Employment and Labor Minister Kim Young-hoon announces a pan-government plan to eradicate wage theft at Government Complex Seoul in Jongno-gu, Seoul, in September last year. [Yonhap]
Employment and Labor Minister Kim Young-hoon announces a pan-government plan to eradicate wage theft at Government Complex Seoul in Jongno-gu, Seoul, in September last year. [Yonhap]

Employers who habitually withhold workers' wages will be barred from participating in local government subsidy projects under new rules.

Under the Ministry of Interior and Safety's revised local subsidy management guidelines released Wednesday, heads of local governments must exclude habitual wage withholders from selection as local subsidy project operators.

Previously, local government heads were required to consider only whether a prospective operator had been excluded from subsidy projects or had faced restrictions on subsidy grants, and whether the applicant was receiving duplicate subsidies.

The revision adds habitual wage withholders to the list of those barred from local subsidy projects.

The updated guidelines also require local government heads to establish and operate a local subsidy disbursement review committee to respond to and prevent fraudulent subsidy claims.

The committee will deliberate on five categories of matters: the calculation, aggravation and mitigation of penalty surcharges, and the review of explanatory materials submitted by those subject to such surcharges; the review of explanatory materials related to exclusion from local subsidy projects; whether the conditions for whistleblower reward payments are met and the amount of such rewards; matters the head of the local government deems to require committee review in determining whether fraud has occurred; and other matters the head of the local government deems to require committee review for confirming fraudulent subsidy claims and taking follow-up action.

The government moved to impose additional economic sanctions on habitual wage withholders last September, when an amendment to the Labor Standards Act took effect strengthening financial penalties against them — expanding the scope of sanctions beyond those already subject to public disclosure of names and credit restrictions.

The measures apply to employers who, in the preceding year, withheld at least three months' worth of wages — excluding severance pay — or withheld wages on five or more occasions with a total unpaid amount of 30 million won ($21,300), including severance benefits.

Such employers face credit restrictions, limits on participation in government subsidy and support projects, and deductions in public procurement bids.


thlee@heraldcorp.com