On August 24, 2025, South Korea's National Assembly officially passed amendments to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act, otherwise known as the "Yellow Envelope" bill. Spearheaded by South Korea's current ruling party, the bill has caused significant concern in the country's industrial sector, with potential unrest brewing in its aftermath.
Following the passage of the bill, the ruling party plans to push through another set of stricter amendments to the Commercial Act. In response, senior executives at General Motors (GM) South Korea have warned that the US headquarters may reassess its business layout and investment strategy in South Korea.
Origins of the "Yellow Envelope" movement
The term "yellow envelope" dates from 2014, during the mass layoff strike at SsangYong Motor (now KG Mobility), when hundreds of workers faced massive damage claims filed by the company. As many workers' families were plunged into hardship, a grassroots "yellow envelope campaign" began, where citizens donated money using mostly yellow envelopes to help affected workers cover legal and living expenses. The resulting legislative bill thus became known as the "Yellow Envelope law."
The recently passed amendments revive proposals previously targeted for reconsideration or repeal by the previous Yoon Suk-yeol administration. The core content expands the scope of employers and labor disputes, while restricting companies from claiming damages against striking workers.
Expanded employer definitions strengthen worker protections
On August 24, 2025, the South Korean National Assembly approved partial revisions to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act. Article 2 defines workers, employers, and labor disputes, while Article 3 addresses liability and claims arising from collective bargaining or dispute actions.
Most significantly, the amendment adds a definition of "employer" in Article 2, clarifying that "even if not a party to the labor contract, any entity with substantial and concrete control or decision-making power over workers' conditions shall be considered an employer."
This broadens the scope of the term "employer," allowing indirectly employed workers—such as contractors—to engage in collective bargaining with the original employer in control of working conditions, thereby strengthening labor rights protections.
The law also introduces proportional responsibility for compensation liabilities caused by union activities, based on factors like the worker's role within the union, participation in dispute actions, extent of damage, and salary level. While maintaining joint liability for union-related damages, it prevents individual workers from bearing excessive compensation burdens. Furthermore, even when workers are held liable, family members or acquaintances will not be pursued for compensation, preventing unlimited expansion of liability.
After promulgation, the amendment is expected to take effect in six months, during which the government plans to establish a task force to collect feedback from both labor and business to minimize uncertainties during implementation.
GM threatens reassessment amid industry concerns
According to Korea JoongAng Daily, following the passage of the "Yellow Envelope" bill, senior executives at GM's subsidiary in South Korea stated that the company's US headquarters will likely reassess its business operations in the country, given the already high risk of labor conflicts in South Korea. The same day, GM South Korea reportedly urged the government to reconsider the yellow envelope law.
The South Korean automotive industry widely believes that this legislative change could lead to GM's complete withdrawal from South Korea. Past labor negotiations have already led to multiple strikes and production halts at GM South Korea, and in May 2025, GM announced plans to gradually sell off its nine service centers operating in the country.
Six major business groups issue joint warning
On the day the bill was passed, six major business groups—including the Korea Employers Federation (KEF)—issued a joint written statement expressing their disappointment regarding the amendments expanding employer scope and redefining labor disputes, which limit damage claims related to illegal dispute actions under Articles 2 and 3 of the Labor Union Act.
According to the statement, post-amendment definitions of who qualifies as an employer under union law and what constitutes labor disputes remain unclear, which will inevitably lead to legal conflicts between labor and management. Moreover, financial experts believe that the enactment of the "Yellow Envelope" law will deter businesses from investing or operating in South Korea, due to heightened uncertainties in 2025.
The bill comes after the US imposed a 25% tariff on imported vehicles in April 2025. Although tariffs on South Korean imports are expected to decrease to 15%, this will still be a significant blow to the industry, since roughly 90% of GM South Korea's exports go to the US. With additional challenges now mounting from the passage of the "Yellow Envelope" bill, GM will likely need to adjust its production layout.
Article edited by Jerry Chen
