South Korean firms sue over user status rulings under new labor law

South Korea's recently amended labor law, nicknamed the “yellow‑envelope law,” expands the scope of collective bargaining and limits employers’ ability to claim damages from union strikes. Companies are now confronting a surge in disputes over whether they are legally considered employers (user status) of subcontractor unions.

Hanwha Ocean has filed an administrative lawsuit and request for an injunction against a Central Labor Commission decision that recognized its in‑house catering firm as a user, marking the first such legal challenge since the law took effect. Similarly, Chungheung Construction and its affiliate Chungheung Tokon have sued over a commission ruling that designated them as the “real boss” of the tower‑crane pilots’ union. Both cases follow earlier rulings that granted strike rights to several subcontractor unions after “adjustment suspension” decisions.

The litigation reflects companies’ dilemma between pursuing costly legal action or entering negotiations to avoid widespread work stoppages, especially in manufacturing sectors with extensive subcontracting. The Ministry of Employment and Labor is reviewing how to respond to these challenges.