"Controversy Over N% Performance Bonuses from Operating Profit... Fallout from Hastily Passed Yellow Envelope Act"

"Performance-based Bonuses Are Profit Sharing...
A Reasonable Solution Is Needed"

There are growing calls for performance-based bonuses calculated as a certain percentage of operating profits at major companies, following the introduction of such incentives by Samsung Electronics and SK hynix. Meanwhile, the Yellow Envelope Law (the amendment to the Trade Union and Labor Relations Adjustment Act) is being criticized for increasing confusion at worksites. Both members of the National Assembly and experts argue that supplementary measures—such as revising the interpretive guidelines that expanded the scope of labor disputes to managerial decisions—must be prepared.

Woo Jaejun, member of the People Power Party, is speaking at the discussion forum titled "Issues of the Yellow Envelope Act Viewed Through the Debate on Operating Profit n% Performance Bonus" on the 4th. Courtesy of Woo Jaejun's office

Woo Jaejun, a member of the People Power Party, held a forum titled 'Issues with the Yellow Envelope Law Seen Through the Debate on Operating Profit N(%) Bonuses' at the National Assembly Members’ Office Building on August 4, 2026. The event was attended by People Power Party representatives Koh Dongjin, Kim Yongtae, Kim Hyeongdong, and Yoo Yongwon, as well as independent Assemblyman Han Donghoon.

This forum was organized amid ongoing debates over performance-based bonuses, which are escalating from individual company-level wage negotiations to broader social discussions surrounding compensation principles and overall wage structures in the industrial sector. The aim was to discuss where to draw the line regarding the scope of collective bargaining, how to balance companies’ managerial autonomy with workers’ rights and interests, and how to design healthy wage structures appropriate for worksites.

Assemblyman Woo explained, “At the time the Yellow Envelope Law was enacted, efforts were made to carefully review the potential consequences and pass the law accordingly. Despite this, the Democratic Party of Korea pushed the bill through with remarkable speed.” He added, “In fact, including managerial decisions as a subject of labor dispute was inserted on the very day of the bill’s passage, and we are now facing the repercussions.”

Assemblyman Woo also stated, “As many sectors are currently preparing for strikes, I have significant doubts as to whether our country is economically prepared for this. There is a sense of apprehension,” he said, expressing concern that, “There might be a surge in economic turmoil within a month or two.” He further noted, “President Lee Jaemyung also suggested that interpretive guidelines on performance-based bonuses should be revised. That, at least, is a relief. We must find a rational solution.”

Professor Park Jisoon of Korea University School of Law delivered a presentation titled, ‘Problems and Solutions of the Yellow Envelope Law and the Debate on Managerial Performance-Based Bonuses.’ Professor Park pointed out that, as a result of the Yellow Envelope Law expanding the scope of labor disputes to managerial decisions, matters like performance-based bonuses, which are organizational management decisions, are now mistakenly being considered legitimate subjects for dispute. He advised the establishment of legislative and interpretive standards that clearly define the boundaries between working conditions and managerial rights.

Professor Park continued, “Performance bonuses are, by definition, a post hoc distribution of profits reflecting management performance. They do not fall under wages, welfare, or other types of employee treatment and are not, under current law, considered valid matters for labor dispute. The decision authority for such bonuses fundamentally rests with the company’s board of directors or general shareholders’ meeting. Excessive profit distributions may create various accountability issues for management, which is why systemic controls are needed.”

Representative Kim Hyeongdong also remarked, “The Yellow Envelope Law does not seem to be reducing polarization or duality in the labor market; rather, there is disappointment that it may even be widening the gap,” highlighting the necessity of institutional improvements. Representative Koh Dongjin added, “While I fully empathize with the need for union activities, in a democratic society, such actions must take place within the framework of balance and moderation. This is not the right way.”

This content was produced with the assistance of AI translation services.