Labor ministry doubles unpaid-wage coverage under insolvency payments

The labor ministry said Wednesday it will double the unpaid-wage period covered by insolvency advance payments, from three to six months, when revised rules take effect Aug. 20.

The ministry said the changes are part of wage-arrears eradication measures announced in September 2025 and are intended to strengthen protection for workers facing prolonged nonpayment.

The scheme lets the state pay certain unpaid wages, business-suspension allowances and maternity-leave pay on behalf of employers when businesses go bankrupt. Its maximum payout will rise to 31.5 million won ($22,325) from 21 million won ($14,883).

The rules also increase financing available to employers seeking to clear wage arrears. The standard loan ceiling will rise to 200 million won ($141,743) from 150 million won ($106,308), while the per-worker limit will increase to 20 million won ($14,174) from 15 million won ($10,631).

Employers with more than 200 million won in wage arrears over the previous three months can seek up to 1 billion won ($708,717) under a new special-loan program by posting real estate collateral worth at least 120 percent of the loan sought. Annual loan rates are 3.7 percent for unsecured credit and 2.2 percent for secured borrowing.

"We will continue to strengthen government support so that workers who were not paid properly or on time despite working diligently can rebuild their lives as soon as possible," Labor Minister Kim Young-hoon said.