Korea's Ministry of Employment and Labor has uncovered widespread habitual wage theft through a focused inspection campaign.
The ministry announced Monday that it detected 6.36 billion won ($4.7 million) in unpaid wages after conducting intensive inspections of 166 workplaces suspected of habitual wage violations from September to December last year, based on anonymous tips from current employees. Of this amount, 4.87 billion won was recovered during the inspection process.
Labor law violations were confirmed at 152 of the 166 inspected workplaces, representing 91.6% of the total. The number of violations detected reached 551 cases. The ministry issued correction orders to 150 workplaces covering 533 cases and imposed fines on six workplaces for six violations. Eight workplaces involving 12 cases were immediately referred for criminal prosecution after being deemed to have no intention of paying owed wages.
By violation type, wage theft accounted for the largest share. The ministry confirmed 6.36 billion won in unpaid wages owed to 4,775 workers at 118 workplaces. Among these, 12 workplaces were found to have engaged in so-called "free labor" practices, refusing to pay overtime, night shift, and holiday work allowances under the pretext of lump-sum wage contracts. Two workplaces were also caught paying wages below the minimum wage.
In one case, a restaurant was found to have withheld approximately 12 million won in wages by refusing to pay overtime, night work allowances, and annual leave pay, citing a lump-sum wage contract. Another hotel was discovered to have failed to pay around 17 million won after signing fixed monthly salary contracts that fell short of minimum wage requirements when calculated against actual working hours.
The ministry facilitated immediate payment during inspections, resulting in 4.87 billion won in back wages being paid to 4,538 workers at 105 of the 118 workplaces. These included a hospital that had withheld 660 million won in wages from 92 employees due to internal irregularities and financial difficulties, and a manufacturer that had failed to pay 300 million won to 69 workers. Settlement procedures are ongoing at the remaining workplaces.
Criminal action was taken against seven workplaces that showed no willingness to pay wages despite correction orders. These workplaces were found to have engaged in repeated violations including months of wage arrears and unpaid severance.
Beyond wage theft, numerous basic labor law violations were detected. Violations of the 52-hour weekly work limit were confirmed at 31 workplaces, while 68 workplaces failed to specify working conditions in employment contracts or provide them in writing. Thirty-two workplaces were found not to have filed their employment rules.
At some workplaces, employees were instructed to clock out and then return to work without any entry record to avoid documentation of work exceeding 52 hours per week. Forensic analysis of card tagging records and wage calculation data was conducted to verify manipulation of attendance records.
The ministry plans to conduct re-inspections within one year if new complaints are filed against the 44 workplaces where multiple violations were detected.
Starting Monday, the ministry will operate the "Anonymous Tip Center for Current Employees" on a permanent basis and plans to more than double the scale of inspection campaigns based on these tips this year. The aim is to strengthen early detection and prevention through anonymous reporting, recognizing that it is difficult for employees to file complaints while still employed.
"There are many situations where people have no choice but to endure not receiving proper compensation for their work because they need to keep their jobs," Labor Minister Kim Young-hoon said. "We will continue to pursue inspections in areas that people actually experience, including anonymous tips from current employees to find hidden wage theft, disguised employment through fake freelance contracts, and the misuse and abuse of lump-sum wage contracts that encourage free labor."