Nearly 198,000 labor law violations reported at small workplaces last year, 83% over unpaid wages

Reports of labor law violations at workplaces with fewer than five full-time employees came close to 200,000 last year.

More than eight in 10 cases involved unpaid wages or severance pay. Disputes over basic obligations such as wage payment continue to arise at small businesses exempt from certain provisions of the Labor Standards Act.

According to data obtained from the Ministry of Employment and Labor by People Power Party lawmaker Kim Wi-sang of the National Assembly's Climate, Energy, Environment and Labor Committee, reports of labor law violations at workplaces with fewer than five employees totaled 197,997 last year — up 10,106 cases, or 5.4 percent, from 187,891 the previous year.

The number of reports fell from 200,346 in 2023 to 187,891 in 2024 before rising again last year. So far this year, 126,766 cases had been filed as of Sept. 16.

Breaking down last year's reports by violation type, cases involving unpaid wages or severance — categorized as "wage settlement" violations — accounted for 165,178 cases, or 83.4 percent of the total. Violations of "working condition disclosure" requirements, which oblige employers to inform workers of wages and hours when signing a labor contract, followed with 13,603 cases, while violations of "advance notice of dismissal" rules accounted for 8,297 cases.

Workplaces with fewer than five employees are exempt from several Labor Standards Act provisions, including the 52-hour weekly work cap, premium pay for overtime, nighttime and holiday work, paid annual leave, and restrictions on dismissal without just cause. However, obligations such as paying wages and severance, disclosing working conditions and providing advance notice of dismissal apply regardless of workplace size.

A large share of wage-settlement cases were closed at the administrative level before being referred to prosecutors. Some 132,576 cases were resolved administratively last year — of those, 128,659 were closed under an "other resolution" category, typically because back wages were paid during the investigation, while 3,917 were closed as "no violation found."

A total of 31,801 wage-settlement cases were referred to prosecutors. Of those, the ministry forwarded 21,937 with a recommendation for indictment, reflecting its own investigative judgment — a separate determination from whether prosecutors ultimately choose to indict.

Reports alleging violations of provisions that do not apply to workplaces with fewer than five employees are in principle closed without a finding of illegality, which means the total number of reports cannot be taken as a count of confirmed violations.

The Ministry of Employment and Labor is pursuing a phased expansion of the Labor Standards Act's coverage to workplaces with fewer than five employees. After launching a fact-finding analysis in May, the ministry began a social dialogue process in September. It plans to develop an expansion proposal that accounts for the operating conditions of small business owners, the cost burden of individual provisions and the feasibility of compliance.