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Gov’t targets businesses that skimp on salaries

Jan 09,2018
The government plans to crack down on businesses that have violated labor laws or changed their contracts to avoid paying a higher minimum wage that took effect at the start of the year.

In particular, the Ministry of Employment and Labor said Monday that it would focus on five areas with a disproportionately high number of low-wage workers: residential buildings, supermarkets, convenience stores, gas stations and restaurants.

The ministry will check whether businesses have been firing people without just cause, reducing weekend and holiday pay or increasing the amount of break time to avoid paying for more hours.

The inspections will start later this month and run until the end of March. The ministry plans to hold a public hearing on Jan. 28 to give some businesses that have changed their employment contracts since the minimum wage increase a chance to make amends before starting its probes the next day.

The ministry laid out a few cases it would look for. In apartment complexes, for example, building managers have to provide a notification and justification before firing a security guard. Otherwise, the fired worker can file a complaint with the National Labor Relations Commission. If a worker is not notified of a firing 30 days prior, the employer is obligated to pay wages for the 30 days.

On bonuses, if employers want to reduce the amount, they are required by law to earn 50 percent approval from employees. If not, employers have to pay the same amount of bonuses that employees have been receiving.

At franchises, where store owners often skirt paying more by increasing break time, the government will require the change be reflected in an employment contract. And if an employee ends up working through the break time, the employer must pay for the labor.

Employers are also required to make all welfare payments including food and transportation if they unilaterally canceled them this year.

The ministry’s action came after several cases of workers getting laid off when a record-high minimum wage increase took effect at the start of the year. Ninety-four security guards at a Hyundai apartment complex in Apgujeong-dong, southern Seoul, were let go last week after the residents’ board decided to rehire them through an outside agency, converting them to contract workers with lower wages and fewer benefits.

There has been conflict between the residents and security guards, who are mostly aged 50 and older. In November, the residents said that they voted to hire an outside agency because of the minimum wage increase and perceived laziness of the security guards.

The residents claimed that the higher minimum wage has also raised the financial burden of covering the guards’ retirement pension by 660 million won ($620,400). They argue that switching to an outside agency will increase security quality and efficiency in the apartment complex.

The move generated public backlash, especially because the apartment complex is known for its affluent residents. One resident claiming to be a lawyer posted a notice in the complex saying each resident would need to pay an additional 3,570 won ($3.40) to cover the higher minimum wage.

Considering the average income of the residents, the additional burden would be paltry.

Several small businesses have reportedly taken out more money from employees’ paychecks to cover benefits like food and transportation in order to avoid raising wages.


BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]