Son Kyung-sik "Application of Labor Standards Act to Companies with Fewer Than 5 Employees Threatens Survival of Small Businesses"

Chairman Son Kyung-sik Meets with Minister of Employment and Labor

On the morning of the 29th, Sohn Kyung-shik, Chairman of the Korea Employers Federation (left), met with Ahn Kyung-duk, Minister of Employment and Labor (right), at the Federation's headquarters in Mapo-gu, Seoul, to convey the business community's concerns regarding the government's and National Assembly's efforts to apply the Labor Standards Act to workplaces with fewer than five employees. (Photo by Korea Employers Federation)

[Asia Economy Reporters Changhwan Lee and Gimin Lee] The business community has expressed concerns that expanding the application of the Labor Standards Act to workplaces with fewer than five employees will place an even greater burden on small and medium-sized enterprises (SMEs) and self-employed individuals, who are already struggling due to COVID-19.

On the morning of the 29th, Sohn Kyung-shik, Chairman of the Korea Employers Federation, met with Employment and Labor Minister Ahn Kyung-duk at the Federation's office in Mapo-gu, Seoul, stating, "The COVID-19 crisis is still ongoing, and with employment uncertainties and inflation affecting ordinary citizens, our economic conditions next year will not be smooth." He added, "In this situation, the National Assembly is currently discussing the application of the Labor Standards Act to workplaces with fewer than five employees, which is causing great concern among businesses."

The National Assembly's Environment and Labor Committee is recently discussing amendments to the Labor Standards Act and the introduction of the time-off system (working hours exemption system) for public officials and teachers' unions. Currently, the Labor Standards Act applies only to workplaces employing five or more workers, but if the amendment passes, the Act will be applied to all workplaces.

Thereafter, even small businesses will be strictly subject to legal standards regarding workers' annual leave, allowances, working hour limits, and dismissals. There are concerns that micro-enterprises and self-employed individuals will have to pay more costs to comply with the law, which could significantly restrict their business activities.

Chairman Sohn pointed out, "If the Labor Standards Act is applied to workplaces with fewer than five employees, they will have to pay various allowances like workplaces with five or more employees, and dismissals will become difficult. In that case, workplaces with fewer than five employees, which are small in scale, will find it hard to survive."

He continued, "As the COVID-19 situation prolongs and the phased recovery of daily life is delayed, the circumstances of small and micro enterprises and small business owners are very difficult. Therefore, I urge the government to carefully consider so that the management burden on small and micro enterprises and small business owners does not increase."

He also clearly opposed the time-off system, which grants wages to union officials while exempting them from working hours. Chairman Sohn stated, "South Korea is the only country in the world that guarantees union activity time as working hours. Now, our unions should have autonomy and independence, but implementing the time-off system at the employer's expense is problematic."

Minister Ahn responded, "Currently, the application of the Labor Standards Act to workplaces with fewer than five employees and the time-off system are being discussed at the National Assembly and the Economic, Social and Labor Council (ESLC). We hope a reasonable alternative will emerge."

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