The first decision recognizing a primary contractor's "employer status" over subcontracted workers has been issued since the Yellow Envelope Law (amendments to Articles 2 and 3 of the Trade Union Act) took effect. The Chungnam Regional Labor Relations Commission ruled on Monday that four institutions, including the Korea Institute of Nuclear Safety (KINS), hold "substantive employer status" in a bargaining request case filed by a coalition of subcontracted workers' unions at public institutions. Just 23 days after the law's implementation, labor authorities have opened the door for direct negotiations between subcontracted unions and primary contractors.
This decision could trigger "bargaining chaos" across the entire industrial sector, far beyond individual workplaces. The greatest concern is that even the government's own guidelines have been rendered ineffective. The Ministry of Employment and Labor stated in its interpretive guidance issued in February that mere work instructions to simple service contractors cannot serve as grounds for recognizing employer status. Yet the regional labor commission recognized employer status based on safety management and workforce deployment.
The paradox that the business community had warned about from the start has now materialized: the more a primary contractor strengthens safety measures for subcontracted workers, the more evidence of "substantive control" is created, trapping the contractor. It is obvious that subcontracted unions will aggressively target safety-related areas to assert employer status claims going forward. The problem is that this chaos is only the beginning. Currently, 65 employer status inquiries have been filed with regional labor relations commissions nationwide. As early as next week, bargaining separation rulings are lined up for major workplaces including Incheon International Airport Corporation, KB Kookmin Card, Hana Bank, and Coupang CLS. POSCO Holdings (005490.KS) has also been brought before the commission over whether separate bargaining should be conducted with each of its subcontracted unions. If primary contractors must sit down at the table individually with numerous subcontracted unions, business activities will inevitably be constrained.
Korea's economy is in an emergency phase right now. Oil prices, consumer prices, and exchange rates are surging due to the Middle East conflict, and supply chain risks are severe. Amid all this, fueling labor-management conflicts and uncertainty over "who is the real employer" amounts to nothing less than self-inflicted harm with no benefit whatsoever. The Yellow Envelope Law was forced through unilaterally by the ruling party despite numerous foreseeable problems, including the expanded definition of employer, restrictions on damage claims during strikes, and a broadened scope of dispute issues. On top of this, if the "worker presumption system" — which would classify special-employment workers as employees — is legislated by Labor Day (May 1) as the government has planned, it will be a double blow for the industrial sector. Before labor-management relations sink into an irreversible quagmire due to indiscriminate bargaining demands by subcontracted unions, supplementary legislation to reduce the side effects of the Yellow Envelope Law must be expedited, and clearer standards must be established.