Labor ministry doubles bounty for reporting false wage-support claims

The labor ministry said Tuesday it will double the maximum reward for reporting fraudulent claims under the state wage-support system to 200 million won ($147,221), as it moves to curb abuse of a fund that recovers only about 30 percent of what it pays out.

The cabinet approved the revision to the enforcement decree of the Wage Claim Guarantee Act, raising the ceiling from 100 million won. The higher limit takes effect on Jan. 1, 2027.

Under the system, the state pays part of the wages owed to workers whose employers fail to pay, then collects the money back from those employers. Fraudulent claims usually involve employers and workers colluding to insert fake workers or inflate unpaid wages, so tip-offs play a decisive role in investigations, the ministry said.

"The increase in the maximum whistleblower reward is a measure to root out fraudulent claims," Labor Minister Kim Young-hoon said. "Using this revision as a foothold, we will raise the sustainability of the wage-support system so that employers fulfill their responsibility to clear unpaid wages and workers can be protected more thoroughly."

The ministry has pushed a broader overhaul this year, introducing national tax delinquency procedures for collecting repayments from employers, imposing its first credit sanctions in May on 2,057 employers with long-unpaid debts, extending guaranteed payments covering unpaid wages to the last six months from the last three, and raising the loan ceiling for employers willing to clear arrears to 200 million won from 150 million won.