Government Takes Action Against Employers Delaying Wage Payments

#. A construction company operating in the metropolitan area has received approximately 900 million won in wage payments but has yet to fulfill its repayment obligations.

#. Another construction firm in Gyeongnam has failed to repay 470 million won of the 500 million won it owes, and its CEO is reportedly missing.

The government is set to implement credit sanctions for the first time against employers who have not repaid wage payments for an extended period.

The Ministry of Employment and Labor and the Korea Workers' Compensation and Welfare Service announced that they will impose credit sanctions on 2,057 employers who have not repaid wage payments since August 7 of last year, starting on May 29. The total amount owed by these employers is 386.8 billion won.

Wage payments are a system where the state pays workers who have been deprived of their wages due to employer defaults and then seeks reimbursement from the employers.

This action marks the first instance of credit sanctions since the revised Wage Claim Guarantee Act was enacted. The government plans to provide the personal information and unpaid amounts of employers who have not repaid wage payments for over a year and whose total unpaid amounts exceed 20 million won to the Korea Credit Information Service.

Employers subject to credit sanctions will be registered as credit management subjects for seven years, which could lead to disadvantages in financial transactions and loan assessments.

The government expects this measure to increase the recovery rate of wage payments and enhance awareness among habitual wage defaulters. There are also expectations that the strengthened sanctions against repeat offenders will help prevent wage defaults.

Kim Young-hoon, Minister of Employment and Labor, stated, "Wage defaults are a theft of wages that threaten the livelihoods of workers and their families, and it is a serious crime. We will enhance the sustainability of the wage payment system through the application of national tax collection procedures and credit sanctions."