"3 Years Imprisonment in Korea vs. Only Fines in G5... Excessive Punishment Regulations in Labor Relations Law"

Hankyung Research Institute Compares Labor Law Penalty Provisions in US, Japan, Germany, UK, France... Significant Differences in Penalties for Working Hours Violations

Data provided by Korea Economic Research Institute

[Asia Economy Reporter Kim Heung-soon] An analysis has revealed that the penalty regulations for violations of labor-related laws by Korean companies are excessive compared to major countries such as the United States, Japan, Germany, the United Kingdom, and France. It has been pointed out that there is a need to improve the penalty regulations to an international standard so that companies can fulfill their primary roles, such as job creation, without being discouraged by strict regulations.

The Korea Economic Research Institute (KERI), under the Federation of Korean Industries, announced on the 3rd that a comparative analysis of penalty regulations for violations of labor-related laws such as the Labor Standards Act, Labor Union Act, and Industrial Safety Act between Korea and these G5 countries showed that Korea’s penalty levels are generally higher than those of the G5.

Violation of Working Hours: Korea Imprisonment up to 2 Years vs. No Imprisonment in the US and France

According to KERI, for violations of working hours, Korea imposes imprisonment of up to 2 years or a fine of up to 20 million KRW. In contrast, the United States has no penalty regulations for working hours violations, and France imposes fines only. Germany and the United Kingdom impose fines but only impose imprisonment in cases of intentional or repeated violations or failure to comply with correction orders.

Japan, which has a labor-management system similar to Korea, imposes imprisonment of up to 6 months or a fine of up to 300,000 yen, but the penalty level is lower than Korea’s. KERI pointed out, "Korea has stricter working hours regulations than the G5, resulting in a higher compliance burden, whereas advanced countries have well-established flexible working hour systems to prevent employers from violating working hour regulations even when workload surges." Comparing the unit periods of flexible working hours, Korea’s maximum is 6 months, which is more than twice as short as France (3 years), Japan (1 year), Germany (1 year), and the United Kingdom (1 year).

Minimum Wage Violations: Korea Imprisonment up to 3 Years vs. G5 Mainly Fines
Korea’s Minimum Wage Level is Higher than G5

For minimum wage violations, Korea imposes imprisonment of up to 3 years or a fine of up to 20 million KRW. In contrast, most G5 countries impose fines without imprisonment. France imposes a fine of 1,500 euros per worker paid below the minimum wage. Japan, which applies minimum wages differentially by region, imposes fines of up to 500,000 yen for violations. The United Kingdom imposes fines up to 20,000 pounds or fines for intentional violations. Germany imposes administrative fines up to 500,000 euros without imprisonment. The United States imposes imprisonment of up to 6 months or fines up to 10,000 dollars only for intentional minimum wage violations.

Korea’s minimum wage level is the highest compared to the G5. As of 2019, Korea’s minimum wage level relative to the median wage was 63%, which is up to 31 percentage points higher than the United States (32%), Japan (44%), Germany (48%), the United Kingdom (55%), and France (61%). According to KERI, due to the high minimum wage level, small and medium-sized enterprises without the ability to pay often fail to comply, and in fact, the proportion of workers who did not receive the minimum wage last year reached 15.6%.

Data provided by Korea Economic Research Institute

Unfair Labor Practice Violations: Korea Imprisonment up to 2 Years vs. No Related System in Germany and France

For violations of unfair labor practices, Korea imposes imprisonment of up to 2 years or a fine of up to 20 million KRW, whereas Germany and France do not have such systems. The United States imposes detention or fines if correction orders are not complied with, and Japan imposes imprisonment of up to 1 year or fines up to 1 million yen for non-compliance with correction orders.

According to KERI, among the G5 countries, the United States was the first to introduce the unfair labor practice system regulating both labor and management sides, but Korea regulates only the management side. Because of this, KERI claims that labor unions excessively file unfair labor practice complaints as a means to pressure management. This is supported by the fact that out of 1,450 unfair labor practice cases filed last year, only 86 cases (5.9%) were recognized as unfair labor practices.

Violation of Industrial Safety Obligations: Korea Imprisonment up to 7 Years vs. G5 Imprisonment up to 2 Years

For fatal accidents caused by violations of industrial safety obligations, Korea imposes imprisonment of up to 7 years or fines up to 100 million KRW on employers. The United Kingdom imposes imprisonment of up to 2 years, and the United States and Japan impose imprisonment of up to 6 months. Germany and France impose imprisonment of 1 year only in cases of intentional or repeated violations. Furthermore, when the Serious Accident Punishment Act is enforced in Korea, penalties of imprisonment of 1 year or more will be imposed, which is analyzed to be equivalent to the punishment for murder by commission or consent under criminal law.

Choo Kwang-ho, Director of Economic Policy at KERI, stated, "There is a need to improve the penalty regulations of labor-related laws to international standards so that Korean companies are not discouraged by excessive penalties and can actively engage in job creation."