Will a System for Financial Compensation Be Established for Businesses Closed Due to Social Distancing?

Government and Ruling Party Reviewing Legal Grounds
Funding and Feasibility Remain Unclear

On the afternoon of the 4th, the streets of Myeongdong, Jung-gu, Seoul were deserted due to the impact of the novel coronavirus (COVID-19).
Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Choi Dae-yeol] The government and the ruling party are considering establishing a legal basis to provide financial compensation to self-employed individuals and small business owners whose operations have been restricted due to social distancing measures. Under current laws, it is possible to impose gathering bans and restrictions that effectively force businesses to close when infectious diseases spread, but there is no systematic basis for compensation or support for these measures. As the COVID-19 pandemic has lasted nearly a year, voices expressing relief at this belated move have emerged, but it remains uncertain whether it will actually materialize due to practical issues such as securing funding.

According to related ministries on the 7th, the ruling Democratic Party and the Ministry of Health and Welfare have recently discussed compensation measures while reviewing plans to reform the quarantine system amid the prolonged COVID-19 situation. Although disaster relief funds have been distributed through supplementary budgets and the upcoming third round of support payments will also consider business restrictions by industry, these are temporary measures. The plan is to establish a new compensation system itself. A Democratic Party official said, "The party conveyed public opinion and views on the fairness of restrictions by industry, and the government plans to review supplementary measures based on these opinions."

On the afternoon of the 6th, due to the government's 'ban on cafe hall usage' measure, the use of indoor seats at a cafe in Gwanak-gu, Seoul is prohibited.

Under the current Infectious Disease Prevention and Control Act, the Minister of Health and Welfare, the Director of the Korea Disease Control and Prevention Agency, or local governments can issue gathering bans as part of quarantine measures to prevent the spread of infectious diseases. However, except for a few cases such as medical institutions or quarantine facilities, there are no compensation measures for damages. The constitutional complaint filed mainly by small business associations was based on the judgment that such unilateral measures may be unconstitutional.

Kim Nam-ju, a lawyer at the People's Solidarity for Participatory Democracy's Livelihood Hope Headquarters, stated, "The Infectious Disease Control Act, which does not stipulate even minimum compensation for losses to small merchants and self-employed individuals who actively cooperate with quarantine measures, is a clear legislative omission," adding, "The Livestock Epidemic Prevention Act, which has a similar legal framework, includes compensation provisions for various restriction orders, but uniquely, there are no loss compensation provisions in laws or notices for business restrictions due to COVID-19, violating the principle of equality."

According to quarantine authorities, the number of businesses unable to operate or restricted due to social distancing measures reaches about 1.3 million nationwide, including approximately 600,000 in the metropolitan area. There are about 930,000 high-priority management facilities and 370,000 general management facilities. Having been unable to operate properly for several months, the damage is severe, and the likelihood that this situation will continue for several more months is high, placing them in a practically desperate situation. Although the government and the National Assembly have distributed support funds multiple times, conflicts frequently arise over the payment methods, procedures, and eligibility, which is also problematic.

Representatives of small business owners and civil society organizations held a press conference on the afternoon of the 5th in front of the Constitutional Court in Jongno-gu, Seoul, stating that the COVID-19 business restriction measures have limitations but no compensation, and are unconstitutional, before filing a constitutional complaint.

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