South Korea’s “Yellow Envelope Act”: What it means for workers and businesses

ETI welcomes South Korea’s adoption of the “Yellow Envelope Act” (‘the Act’), which amends Articles 2 and 3 of the Trade Union and Labour Relations Adjustment Act. The reform is a major step forward for labour and trade union law, particularly in sectors that rely on subcontracted work, agencies, and migrant labour. 

It provides an important opportunity to workers’ rights and create fairer, more resilient supply chains. Key features of the Act include: 

• Expanded definition of “employer”: Principal companies that exercise substantial control over working conditions can now be recognised as employers, even if work is carried out by agencies or subcontracted workers. This step mirrors similar expansions made in the US, offering stronger protections that should be consider by other countries.
• Broader lawful industrial action: Workers can now legal strike not only over pay or working hours, but also over big management decisions like restructuring, relocation, and sales.
• Protection against excessive damages claims: The law limits the potential financial liability of unions and workers in the case of lawful strike. Previously, if a strike was deemed illegal, unions and even individual workers could be forced to pay the full cost of the employer’s losses, such as lost production or delayed contracts. Courts sometimes applied “joint and several liability”, meaning any one person or group could be held responsible for the entire amount. The Act limits such financial liability, ensuring that unions and workers are only responsible for damages proportionate to their actual involvement.
• Relevance to migrant workers: The Act is particularly significant in sectors such as manufacturing, logistics, construction, and fisheries, where many migrant workers are formally employed through agencies or subcontractors. Previously, these workers were often not legally recognised as employees, so they had little or no legal right to negotiate with employers through unions. Under the Act, they are now covered by collective bargaining agreements (CBAs) and protected in lawful industrial action, giving unions stronger leverage and workers stronger rights.  

While significant, the Act is not without caveats: 

• It does not change wage or hours law;
• Protections apply only to lawful industrial action, not strikes outside statutory procedures;
• The impact is strongest where the principal company making the decisions is in Korea. 

The law is expected to be in effect from March 2026. 

SPOTLIGHT: The impact on fisheries and the maritime industry 
Korea's workers and labour movement secured a major victory with the passage of the Yellow Envelope Act, vindicating decades of indefatigable advocacy and struggle. With the expansion of the definition of 'employer' to include those entities with substantial control over working conditions, workers in heavily sub-contracted sectors in critical supply chains, including road transport and fisheries, will now enjoy additional protections. The country's trade unions [who have long-suffered State-led repression] will also benefit from new rights with the expansion of mandatory collective bargaining subjects and permitted grounds for industrial action, among other things. These amendments represent a significant first step towards the effective recognition of the rights to freedom of association and collective bargaining in Korea. 
Ruwan Subasinghe, Legal Director at the International Transport Workers’ Federation (ITF). 

At ETI, we particularly want to highlight the relevance of this law even for non-Korean companies, as well as for trade union engagement. 

• Multinational corporations sourcing goods or services from Korea may find that entities further upstream (principals) in the supply chain can now be held responsible for subcontracted or agency labour.
• Migrant workers in complex supply chains, such as fisheries and shipping, can now take their concerns directly to the principal company in charge, giving them a stronger voice and a clear legal pathway to raise claims.
• Unions may have more grounds to organise around issues previously considered management prerogative.  

Legal reforms like the Yellow Envelope Act are more than regulatory changes, they create opportunities to strengthen accountability and give workers, especially those in vulnerable or marginalise groups, a stronger voice. The Act could set a precedent for other countries and industries where agency labour, subcontracting, and migrant work are common. It has the potential to encourage other policies that allow subcontracted, agency, and migrant workers to negotiate directly with their principal employer, giving workers more influence and supporting unionisation in sectors where it had been traditionally weak.  

This development comes as ETI expands its work on mandatory human rights and environmental due diligence (mHREDD), including the practical application of new EU laws on corporate responsibility and reporting, such as the Corporate Sustainability Due Diligence Directive (CSDDD), the Corporate Sustainability Reporting Directive (CSRD), and the EU Foreign Labour Regulation (EUFLR). Through projects in key production countries including India, Bangladesh, Cambodia, and Indonesia, ETI is supporting companies at all stages of the value chain to understand and implement these laws in practice. Our focus is to promote meaningful stakeholder engagement, aligning business practices with national and international standards, and ensuring that workers’ voices are heard in decision-making. This work builds on widely recognised standards — such as the ETI Base Code, the UN Guiding Principles on Business and Human Rights (UNGPs), and the OECD Guidelines. Our aim to embed responsible supply chain practices that protect workers and ensure companies’ due diligence is both effective and credible. 

As we continue to track legal developments globally via our Human Rights Due Diligence legislation tracker, we are committed to helping our members anticipate change, exceed expectations of emerging standards, and engage meaningfully with stakeholders across the value chain.