The Yellow Envelope Law originated from citizen donations to support SsangYong Motor strike workers. The photo shows the Metal Workers’ Union holding a rally in front of the main gate of SsangYong Motor’s Pyeongtaek plant in June 2010, marking the first anniversary of the factory occupation strike. (Yonhap)
SEOUL, Aug. 24 (Korea Bizwire) — Nearly a decade after it was first proposed, South Korea’s National Assembly on Sunday passed the so-called Yellow Envelope Law, a landmark revision to the Trade Union and Labor Relations Adjustment Act that limits companies’ ability to claim damages against striking workers and strengthens protections for subcontracted labor.
The legislation, which will take effect in six months, marks a major victory for organized labor after years of political stalemate and repeated vetoes.
Originally introduced in 2015 by the then-New Politics Alliance for Democracy, now the Democratic Party, the bill cleared the Assembly several times but was blocked by former President Yoon Suk-yeol. It was revived under President Lee Jae-myung, whose government had pledged stronger protections for workers.
The law’s roots trace back to 2014, when a court ordered SsangYong Motor workers to pay 4.7 billion won ($3.4 million) in damages after a 77-day strike. In protest, a citizen sent 47,000 won in a yellow envelope — a reference to how wages were once distributed — sparking a nationwide fundraising campaign and giving the legislation its symbolic name.
Momentum grew again in 2022 after subcontracted workers at Daewoo Shipbuilding & Marine Engineering were hit with a 47 billion won damages claim following a strike. By then, labor unions had branded corporate lawsuits as “compensation bombs” designed to suppress collective action.
The National Assembly passed the amendment to the Labor Union and Labor Relations Adjustment Act — known as the Yellow Envelope Law — at its plenary session on August 24, 2025. (Yonhap)
Yellow Envelope Law Marks Turning Point in Korea’s Fierce Battle Over Labor Rights
A turning point came in June 2023, when South Korea’s Supreme Court ruled that damages from illegal strikes must be assessed individually, rather than holding unions and all participants equally liable.
The Court argued that imposing joint liability could weaken workers’ constitutional rights to organize and strike, and that responsibility should instead reflect each worker’s role, participation, and contribution to damages. Legal experts said the decision aligned with the legislative intent of the Yellow Envelope Law, which stipulates that liability must be apportioned case by case.
Under the new law, courts will be required to assign responsibility for damages individually, ending the practice of burdening all striking workers and their unions with joint liability for the full amount. The law also broadens the scope of legal strikes and holds parent companies more accountable for the treatment of subcontracted workers.
Business leaders and the conservative opposition fiercely opposed the bill, warning it would embolden illegal strikes and harm the economy. But the ruling Democratic Party, armed with a dominant majority, overcame a filibuster attempt by the conservative People Power Party and forced a vote after 24 hours of debate.
The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the largest labor union federation in the United States, previously urged the National Assembly to pass South Korea’s ‘Yellow Envelope Law’ (amendments to Articles 2 and 3 of the Labor Union Act), saying it would ‘promote corporate accountability and workers’ rights.’ The photo shows the letter the AFL-CIO sent on the 20th of this month to National Assembly Speaker Woo Won-shik, Environment and Labor Committee Chair Ahn Ho-young, and Foreign Affairs and Unification Committee Chair Kim Seok-ki.
“The passage of this law reflects a long-standing demand to shield workers from excessive liability and ensure fairer protections,” labor advocates said, noting that the Ministry of Labor will prepare detailed enforcement guidelines during the six-month grace period before implementation.
With its enactment, the Yellow Envelope Law is poised to reshape South Korea’s labor relations — the culmination of years of street-level activism, political struggle, and a high court ruling that shifted the legal ground beneath one of the country’s most contentious debates.
M. H. Lee (mhlee@koreabizwire.com)
