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WAGE CLAIM GUARANTEE ACT

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WAGE CLAIM GUARANTEE ACT

Act No. 5513, Feb. 20, 1998

Amended by Act No. 6100, Dec. 31, 1999

Act No. 6334, Dec. 30, 2000

Act No. 7047, Dec. 31, 2003

Act No. 7379, Jan. 27, 2005

Act No. 7466, Mar. 31, 2005

Act No. 8093. Dec. 26, 2006

Act No. 8135, Dec. 30, 2006

Act No. 8372, Apr. 11, 2007

Act No. 8694, Dec. 14, 2007

Act No. 8816, Dec. 27, 2007

CHAPTER

General Provisions

Article 1 (Purpose)

The purpose of this Act is to contribute to the stabilization of workersßÓlivelihood by coming up with measures to guarantee the payment of overdue wages, etc., to workers who have retired, having wages, etc. unpaid because the company cannot continue its business, or its business is unstable due to economic fluctuation, changes in industrial structure, etc. Article 2 (Definitions)

Terms used in this Act are defined as follows:

1. The term ßÖworkerß×means a worker under Article 2 of the Labor Standards Act;

2. The term ßÖemployerß×means a person who operates a business by using workers; and

3. The term ßÖwages, etc.ß×means wages, retirement pay and allowances for suspension of business under Articles 2, 34 and 46 of the Labor Standards Act.

Article 3 (Scope of Application)

This Act shall apply to businesses or workplaces (hereinafter referred to as ßÖbusinessesß×) under Article 6 of the Industrial Accident Compensation Insurance Act : Provided that this shall not apply to a business which is carried out directly by the State or local governments.

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<This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 4 (Mutatis Mutandis Application) Articles 3, 5 (4) and (5), 6 (2) through (4) and 8 of the Act on the Collection, etc., of Premiums for Employment Insurance and Industrial Accident Compensation Insurance (hereinafter referred to as "the Insurance Premium Collection Act") shall apply mutatis mutandis to wage claim guarantee relations. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 5 (Defrayal out of State Treasury) The State shall, within the limits of the budget of every fiscal year, finance part of the costs of carrying out the work of guaranteeing the payment of wage claims under this Act, from the general account. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 6 (Deliberation Commission on Wage Claim Guarantee Fund) (1) The Deliberation Commission on Wage Claim Guarantee Fund (hereinafter referred to as the ßÖCommissionß×) shall be established in the Ministry of Labor in order to deliberate important matters relating to the management and operation of the Wage Claim Guarantee Fund under Article 17. (2) The Commission shall be composed of equal numbers of members representing workers, employers, and the public interest. (3) Matters necessary for the organization and operation of the Commission shall be prescribed by the Presidential Decree. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> CHAPTER Guarantee of Payment of Wage Claims Article 7 (Payment of Overdue Wages, etc.) (1) Notwithstanding the provision of Article 469 of the Civil Act concerning payment by a third person, the Minister of Labor shall, on behalf of an employer, pay unpaid wages, etc., to a retired worker at the request of the worker, if there are reasons as prescribed by the Presidential Decree, such as bankruptcy. (2) The scope of wages, etc., (hereinafter referred to as the ßÖsubrogated paymentß×) paid by the Minister of Labor on behalf of an employer pursuant to paragraph (1) is as follows : - 3 - Provided that a ceiling may be put on the amount in consideration of the worker's age, etc., at the time of retirement under the conditions prescribed by the Presidential Decree and the subrogated payment may not be made in case the amount is small : 1. Wages under Article 38 (2) 1 of the Labor Standards Act; and retirement pay for final three years under Article 11 (2) of the Employee Retirement Benefit Security Act; and 2. Allowances for suspension of business (limited to those for final three months) under Article 46 of the Labor Standards Act. (3) The criteria for workers and employers who are subject to subrogated payment shall be prescribed by the Presidential Decree. (4) Other matters necessary for request for and payment, etc. of subrogated payments shall be prescribed by the Presidential Decree. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 8 (Subrogation of Right to Claim Unpaid Wages, etc.) (1) If the Minister of Labor has made subrogated payment to a worker pursuant to Article 7, the right of the worker to claim unpaid wages, etc., against his/her employer shall be transferred to the Minister of Labor. (2) The right to preferential payment of wage claims under Article 38 (2) of the Labor Standards Act and the right to preferential payment of retirement pay under Article 11 (2) of the Employee Retirement Benefit Security Act shall continue to exist with regard to the right transferred under paragraph (1). <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 9 (Charges Imposed on Employers) (1) The Minister of Labor shall impose charges on employers in order to cover the expenses required for the subrogated payment of unpaid wages, etc., under Article 7. (2) The amount of charge an employer has to pay pursuant to paragraph (1) shall be an amount calculated by multiplying an amount less than 2/1000 of the total wages of all workers engaging in the business by the rate determined by the Minister of Labor after deliberation at the Commission. (3) If it is difficult to determine the total wages, they shall be determined based on the labor cost ratio announced pursuant to Article 13 (6) of the Insurance Premium Collection Act. (4) The provision of Article 9 of the Insurance Premium - 4 - Collection Act concerning blanket application for contract business shall apply mutatis mutandis to the collection of charges under paragraph (1). In this case, "Corporation" in the proviso of Article 9 (1) of the same Act shall be read as "Minister of Labor". <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 10 (Reduction of Charges) The Minister of Labor may reduce the charges under Article 9 for employers falling under any of the following subparagarphs. In this case, the criteria for the reduction shall be determined by the Minister of Labor after deliberation at the Commission : 1. Employers who ordinarily employ less than five workers; 2. Employers who have calculated and paid in advance retirement pay pursuant to the Labor Standards Act or the Employee Retirement Benefit Security Act; 3. Employers who have taken out retirement insurance, etc. pursuant to Article 2 (1) of the Addenda of the Employee Retirement Benefit Security Act as amended by Act no. 7379 and employers (including employers of businesses subject to the provision on special cases for businesses pursuant to Article 26 of the same Act) who have established a retirement pension plan pursuant to Chapter III of the Employee Retirement Benefit Security Act; and 4. Employers who have taken out departure guarantee insurance or trust pursuant to Article 13 of the Act on the Employment, etc. of Foreign Workers. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 11 (Protection for Right to Receive) (1) The right to receive subrogated payment shall not be transferred or provided as collateral. (2) A receipt of subrogated payment may be delegated under the conditions prescribed by the Presidential Decree. (3) A worker who is a minor may independently claim subrogated payment. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 12 (Proof, etc., of Retirement) (1) A person who intends to receive subrogated payment under Article 7 shall submit documents proving the retirement and other documents prescribed by the Ordinance of the Ministry of - 5 - Labor to the Minister of Labor. (2) If a worker requests the documents prescribed in paragraph (1), the employer shall comply with the request. <Title of This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 13 (Order to Submit a List of Properties) (1) If the Minister of Labor intends to make subrogated payment to a worker pursuant to Article 7, he/she may order the employer concerned to submit a list of properties which specifically shows the property relationship, under the conditions prescribed by the Presidential Decree. (2) An employer who is ordered to submit a list of properties pursuant to paragraph (1) shall submit a list of properties specifically showing the property relationship to the Minister of Labor within 7 days, unless there is any particular reason. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 14 (Return Request, etc. Due to Fraudulent Acts) (1) The Minister of Labor may not make all or part of subrogated payments requested under the conditions prescribed by the Presidential Decree to those who intends to receive subrogated payments under Article 7 in a false or other fraudulent ways, and may request those who have received the payment to return all or part of the subrogated payment received under the conditions prescribed by the Presidential Decree. (2) If a return of subrogated payment is requested pursuant to paragraph (1), an amount equal to or lower than the subrogated payment received in a false or other fraudulent ways in accordance with the standards prescribed by the Ordinance of the Ministry of Labor may be additionally collected. (3) In the case of paragraph (1), if subrogated payment is made by fraudulent means, such as making a false report, making a false statement, false certification or submitting false documents, the employer, jointly with the recipient of the subrogated payment, shall take responsibility for the return prescribed in paragraph (1). <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 15 (Payment of Reward Money) If a person reports to or informs a local labor office or an - 6 - investigation agency that subrogated payment has been received in a false or other fraudulent ways, he/she may be given reward money in accordance with the standards prescribed by the Presidential Decree. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 16 (Mutatis Mutandis Application) Articles 17 through 21, 22-2, 22-3, 23 through 25, 26-2, 27, 27-2, 27-3, 28, 28-2 through 28-7, 29, 29-2, 30, 32 through 37, 39 and 50 of the Insurance Premium Collection Act shall apply mutatis mutandis with regard to the payment and collection (including a request for a return of subrogated payment) of charges and other levies under this Act. In this case, ßÖinsurance subscriber in the same Act shall be read as ßÖemployeß×, premiumß×as ßÖcharge , insuranceß×as ßÖwage claim guaranteeß×, insurance activitiesß×as ßÖwage claim guarantee activitiesß×, Corporationß×as ßÖMinister of Laborß×(referring to the Korea Workers' Compensation & Welfare Service in case where the authority is delegated to the Corporation pursuant to Article 27 of this Act), ßÖestimated premiumß×as ßÖestimated chargeß×, insurance yearß×as ßÖfiscal yearß×, insurance relationsß×as ßÖwage claim guarantee relationsß×, premium rateß×as ßÖcharge rateß×, fixed premiumsß×as ßÖfixed charges", "special-case premiums" as "special-case charges", and "Employment Policy Council under Article 6 of the Basic Employment Policy Act or Industrial Accident Compensation Insurance Deliberation Committee under Article 8 of the Industrial Accident Compensation Insurance Act" as "Committee". <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> CHAPTER Wage Claim Guarantee Fund Article 17 (Establishment of Fund) The Minister of Labor shall establish the Wage Claim Guarantee Fund(hereinafter referred to as the "Fund") to finance the subrogated payment under Article 7. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 18 (Creation of Fund) (1) The Fund shall be created with financial resources - 7 - described in the following subparagraphs: 1. Payment made by an employer under Article 8; 2. Charges paid by an employer under Article 9; 3. Loans under paragraph (2); 4. Revenues from the operation of the Fund; and 5. Other revenues (2) The Minister of Labor may, if necessary for the operation of the Fund, borrow from financial institutions or other funds on the security of the Fund. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 19 (Uses of Fund) The fund shall be used for purposes described in the following subpsragraphs : 1. To make subrogated payment and return the amount paid by mistake or in excess, etc.,; 2. To repay loans and their interest; 3. To conduct research on wage systems, such as prevention of overdue wages and support for their payment; 4. To make financial contributions to the Korean Legal Aid Corporation under the Legal Aid Act, however, such contributions shall be limited to support for legal aid services for workers with overdue wages; 5. To make financial contributions to the Korea Workers' Compensation & Welfare Service under the Industrial Accident Compensation Insurance Act; and 6. To carry out other wage claim guarantee activities and manage and operate the Fund <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 20 (Management and Operation of Fund) (1) The Fund shall be managed and operated by the Minister of Labor. (2) Paragraphs (2) through (4) of Article 66, Articles 67 through 69 and Article 71 of the Industrial Accident Compensation Insurance Act shall apply mutatis mutandis with regard to the management and operation of the Fund. In this case, ßÖinsurance benefitsß×in the same Act shall be read as ßÖsubrogated paymentß×, and ßÖpremium revenues as ßÖcharge revenuesß×. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 21 (Fiscal Year) - 8 - The fiscal year of the Fund shall follow the fiscal year of the Government. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> CHAPTER Supplementary Provisions Article 22 (Report, etc.) The Minister of Labor may, under the conditions prescribed by the Presidential Decree, request such relevant persons as the employer of a business subject to this Act or a worker engaged in the business to make a report or submit related documents necessary for what is described in the following subparagraphs : 1. Managing and operating the Fund; and 2. Making subrogated payment <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 23 (Request for Cooperation from Related Agencies, etc.) (1) The Minister of Labor may, if he/she deems it necessary for the efficient operation of wage claim guarantee activities, request related administrative agencies, local governments, other agencies or organizations, etc., to submit necessary materials, etc. (2) Related agencies or organizations requested to cooperate pursuant to paragraph (1) shall cooperate, unless there is any special reasons. <Title of This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 24 (Inspection) (1) The Minister of Labor may, if deemed necessary for the enforcement of this Act, have a relevant public official enter a workplace subject to this Act to inspect related documents or ask questions to a related person. (2) A public official who enters a workplace and conduct inspection pursuant to paragraph (1) shall carry a certificate proving the authority and show it to a related person. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 25 (Notification) A worker may, if there is the fact that his/her employer has violated this Act or an order under this Act, notify a labor - 9 - inspector of the fact and request action to redress the violation. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 26 (Extinctive Prescription) (1) The right to collect charges and other levies under this Act or the right to have subrogated payment or charges returned shall be extinguished if it is not exercised for three years in accordance with the extinctive prescription. (2) The extinctive prescription under paragraph (1) shall be subject to the Civil Act, except as provided in this Act. (3) Articles 42 and 43 of the Insurance Premium Collection Act shall apply mutatis mutandis with regard to the interruption, etc., of extinctive prescription. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 27 (Delegation and Entrustment of Authority) Part of the authority of the Minister of Labor under this Act may be delegated to the head of a local labor office or entrusted to the Korea Workers' Compensation & Welfare Service under the Industrial Accident Compensation Insurance Act, under the conditions prescribed by the Presidential Decree. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> CHAPTER Penal Provisions Article 28 (Penal Provisions) A person who falls under any of the following subparagraphs shall be punished by imprisonment of up to three years or by a fine not exceeding 20 million won: 1. A person who receives subrogated payment in a false or other fraudulent ways; 2. A person who makes a false report, makes false certification or submits false documents to enable subrogated payment to be received in a false or other fraudulent ways; and 3. A person who refuses to submit a list of properties under Article 13 without any justifiable reason or submits a false list of properties. Article 29 (Joint Penal Provisions) (1) If the representative, an agent, a servant or any other employee of a corporation commits a violation referred to in - 10 - Article 28 in relation to the affairs of the corporation, the corporation, in addition to the offender shall be punished by a fine prescribed in the same Article. (2) If an agent, a servant or any other employee of an individual commits a violation referred to in Article 28 in relation to the affairs of the individual, the individual, in addition to the offender, shall be punished by a fine prescribed in the same Article. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> Article 30 (Fine for Negligence) (1) A person who falls under any of the following subparagraphs shall be punished by a fine for negligence not exceeding five million won: 1. A person who fails to comply with a request made under Article 12 (2) without any justifiable reason; 2. A person who fails to comply with a request to report or submit related documents made under Article 22 without any justifiable reason, or who makes a false report or submits false documents; and 3. A person who refuses to answer questions asked, or refuses, interferes with or evades inspection conducted, by a related public official under Article 24 (1) without any justifiable reason. (2) A fine for negligence referred to in paragraph (1) shall be imposed and collected by the Minister of Labor under the conditions prescribed the Presidential Decree. (3) A person who is dissatisfied with the imposition of a fine for negligence under paragraph (2) may raise an objection against the Minister of Labor within thirty days from the date on which the fine for negligence is notified. (4) If a person subject to the imposition of a fine for negligence under paragraph (2) raises an objection under paragraph (3), the Minister of Labor shall, without delay, notify the competent court of this and the court so notified shall try the case of the fine for negligence in accordance with the Non-Contentious Case Litigation Procedure Act. (5) If no objection is raised within the period prescribed in subparagraph (3) nor is a fine for negligence paid, the fine shall be collected according to the process of recovery of national taxes in arrears. <This Article Wholly Amended by Act No. 8816, Dec. 27, 2007> - 11 - Addenda <Act No. 8816, Dec. 27, 2007> Article 1 (Enforcement Date) This Act shall enter into force on the date of its promulgation. Article 2 (Revision of Other Laws) (1) Parts of the Act on the Collection, etc., of Premiums for Employment Insurance and Industrial Accident Compensation Insurance shall be amended as follows : "Articles 8 and 14 of the Wage Claim Guarantee Act" in Article 31 (1) shall be changed to "Articles 9 and 16 of the Wage Claim Guarantee Act". "Article 8 of the Wage Claim Guarantee Act" in Article 31 (2) shall be changed to "Article 9 of the Wage Claim Guarantee Act". "Article 15 of the Wage Claim Guarantee Act" in Article 31 (4) shall be changed to "Article 17 of the Wage Claim Guarantee Act". (2) Parts of the Framework Act on the Management of Charges shall be amended as follows : "Article 8 of the Wage Claim Guarantee Act" in subparagraph 67 in the annexed Table shall be changed to "Article 9 of the Wage Claim Guarantee Act". Article 3 (Relationship to Other Laws) (1) If the previous Wage Claim Guarantee Act or its provisions are quoted in other Acts and subordinate statutes at the time this Act enters into force, and corresponding provisions thereof are contained in this Act, this Act or the corresponding provisions shall be deemed to be quoted in lieu of the previous provisions.   <hr class="make-database"> AsianLII: <a href="/asianlii/copyright.html" class="make-database">Copyright Policy</a> | <a href="/asianlii/disclaimers.html" class="make-database">Disclaimers</a> | <a href="/asianlii/privacy.html" class="make-database">Privacy Policy</a> | <a href="/asianlii/feedback.html" class="make-database">Feedback</a> URL: http://www.asianlii.org/kr/legis/laws/wcga169 </body> </html>