Government Draws Sword on 'Unemployment Benefits'... What Is the Level of Criminal Punishment for Fraudulent Claims?

The government has taken strong measures against the unemployment benefits (job-seeking benefits) system. The Ministry of Employment and Labor conducted a special inspection of fraudulent claims for unemployment benefits over a three-month period from November last year to January this year, resulting in the detection of 606 individuals. The total amount involved was 1.45 billion KRW. Including additional recoveries, the government has ordered the return of 2.31 billion KRW. For 178 individuals whose criminal acts were deemed serious, criminal prosecution will also be pursued.

On February 9, 2021, citizens are receiving consultations for unemployment benefits application and employment support at the Seoul Employment Welfare Plus Center in Jung-gu, Seoul.

Unemployment benefits are provided to support the reemployment and livelihood stability of workers who have involuntarily lost their jobs. They are available to those who have been enrolled in employment insurance for six months (including weekly holidays, totaling 180 days) and have resigned involuntarily. Recipients of unemployment benefits must notify the government if they find new employment or start self-employment. The number of unemployment benefit recipients increased from 1.2 million in 2017 to 1.78 million in 2021. Last year, approximately 1.63 million people received benefits.

If fraudulent claims are detected, the government can impose administrative sanctions such as additional recovery and suspension of payments under the Employment Insurance Act. Criminal penalties are also possible. Article 116 (Penalties) of the same law states that "anyone who receives unemployment benefits or other benefits by false or other fraudulent means may be punished by imprisonment for up to three years or a fine of up to 30 million KRW." If the claimant colludes with an employer, they may be punished by imprisonment for up to five years or a fine of up to 50 million KRW.

In December last year, Judge Kim Do-young of the Ulsan District Court Criminal Division 6 sentenced A (43, female), who was indicted for violating the Employment Insurance Act, to a fine of 3 million KRW. A applied for unemployment benefits on January 9, 2019, and received about 10 million KRW over approximately seven months. However, it was investigated that she had been employed as a substitute driver before the application date for unemployment benefits.

Judge Kim pointed out, "The unemployment benefits system is intended to stabilize the lives of unemployed workers and promote job-seeking activities," adding, "Acts that undermine the fairness of payments cannot be considered minor offenses."

For fraudulent claimants involved in large-scale offenses, employers or brokers who participated in the crime in an organized and planned manner may be charged with fraud. Under the Criminal Act, fraud is punishable by imprisonment for up to 10 years or a fine of up to 20 million KRW. If the gain from a single offense exceeds 500 million KRW, the penalty is increased under the Act on the Aggravated Punishment of Specific Economic Crimes.

In October last year, the Seoul High Court Criminal Division 13 (Presiding Judge Choi Soo-hwan) sentenced B, a so-called "unemployment benefits broker," to four years in prison, the same as the first trial, on charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violation of the Employment Insurance Act. B was tried for conspiring with 78 fraudulent claimants from 2016 to 2020 to illegally embezzle about 570 million KRW in unemployment benefits.

B, who handled tax filing for seven businesses including restaurants located in Seocho-gu, Seoul, recruited fictitious workers and fabricated their work history at the establishments. He even acted as an agent for applications at employment centers and received half of the unemployment benefits from each fraudulent claimant as a fee for enabling them to qualify for benefits. To conceal the criminal acts, some payments were transferred to accounts of acquaintances.

The court stated, "Considering the purpose of the employment insurance system, strict punishment for such fraudulent claims is necessary," and criticized, "The defendant, upon the start of the investigation, caused some fraudulent claimants to provide false statements and even submitted altered bank transaction records to the investigative authorities, showing unfavorable circumstances after the crime."

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