[비즈한국] Following President Lee Jae-myung’s expression of his determination to strictly punish industrial accidents, the Democratic Party passed the so-called ‘Yellow Envelope Act’ despite strong pushback from the business community, leading to a surge in demand for corporate legal advice. Since last month, major law firms have been flooded with inquiries from companies seeking ways to minimize legal risks related to industrial accidents. The business community is said to be in a state of emergency.
POSCO E&C Faces Compulsory Investigation by Police and Ministry of Employment and Labor
On the 19th, the Gyeongnam Provincial Police Agency’s Criminal Mobile Unit and the Changwon Office of the Ministry of Employment and Labor raided the POSCO E&C headquarters in Songdo, Incheon, regarding an accident where a worker was caught in a drilling machine and died at a highway construction site in Haman-Ulsan. About 50 investigators from the police and the labor ministry were deployed to secure materials related to construction execution and safety management. Two individuals, including the site manager, have already been booked on charges of professional negligence resulting in death.
On the 12th, the Ministry of Employment and Labor also conducted a raid in cooperation with the Anyang Office of the Ministry of Employment and Labor and the Gyeonggi Nambu Provincial Police Agency regarding the death of a Myanmar worker (presumed electrocution) at a POSCO E&C construction site in Gwangmyeong. This year alone, POSCO E&C has already experienced four fatal accidents: a fall at an apartment construction site in Gimhae, Gyeongnam (January), a collapse at the Shinansan Line construction site in Gwangmyeong, Gyeonggi-do (April), a fall at a residential-commercial building site in Daegu (April), and the drilling machine accident at the Hamyang-Changnyeong highway construction site (July), drawing public rebuke from President Lee Jae-myung. Consequently, CEO Jeong Hee-min resigned, and construction was temporarily suspended at all project sites.
As investigations followed immediately after the President’s rebuke, other construction companies have also adopted a "low-profile" mode. Industrial accidents have emerged as the biggest risk for the construction industry. At DL E&C001880, where a subcontractor's employee in his 50s died after falling from the 6th floor while dismantling safety netting on an apartment exterior wall on the 8th, the company took responsibility, leading to the collective resignation of CEO Kang Yun-ho, Chief Safety Officer (CSO) Ha Jung-min, and team leaders and site managers.
Small and Medium-sized Enterprises Struggle with Pre-emptive Risk Management
With the Yellow Envelope Act (Articles 2 and 3 of the Labor Union Act) passing the National Assembly plenary session on the 24th, the business community, including the construction industry, is on high alert.
The government proposed a six-month grace period for implementation amid the uncertainty surrounding the definitions of "employer" and the "scope of disputes" as specified in the Yellow Envelope Act. However, this content is not included in the act itself. With no government guidelines yet, major manufacturing and construction firms that rely heavily on subcontractors have begun seeking legal advice from large law firms, as their existing HR and labor systems cannot comply with the changed law.
Major law firms report a continuous stream of inquiries not only from existing corporate clients but also from new mid-sized companies. A lawyer specializing in labor law at a large firm said, "There is at least one inquiry a day from companies that produce goods through subcontracting systems asking whether their business structure is exposed to legal risks," adding, "On average, consultation requests seem to have increased by more than 20–30%."
A representative lawyer at a small-to-medium law firm who is a former chief prosecutor with extensive experience in labor-related investigations said, "While large corporations seek out big law firms, construction companies and mid-sized manufacturers operating locally reach out through referrals to get advice," and added, "Given how strong the determination of the government and the Democratic Party is, companies have no choice but to seek out law firms."
In response, major law firms have actively engaged in securing clients. Anticipating the high likelihood of the Yellow Envelope Act’s passage, major firms preemptively launched teams or task forces (TFs) to handle corporate demand for legal advice. Yulchon and Bae, Kim & Lee (BKL) formed dedicated TFs for responding to the Yellow Envelope Act, while Kim & Chang, Lee & Ko, and Shin & Kim expanded their labor-specialized organizations or held seminars for companies.
The aforementioned head of a small law firm explained, "Large firms typically build relationships through consultations and bill appropriately when major incidents occur. Since industrial accidents and labor-management conflicts are risks all companies are inevitably exposed to, all firms are aggressively trying to secure clients." He added, "While companies with a certain level of revenue can afford to hire law firms, it is not easy for small businesses or micro-entrepreneurs to even manage risks in advance."