"If Wages Are Delayed for 3 Months, Credit Sanctions Apply"… 'Measures to Eradicate Habitual Wage Arrears'

Sanctions Cover 7,600 Sites... Economic Sanctions to Expand if No Willingness to Liquidate
June Announcement of 'Comprehensive Wage Abuse Eradication Measures'

Economic sanctions such as credit restrictions and limitations on government support will be strengthened against employers who habitually withhold wages for more than three months and do not make active efforts to settle payments. On the 3rd, the Ministry of Employment and Labor and the ruling party held a party-government meeting to announce the "Measures to Eradicate Habitual Wage Arrears," which include these contents.

On the same day, Minister of Labor Lee Jeong-sik stated in a briefing, "The scale of wage arrears exceeds 1.3 trillion won annually, affecting 240,000 workers," adding, "In particular, workplaces with repeated arrears more than twice account for 30% of the total, and they represent 80% of the total arrears amount, highlighting the need for drastic measures." Until now, when wage arrears occurred, criminal punishment, public disclosure of names, and delayed interest were used as means, but the strict requirements limited the target to about 400 people. Furthermore, criminal penalties mostly resulted in fines, and in over 77% of cases, the amount was less than 30% of the arrears, indicating limitations in effectiveness and the need for supplementation.

The Ministry of Employment and Labor will consider employers who, within nearly one year, either fail to pay wages equivalent to three months or more per worker or have withheld wages five or more times from multiple workers with a total amount exceeding 30 million won as habitual wage arrears employers. If these employers show no intention to settle, sanctions will be strengthened. According to this criterion, about 7,600 workplaces that have withheld approximately 800 billion won, accounting for 60% of the total arrears, fall under the scope of sanctions.

Economic Sanctions Including Credit Restrictions and Government Support Limitations... Strengthened Supervision and Investigation

In addition to criminal penalties, economic sanctions such as credit restrictions and limitations on government support will be added and expanded for these employers. Minister Lee said, "We plan to restrict support projects or subsidies from the state or local governments for one year and impose disadvantages such as point deductions in public bidding," adding, "Their wage arrears data will be provided to credit information agencies, affecting loan and interest rate assessments as well as credit card issuance." Furthermore, measures to increase the recovery rate of advance payments made by the state for certain wage arrears will be strengthened, and institutional improvements to prevent moral hazard will also be pursued.

Supervision and investigation of wage arrears will also be strengthened to spread an eradication atmosphere. A planned supervision for wage arrears eradication will be conducted in the second half of this year, and forced investigations against malicious wage arrears employers will be intensified. Regarding comprehensive wages, planned supervision will be conducted on 103 workplaces by May, and additional supervision for vulnerable industries such as IT and office work will be carried out by the second half of this year. The Ministry of Employment and Labor is also preparing the "Measures to Eradicate Misuse of Comprehensive Wages," to be announced in June.

Expanded Loans for Employers with Settlement Intentions

Even if an employer meets the habitual wage arrears criteria, sanctions will be exempted if they show an intention to settle, such as by receiving loans. The minimum business operation period required to receive loans will be extended from the current six months to one year, the loan limit will be increased by 1.5 times, and the repayment period will be extended up to twice as long. Difficult loan requirements such as sales decline will be removed, the payment limit will be raised, and the repayment period will be extended.

To eradicate "free overtime," the wage statement preparation program functions will also be significantly improved. When employers enter clock-in and clock-out times, working hours, wages, and various allowances will be automatically calculated, allowing workers to immediately verify whether their wages have been properly calculated and paid. The Ministry of Employment and Labor plans to mandatorily check compliance with the four basic labor orders, including whether wage statements are issued and their contents, during labor inspections.

The Ministry of Employment and Labor also announced that from the 3rd, it will launch the online and mobile-based civil complaint system "Labor Portal." Now, workers can apply for complaints without visiting in person, check the processing status in real time, and even issue wage arrears confirmation certificates. Employers can also apply for various permits and licenses through the Labor Portal.

Minister Lee said, "Eradicating wage arrears is the most fundamental principle of fair compensation for work done, as well as the cornerstone of protecting the vulnerable and labor reform," adding, "We will steadily implement the measures to eradicate habitual wage arrears and raise social awareness about wage arrears."

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