Starting Next Year, Employment Retention Subsidy Requirements Eased... Increased Benefits for Dispatch, Outsourcing, and Small Businesses

Deliberation and Resolution of the 'Employment Insurance Act Enforcement Decree' Amendment on the 22nd
"Reflecting Opinions from Related Organizations and Field... Eliminating Blind Spots"
Relaxation of the 15% Sales Decrease Requirement Compared to the Previous Year
Extension of Post-Report Period for Leave and Suspension from 3 Days to 30 Days

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] The notoriously strict eligibility criteria for the Employment Retention Support Fund will be somewhat relaxed starting January next year. It is expected to benefit dispatched and outsourced workers as well as small and micro enterprises with limited administrative capacity. Additionally, workplaces with fewer than 10 employees will newly be included as eligible for unpaid leave support funds.

On the 22nd, the Ministry of Employment and Labor announced that the 'Enforcement Decree of the Employment Insurance Act' amendment, which addresses blind spots in the Employment Retention Support Fund system, was reviewed and approved at the Cabinet meeting and will be implemented from January 1 next year.

The Employment Retention Support Fund is a system that compensates employers who maintain employment despite business difficulties by reimbursing up to 90% of paid leave or suspension allowances. As of the 10th of this month, a total of 2.1 trillion KRW in Employment Retention Support Funds has been paid to 760,000 workers across approximately 71,000 companies this year.

An official from the Ministry of Employment and Labor stated, "We have improved the system to make it easier to utilize the Employment Retention Support Fund by reflecting suggestions from related organizations such as the Korea Federation of SMEs and feedback from employment center field offices."

First, the eligibility criteria were improved to make it easier for dispatch and outsourcing companies to use the Employment Retention Support Fund. Until now, these companies found it difficult to receive benefits because their workers were dispersed across multiple workplaces and contracts were short-term. Accordingly, when a client company of dispatched workers implements leave or suspension, the dispatch company can apply for the Employment Retention Support Fund for those workers without separately proving the inevitability of employment adjustment. The requirement to observe a one-month reduction prevention period after receiving the support fund applies only to those workers. As of the end of last year, the number of dispatched workers was estimated to be about 97,000.

Lee Jae-gap, Minister of Employment and Labor / Photo by Yoon Dong-joo doso7@

Considering the COVID-19 pandemic, the period for post-reporting has been extended from 3 days to 30 days. To receive the Employment Retention Support Fund, employers must submit an employment retention plan in advance or report within 3 days afterward. However, in cases of sudden business suspension due to assembly bans or restriction orders, it is difficult to comply, so the period has been extended to allow post-reporting within 30 days. Retroactive application will also be made for businesses that suspended work due to assembly ban orders this month. For example, a business that suspended operations from the 8th due to an escalation in social distancing measures but submits the post-report on January 4 next year will be eligible to receive the Employment Retention Support Fund for that period.

The requirement that sales must have decreased by 15% compared to the previous year to receive the Employment Retention Support Fund will also be relaxed. This is to prevent disadvantages to employers whose sales have already declined due to COVID-19. Next year, support funds can be received based on sales compared to 2019.

Meanwhile, companies with fewer than 10 employees will also be included as eligible for unpaid leave support funds. Starting next year, companies with fewer than 10 employees can receive unpaid leave support funds if they have exhausted the 180-day paid Employment Retention Support Fund support period. However, the validity period is limited to December 31, 2022, and extensions will be considered depending on the situation. Previously, to receive unpaid leave support funds, paid leave had to be implemented for more than 3 months, but going forward, if more than 20% of insured employees take paid leave for more than 3 months, unpaid leave support can be received.

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