New Labor Law Allows Korean Workers to Claim Triple Damages for Unpaid Wages (Image courtesy of Yonhap)
SEOUL, Oct. 23 (Korea Bizwire) — Starting Thursday, South Korea began enforcing a revised labor law that allows employees to seek punitive damages of up to three times the amount of unpaid wages from employers who intentionally withhold pay, as part of a broader effort to crack down on chronic wage arrears.
The Ministry of Employment and Labor said the amendment to the Labor Standards Act, passed last year to curb repeat violations, took effect on October 23.
The new law defines “habitual wage defaulters” as employers who either fail to pay more than three months’ worth of wages within a year or owe a total of over 30 million won (about $22,000) across at least five instances, including unpaid severance.
Such employers will now face tougher financial restrictions, including disadvantages in obtaining loans or interest rate assessments, as well as bans on participating in public projects or receiving government support.
Business owners whose names are disclosed for wage nonpayment will also be barred from leaving the country until all overdue wages are paid.
If an employer repeats wage defaults during the three-year public disclosure period, they will be subject to criminal prosecution regardless of the victim’s consent, removing the previous non-prosecution clause for settlements.
The revised law also expands protections for affected workers. The 20 percent annual interest rate on overdue wages, previously applicable only to retirees, will now apply to current employees as well.
Workers can additionally file for punitive damages up to triple the unpaid amount if the employer is found to have acted willfully, withheld pay for three months or longer, or owes wages equivalent to three months of ordinary pay.
The government convened a joint task force on Thursday to review progress on its “Wage Arrears Eradication Plan” and coordinate interagency cooperation for the law’s rollout.
Officials also discussed expanding the direct payment system for subcontracted labor to prevent structural wage delays and examined ways for private companies to use the government’s electronic payment platform.
Lee Hyun-ok, head of the ministry’s Labor Policy Bureau, urged strict implementation, saying the reforms must lead to a “tangible reduction in wage arrears” that workers can feel. “We ask all industries to ensure this law is well understood and followed so that no worker is deprived of rightful wages again,” she said.
M. H. Lee (mhlee@koreabizwire.com)
