[Exclusive] 'Comply with the Labor Standards Act'... Democratic Party Steps Up to Eliminate 30-Year-Old Blind Spot

The Small and Medium Enterprises and Small Business Industry Is Likely to Strongly Oppose

Representative Kim Jong-chul (seventh from the left) and Justice Party floor leader Kang Eun-mi, along with other Justice Party lawmakers and officials, are shouting slogans urging the enactment of the Serious Accidents Punishment Act and the application of the Labor Standards Act at the '28th Jeon Tae-il 50th Anniversary Campaign' held on the Jeon Tae-il Bridge in Jongno-gu, Seoul, on the 4th. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Park Cheol-eung] #. "Hotel A, which gave work instructions in a single group KakaoTalk chatroom, split its business into multiple sites and registered them as workplaces with fewer than five employees, thereby withholding various allowances."

This was revealed by the labor movement organization 'Rights Finding Union' at a press conference last October. A worker who had worked at this hotel said at the conference, "The government distinguishes between workplaces with fewer than five employees and those with five or more, but workers at workplaces with fewer than five employees do not work less." The organization filed complaints against eight business sites, accusing them of disguising as workplaces with fewer than five employees.

#. "The aftershock will hit small business owners much harder than discussions about minimum wage increases." This statement came from an emergency general meeting of the Korea Federation of Small and Medium Business in July 2018. At that time, the Democratic Party strongly opposed the push to apply the Labor Standards Act to workplaces with fewer than five employees, which was being promoted together with the Korean Confederation of Trade Unions.

◆ Additional wages missing from the Democratic Party bill

With the 21st National Assembly, the 'Pandora's box' has been opened again. Following the Justice Party, Democratic Party proportional representative lawmaker Lee Su-jin proposed an amendment to the Labor Standards Act. Lawmaker Lee pointed out that the Labor Standards Act is "a law that sets the minimum level of working conditions." She argued that distinguishing by workplace size does not align with the law's purpose of guaranteeing workers' basic livelihood.

The Labor Standards Act uses the number of 'regular' employees, five, as the criterion for application. It calculates the average number of employees hired by the employer by adding all workers who worked during the one month prior to the occurrence of the reason and dividing by the number of business days in the same period. Part-time workers are also included.

Lawmaker Lee's proposal is a step back compared to the Justice Party's proposal, which applies all provisions of the Labor Standards Act to workplaces with fewer than five employees. While it ensures compliance with statutory working hours, prohibits arbitrary dismissal, and guarantees basic labor rights such as prohibition of workplace harassment, it does not include additional wages that should be paid for overtime work.

According to the 'Survey on Working Hours in Primary Industries and Workplaces with Four or Fewer Employees' conducted last year by the Korea Labor Institute at the request of the Ministry of Employment and Labor, 75.8% of employers responded that '40-hour workweek' was the provision that would not be difficult to apply additionally if the Labor Standards Act's application were expanded. In contrast, 53.6% and 24% found annual leave and additional wages, respectively, which are directly related to labor costs, to be the most burdensome.

Lawmaker Lee's bill appears to take into account the industry's situation. Moreover, the worsening difficulties due to the novel coronavirus disease (COVID-19) are also a variable.

The exception clause for workplaces with fewer than five employees has been maintained for over 30 years, and many point out that change is inevitable. A survey by the Korea Labor Institute of 1,000 workplaces with fewer than five employees found that 22% work more than five days a week, and 7% of workplaces have no annual leave. About 43% conduct weekday overtime work, but only 62% of them pay additional wages.

◆ Strong opposition expected from small and medium enterprises and small business owners

The Justice Party is pushing for the expansion of the Labor Standards Act alongside the Serious Accidents Punishment Act, and proposed a bill in September applying all provisions to workplaces with fewer than five employees without distinction. Nevertheless, Justice Party lawmakers co-sponsored Lawmaker Lee's bill, seemingly to trigger serious discussion.

The People Power Party expressed its position earlier this month during the passage of labor-related laws. Members of the Environment and Labor Committee stated on the 8th, "We must establish a labor law order consistent with constitutional values, and from this perspective, we support applying the Labor Standards Act to workplaces with fewer than five employees." People Power Party lawmaker Hwang Bo-seung-hee also proposed a bill applying the prohibition of workplace harassment to all workplaces.

She also said on Facebook, "Fifty years ago, labor activist Jeon Tae-il changed the labor environment in this land, but issues such as irregular workers, youth, women, and low wages remain ongoing," adding, "We will ensure that all workers are protected by the Labor Standards Act."

However, strong opposition from small and medium enterprises and small business owners is expected. In a media survey conducted shortly after the April general election, the Korea Federation of Small and Medium Business said about the full application of the Labor Standards Act, "There are concerns about additional burdens on small and micro businesses that have been directly affected by COVID-19."

At the 2018 general meeting of the Korea Federation of Small and Medium Business, labor consultant Lee Geum-gu pointed out, "If the exemption clause for workplaces with fewer than five employees is removed, in the case of night part-time jobs such as PC rooms, the current minimum wage hourly rate of 7,530 won plus weekly holiday allowance brings the hourly wage to 9,036 won, and adding night overtime pay raises it to 12,801 won per hour," warning that "this will cause great difficulties for small business owners' management and job creation."

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