Labor ministry expands wage-arrears support for bankrupt workplaces

The labor ministry said it had expanded wage-payment protection for workers at bankrupt workplaces, expanding coverage from the final three months of unpaid wages to the final six months under rules taking effect Aug. 20.

The ministry said the rule implements a Feb. 19 amendment to the Wage Claim Guarantee Act to strengthen protection for workers owed wages at bankrupt workplaces. The revised rule will also raise the maximum payment for a worker at a bankrupt workplace to 31.5 million won ($22,325) from 21 million won ($14,883).

"While responding sternly to employers that withhold wages, we have greatly expanded bankruptcy payments and employer loans to help settle arrears and protect workers owed wages," Labor Minister Kim Young-hoon said.

For employers seeking to clear wage arrears, the overall loan ceiling will increase to 200 million won ($141,743) from 150 million won ($106,308), with no limit on the number of regular-loan applications. The per-worker ceiling will increase to 20 million won ($14,174) from 15 million won ($10,631). Eligible employers must have operated a covered business or workplace for at least six months.

Under a new special lending program, employers with more than 200 million won in unsettled wage arrears over the preceding three months may seek loans of up to 1 billion won ($708,717). Special-loan requests are capped at 20 million won per worker. Applicants must provide real estate collateral valued at at least 120% of the amount sought and submit detailed plans for repayment and priority support for vulnerable workers.