"The Moment You Become a CEO, You Face Criminal Liability Under 233 Legal Provisions"

KEF Analyzes 25 Employment and Labor Laws
268 Provisions Mandate Imprisonment... Excessive Criminal Penalties

It has been found that the moment one becomes a company president in South Korea, they become subject to criminal penalties under 233 provisions across 25 employment and labor-related laws. There are concerns that excessive “dual penalty provisions” and a criminal liability structure heavily focused on business owners are discouraging corporate management.

The Korea Employers Federation released a report on November 19 titled “Current Status and Improvement Directions of Corporate Criminal Penalty Provisions in Employment and Labor-Related Laws,” which examined 25 laws in five areas: employment security, prohibition of employment discrimination, labor standards, labor-management relations, and industrial safety and health.

According to the report, there are a total of 357 criminal penalty provisions, of which 233-about 65%-directly designate business owners as subjects who must comply with the rules.

The law with the most criminal penalty provisions is the Industrial Safety and Health Act, with 82 provisions. This is followed by the Labor Standards Act (72 provisions) and the Trade Union and Labor Relations Adjustment Act (31 provisions). In the case of the Labor Standards Act, 68 provisions (94%) impose penalties specifically on business owners.

In particular, the Act on Fair Recruitment Procedures, the Act on Gender Equality in Employment, the Act on Employment Promotion for the Aged, the Act on Fixed-Term and Part-Time Workers, the Act on Workers' Participation and Cooperation, and the Serious Accidents Punishment Act all designate only business owners as subjects of criminal liability, indicating a “business owner-biased criminal liability structure.”

The report stated, “Criminal punishment constitutes a serious infringement on individual freedom and security, and thus should be used only as a last resort for national sanctions,” adding, “Except in unavoidable cases, a process of decriminalization by replacing criminal penalties with administrative sanctions is necessary.”

Furthermore, 268 provisions (75%) stipulate imprisonment, indicating that “punishment-centered regulation” has become the norm. The report noted, “Regulating even disputable or minor issues through criminal penalties leads to passive management and a contraction in labor management,” and suggested, “Switching to non-criminal sanctions could be a practical alternative to minimize the creation of unnecessary criminal records and reduce management risks.”

Additionally, the report analyzed that the “dual penalty provision”-which allows for both the perpetrator and the corporation or business owner to be fined when a crime occurs-is a structural feature common across employment and labor-related laws.

The report argued, “Including business owners who were not involved in illegal acts as subjects of criminal liability is inconsistent with the principle of culpability in criminal law,” and emphasized, “Extensive dual penalty provisions should be rationalized to the minimum necessary scope to ensure legal predictability and stability.”

The report also pointed out that the level of punishment is concentrated on “up to three years of imprisonment” and “up to 30 million won in fines,” indicating that sentences are set at a heavy level. For example, under the Labor Standards Act, dismissal without just cause is not subject to criminal penalties, but violation of the obligation to give advance notice of dismissal can be punished by up to two years of imprisonment or a fine of up to 20 million won.

The report suggested that excessive criminal penalty-focused regulations should be shifted toward administrative sanctions, that statutory penalties should be rationally reset, and that dual penalty provisions should be minimized to ensure legal stability in business management.

Hwang Yongyeon, Head of Labor Policy at the Korea Employers Federation, stated, “Indiscriminate criminal penalties not only create unnecessary criminal records but also discourage corporate investment and hiring decisions, ultimately increasing employment instability,” adding, “As the government is working to ease corporate burdens and rationalize economic criminal penalties, the punishment-centered structure should also be reformed.”