[Labor] 'Yellow Envelope Act' Passed by Environment & Labor Committee: Employers Must Set Strategy Before Enactment

The Yellow Envelope Act (an amendment to the Trade Union Act) has passed the Environment and Labor Committee, signaling major changes to the business environment, including an expanded scope of "employer," an expanded scope of disputes, and limits on damages. A prime contractor may be recognized as the employer of a subcontractor's workers, and restructuring and outsourcing may also become subjects of labor disputes, so dispute risk is expected to surge. During the six-month grace period, it is time to comprehensively review contract structures and internal response systems.

With the proposal of an amendment to the Labor Standards Act centered on introducing the "4.5-day workweek"—President Lee Jae-myung's campaign pledge—along with the "abolition of the comprehensive wage system," changes are anticipated across companies' HR and labor systems. The 4.5-day workweek is a policy aimed at shortening working hours and improving quality of life, but the feasibility of applying it varies greatly by industry. The abolition of the comprehensive wage system likewise makes stronger working-hour management essential.

AI-driven HR evaluation improves the efficiency of hiring and performance analysis, but it can come with legal problems such as biased algorithms, lack of explainability, and invasion of personal privacy. When AI is involved in actual dismissals or evaluations, there is room for violations of human rights, equality, and personal-data protection laws, making cautious adoption and review by companies essential. We summarize domestic and international trends in AI-driven HR evaluation, along with the points companies should heed when adopting AI HR systems.