Labor Ministry targets Daejeon, Cheongju IT and R&D firms in crackdown on unpaid overtime

The government is launching a targeted inspection of IT and research and development firms in Daejeon and Cheongju over the misuse of lump-sum wage agreements. Earlier probes repeatedly uncovered cases of unpaid "free labor" at knowledge-industry companies in the region, and anonymous tip-offs have continued to come in since.

The Ministry of Employment and Labor announced Thursday that it would begin a fifth round of its regional relay inspection campaign targeting lump-sum wage abuses, focusing on IT, R&D and other knowledge-industry firms in Daejeon and Cheongju starting Friday.

The ministry has been conducting relay inspections since May, selecting regions where abuses are suspected to be frequent based on tip-offs received at its anonymous reporting center for lump-sum wage and fixed-overtime violations. Inspectors have already covered Seoul's Guro and Gasan Digital Complex, Seongnam's Pangyo Techno Valley, Changwon National Industrial Complex, and financial-sector firms in Seoul's Jung-gu and Yeongdeungpo-gu.

Daejeon and Cheongju were selected for this round because earlier inspections had already identified numerous workplaces in the area that failed to properly pay overtime, holiday and night-shift allowances.

A ministry-wide inspection of 101 workplaces suspected of misusing lump-sum wage arrangements, conducted over two months beginning in February, found that 79 were using such agreements. Of those, 34 were caught failing to pay overtime, holiday and night-shift allowances. Six violations were found within the jurisdiction of the Daejeon Regional Employment and Labor Office.

Of the six workplaces flagged under the Daejeon office, two were in Daejeon and two in Cheongju. By industry, five of the six belonged to the knowledge services sector — specifically R&D and software development and supply firms.

In one case, a software development and supply company failed to verify employees' actual working hours and withheld overtime pay beyond the fixed-OT threshold. An investigation found that 14 workers were owed a combined 25 million won ($17,800) in unpaid overtime, holiday and night-shift allowances. At a separate R&D firm, one worker was owed 13 million won in additional pay for hours worked beyond the fixed-OT cap.

In the current round of inspections, the ministry plans to re-examine how knowledge-industry firms in Daejeon and Cheongju use lump-sum wage arrangements and to focus particularly on the practice of withholding allowances for actual hours worked on the grounds that a lump-sum agreement is in place.

Anonymous reports have continued to come in even after the earlier inspections. Some workers reported that holiday pay or compensatory leave had been reduced or withheld entirely, even at workplaces where working hours could be accurately measured. Other tip-offs described fixed-OT workplaces that paid no additional allowances for weekday overtime and recognized only a portion of holiday work.

"We plan to eliminate improper labor practices in the field through repeated inspections of regions and industries where lump-sum wage abuses are suspected," Minister of Employment and Labor Kim Young-hoon said. "We will continue to guide and supervise workplaces so that a common-sense workplace culture — where workers are fairly compensated for every hour they put in — can take root."