Korea Employers Federation chief calls for employer defense rights under 'yellow envelope law,' favors rehiring over retirement age extension

Korea Employers Federation Chairman Son Kyung-shik said employer defense rights must be strengthened in connection with Articles 2 and 3 of the Trade Union Act, commonly known as the "yellow envelope law." He also reiterated his position that a post-retirement rehiring system — premised on a shift to job- and performance-based pay — is preferable to a statutory extension of the mandatory retirement age.

The federation held a policy consultation meeting with the People Power Party on Tuesday at its headquarters in Mapo-gu, Seoul, and delivered a formal set of business community proposals. People Power Party floor leader Jeong Jeom-sik and lawmakers Kim Mi-ae, Park Soo-young, Choi Eun-seok and Yun Yong-geun attended, along with Son and representatives from Samsung Electronics, Hyundai Motor Company, LG Energy Solution, Hanwha Ocean, SK Group's Supex Council and Lotte Holdings.

Son said exports, led by semiconductors, continue to perform well and growth is expected to improve, but warned that a high exchange rate could stoke inflation and dampen corporate production, investment and private consumption. He added that while the spread of AI and other advanced technologies is rapidly reshaping industrial and employment structures, South Korea's labor laws and systems have failed to keep pace. "We can no longer put off reforming outdated laws and institutions, if not for ourselves then for future generations," he said.

In its proposals, the federation said that to reduce the side effects of the yellow envelope law, the definition of "employer" must be adjusted more rationally and employer defense rights must be reinforced alongside that change.

The federation said that since the amended law took effect, cases have multiplied in which subcontractor unions demand that primary contractors bargain over wages and performance bonuses regardless of whether the contractor exercises actual control — raising concerns about widening labor-management conflict. It also said labor relations commissions have begun using primary contractors' compliance with the Occupational Safety and Health Act as grounds to compel collective bargaining with subcontractor unions, creating a contradiction in which faithfully following the law leads to mandatory bargaining obligations.

The federation further argued that even when companies seek a court ruling on whether they qualify as an employer under the law, the litigation process itself risks being deemed an unfair labor practice — as a refusal or neglect of collective bargaining — making normal legal recourse effectively impossible. It called for a clear definition of employer scope alongside a guarantee of employer defense rights in line with international standards.

On the retirement age issue, the federation proposed that rather than simply extending the mandatory retirement age, the more realistic path is to ease the procedures for revising work rules to enable a job- and performance-based pay system, and to build a post-retirement rehiring framework on that foundation. It argued the approach would expand employment for older workers while minimizing the reduction of jobs available to younger people.

The federation also expressed concern about the government's proposed Basic Act for Working People and a worker-presumption provision, warning they could increase hiring costs for small and medium-sized enterprises and small business owners and lead to job losses. It proposed that protections for such workers be pursued through economic law mechanisms — such as fair trade regulations — rather than through labor law.