The maximum reward for reporting fraudulent claims related to large wage payments will double from 100 million won to 200 million won starting next year. This measure aims to actively detect cases where employers and workers collude to inflate unpaid wage amounts or include fictitious workers.
The Ministry of Employment and Labor announced on October 6 that the amendment to the Enforcement Decree of the Wage Claims Guarantee Act was reviewed and approved at a Cabinet meeting.
Large payments refer to a system where the government pays a certain amount of unpaid wages to workers who have not received their salaries, and then recovers that amount from the employer. The bankruptcy large payment covers the last six months of wages and unpaid retirement benefits for the last three years for retirees, with a maximum payout of 31.5 million won. The simplified large payment allows for a maximum of 10 million won for retirees and 7 million won for current employees.
According to the revised enforcement decree, starting January 1, 2027, the upper limit for reporting rewards for fraudulent claims will increase from the current 100 million won to 200 million won. The government raised the reporting reward because many fraudulent claims occur through collusion between employers and workers, making external tips crucial for detection.
In fact, during the wage arrears reporting process, there have been instances where non-existent workers were included or unpaid amounts were inflated before applying for large payments. A targeted investigation by the Ministry of Labor from November last year to May this year found that 58 individuals at six workplaces fraudulently received or attempted to receive large payments totaling 423 million won.
The financial soundness of the large payment system is also a reason for expanding reporting incentives. According to the Ministry of Labor, the cumulative recovery rate of large payments that the government initially paid and later recovers from employers is about 30%.
The government is also pursuing reforms to strengthen the recovery of large payments and the accountability of employers for unpaid wages. Since May, the procedures for collecting repayment of large payments have been aligned with national tax delinquency enforcement, establishing a basis for compulsory collection. In the same month, the first credit sanctions were imposed on 2,057 employers who had not repaid for an extended period.
In August, the scope of protection for unpaid workers was expanded. The wage payment range for bankruptcy large payments was increased from the previous three months to six months, and the loan limit for employers willing to settle unpaid wages was raised from 150 million won to 200 million won.
If fraudulent claims for large payments are confirmed, not only will the payment amount be recovered, but an additional charge of up to five times the fraudulent amount may also be imposed. Penalties can include imprisonment for up to three years or fines of up to 30 million won.
The reporting reward system was first introduced in 2005, with an initial cap of 50 million won. It was raised to 100 million won in 2021 and is now being increased to 200 million won.
Kim Young-hoon, Minister of Employment and Labor, stated, "The increase in the upper limit of the reporting reward is a measure to eradicate fraudulent claims for large payments. We will ensure that employers fulfill their responsibility to settle unpaid wages and that unpaid workers receive robust protection, thereby enhancing the sustainability of the large payment system."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.