34 Firms Caught Abusing Wage System, Owing $330,000 in Back Pay

South Korea's Ministry of Employment and Labor has uncovered widespread abuse of the comprehensive wage system, with 34 out of 101 inspected businesses found to be withholding legally mandated overtime, holiday, and night shift allowances. These companies collectively owe 448 million won (approximately $330,000 USD) in unpaid wages.

The ministry's two-month investigation, which began in February, targeted businesses suspected of misusing the comprehensive wage system, often cited as a way to manage labor costs. In addition to the 34 firms that failed to pay allowances, another 34 businesses were found to have inadequate management of working hours despite operating under a comprehensive wage agreement. Furthermore, 27 companies violated regulations by failing to accurately record or manage overtime, night, and holiday work hours on employee pay slips.

Examples of violations include a cosmetics manufacturer that paid fixed overtime allowances without separately recording actual working hours, failing to pay 123 million won to 310 employees. A poultry processing company also neglected to pay overtime and holiday allowances despite continuous extended and holiday work.

The Ministry of Employment and Labor has mandated that these businesses rectify their practices and pay all outstanding wages. The crackdown is intensifying, with a recent focus on the Guro and Gasan Digital Complex, an area known for its high concentration of IT companies and a greater risk of comprehensive wage system abuse. The ministry plans to continue these targeted inspections throughout the year, selecting new areas based on monthly tip-offs.