Korea doubles reward cap for reporting fake wage-support claims to 200 mln won
Version 2: A second Korean outlet's detailed report adds the amendment's effective date of Jan 1 next year, the three-year window for filing a report, the penalties facing fraudulent claimants and an increase in the loan ceiling for employers clearing arrears.
In short
South Korea's cabinet approved an amendment to the enforcement decree of the Wage Claim Guarantee Act on Oct 6, doubling the maximum reward for reporting fraudulent receipt of state wage-claim payments (daegigeupgeum) from 100 million won to 200 million won. The labour ministry said the cumulative recovery rate of such payments was 29.7% last year and that fraud is usually carried out by employers and workers acting together, making internal reports decisive. Kyunghyang Shinmun reported the amended decree takes effect on Jan 1 next year.
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South Korea's cabinet approved an amendment to the enforcement decree of the Wage Claim Guarantee Act on Oct 6, raising the maximum reward for reporting fraudulent receipt of daegigeupgeum payments from 100 million won to 200 million won, the labour ministry said. Newsis carried the same 200 million won figure in its headline on the decree revision. [ 1 , 2 , 3 ]
Daegigeupgeum is the system under which the state pays workers a set range of unpaid wages first when a company collapses or fails to pay, and then collects the money back from the employer. The ministry said the cumulative recovery rate stood at 29.7% as of last year, and that concerns have continued over the financial soundness of the wage claim guarantee fund because of delays in recovery. Kyunghyang Shinmun put the cumulative recovery rate at around 30%. [ 2 , 3 ]
According to the ministry, fraudulent claims are often made through collusion between employers and workers — for example by inserting fictitious workers or inflating the amount of unpaid wages — which makes internal tip-offs or reports decisive. That is the reason given for doubling the maximum reward. [ 2 , 3 ]
Kyunghyang Shinmun reported that the amended decree takes effect on Jan 1 next year, and that the ceiling rose from 50 million won in 2005 to 100 million won in 2021 before doubling again. It said a report must be filed within three years of the fraud to qualify for a reward, which is paid after a disposition over the fraudulent claim is confirmed. It also reported that a fraudulent claimant must return the money received, can face additional collection of up to five times the fraudulent amount, and can be sentenced to up to three years in prison or fined up to 30 million won. [ 3 ]
The ministry said it is pursuing broader changes to the system beyond the reward increase. It said it has introduced national tax delinquency procedures for collecting repayments to build a basis for swift compulsory collection, and imposed first credit sanctions on 2,057 employers with long-outstanding debts — measures Kyunghyang Shinmun said were introduced this year, with the credit sanctions carried out in May. The ministry also said the wage payment range for bankruptcy daegigeupgeum was expanded from the final three months to the final six months to strengthen protection for workers owed wages, and Kyunghyang Shinmun reported that the ceiling on loans to employers willing to clear arrears was raised from 150 million won to 200 million won. [ 2 , 3 ]
Labour Minister Kim Young-hoon said the higher reward ceiling was “a measure to root out fraudulent daegigeupgeum claims”, adding that the government would raise the sustainability of the system so that employers fulfil their responsibility to clear unpaid wages and workers receive fuller protection. [ 2 , 3 ]
Why it matters
The measure is presented by the labour ministry as a way to detect fraudulent claims and stem losses at the wage claim guarantee fund, which pays workers unpaid wages when an employer collapses and then collects the money back. The documents describe the reward increase as part of a wider push that also includes tougher collection and expanded protection for workers owed wages, rather than a change in who qualifies for support. The documents give no estimate of how many reports or how much money the higher reward is expected to produce.
Key facts
- The cabinet approved a revision to the enforcement decree of the Wage Claim Guarantee Act on Oct 6, the labour ministry said. [ 2 , 3 ]
- The maximum reward for reporting fraudulent receipt of daegigeupgeum payments doubles from 100 million won to 200 million won. [ 1 , 2 , 3 ]
- Daegigeupgeum is a system under which the state pays workers a portion of unpaid wages first when a company collapses or fails to pay, and later collects the money back from the employer. [ 2 , 3 ]
- The cumulative recovery rate of daegigeupgeum payments was 29.7% as of last year, and concerns have continued over the financial soundness of the wage claim guarantee fund because of delayed recovery, according to the labour ministry. [ 2 , 3 ]
- Fraudulent claims often involve employers and workers colluding, for example by inserting fictitious workers or inflating the unpaid amount, which makes internal reporting decisive, the ministry said. [ 2 , 3 ]
- The ministry said it has introduced national tax delinquency procedures for collecting repayments and imposed first credit sanctions on 2,057 employers with long-outstanding debts. [ 2 , 3 ]
- The wage payment range for bankruptcy daegigeupgeum was expanded from the final three months to the final six months. [ 2 , 3 ]
- Labour Minister Kim Young-hoon said the higher reward ceiling is “a measure to root out fraudulent daegigeupgeum claims”. [ 2 , 3 ]
Confirmed by several sources
- South Korea's cabinet approved the amendment to the Wage Claim Guarantee Act enforcement decree on Oct 6. [ 2 , 3 ]
- The ceiling on rewards for reporting fraudulent daegigeupgeum claims was raised from 100 million won to 200 million won. [ 1 , 2 , 3 ]
- Daegigeupgeum is a state system that pays unpaid wages to workers first and later recovers the money from the employer. [ 2 , 3 ]
- The labour ministry said fraudulent claims are often made through collusion between employers and workers, making internal reports important. [ 2 , 3 ]
Still unclear
- The effective date of the amended decree. Only Kyunghyang Shinmun states it, saying the amendment takes effect on Jan 1 next year; Yonhap and Newsis do not give a date.
- The exact figures for the reward ceiling's history and the penalties for fraudulent claims. The 2005 and 2021 reward ceilings, the three-year reporting window, the additional collection of up to five times the fraudulent amount and the prison or fine penalties appear only in Kyunghyang Shinmun.
- The content of the Newsis report beyond its headline. The article text carried by Newsis concerns a separate Supreme Court matter and does not describe this event, so only its headline figure and subject could be used.
- How many reports or how much money the higher reward is expected to generate. The documents give no estimate or target.
What local media are saying
Timeline, local time
- Newsis publishes its report on the reward cap increase and the enforcement decree revision. [ 1 ]
- Yonhap publishes its report on the cabinet's approval of the amendment and the ministry's related measures. [ 2 ]
- Kyunghyang Shinmun publishes its report, adding the effective date and the penalties for fraudulent claims. [ 3 ]