors where foreign workers are concentrated.

2. Requirement for direct negotiations with non-regular workers

Non-regular workers, such as short-term contract employees or outsourced staff, are now permitted to join labor unions and request direct collective bargaining. This requires the expanded “employer,” including client companies, to engage in negotiations directly, rather than delegating the responsibility solely to subcontractors. The new regulation allows labor unions to represent this group in disputes concerning wages, working hours, and occupational safety, providing foreign workers who often lack stable contracts with an opportunity to improve their rights and benefits.

3. Measures for the protection of labor unions

The Act expands the scope of “lawful industrial action” to include disputes arising from violations of collective bargaining agreements (CBAs) and managerial decisions affecting working conditions. At the same time, it limits the right of businesses to claim damages against labor unions and individual workers, thereby reducing legal risks associated with strikes or demonstrations. These measures strengthen the position of labor unions and encourage the establishment of representative organizations within multinational companies employing foreign workers.

4. Legal consequences for non-compliance

Violations may result in severe administrative measures, including fines of up to several hundred million KRW and orders to engage in mandatory negotiations. Companies that deliberately evade their obligations may face class-action lawsuits, liability for damages, and even termination of contracts with contractors. The NHRCK and the Ministry of Employment and Labor will strengthen oversight, establishing a rapid complaint mechanism for foreign workers through a multilingual hotline.

III. Impact on businesses

For Korean and multinational companies, the Act increases compliance burdens, particularly in outsourcing models. Companies such as Samsung and Hyundai— which frequently utilize contractors—must review their contracts, train management personnel, and establish reserve funds for negotiations. Labor costs may increase by 10–15% due to collective bargaining, but this also brings long-term benefits, such as reduced disputes and enhanced corporate reputation. Foreign companies investing in Korea should immediately audit their supply chains to mitigate legal risks, particularly if employing Vietnamese or Philippines workers through the Employment Permit System (EPS).

IV. Impact on foreign workers

Foreign workers, who constitute a significant proportion of non-regular employees (over 500,000 through the EPS), will substantially benefit from the right to join labor unions and engage in direct collective bargaining.This helps combat wage discrimination and poor working conditions, which are prevalent in the manufacturing sector. However, challenges remain due to language barriers and limited legal awareness; associations such as the Migrant Workers’ Union (MTU) are expected to provide training support. Overall, the Act promotes equality and contributes to greater stability for foreign workers in Korea.

V. Conclusion

The Yellow Envelope Act not only strengthens labor rights but also reshapes labor relations in Korea in 2025, with a dual impact on businesses increasing their responsibilities and foreign workers providing enhanced protections. In the context of post-pandemic economic recovery, all parties must act swiftly to adapt.

VI. About NYLA – Korean Legal Office

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