"Protecting 8 Million Workers Outside Labor Rights"... Government to Overhaul Labor Laws

Burden of Proof for Employee Status Shifts to Employers
Administrative Mediation for Issues Such as Non-Payment of Compensation

The push for a legislative package to protect 8 million workers outside the scope of current labor rights stems from the reality that existing labor laws have failed to keep pace with the diversification of employment types. The Labor Standards Act was designed on the premise of traditional employment relationships, which has left a significant number of specially employed, platform, and freelance workers outside the protection of the law.

According to the Ministry of Employment and Labor on January 20, since 2006, six separate bills have been proposed to protect specially employed workers. However, efforts to enact a single law have repeatedly failed amid criticism that such laws would further divide workers by employment status. While there have been some incremental improvements-such as expanding the coverage of employment insurance and industrial accident insurance-core disputes such as contract termination and non-payment of compensation remain unresolved.

This legislative package aims to address the structural limitations of current employment forms. The main points are the establishment of a basic law that declares minimum rights for all service providers, regardless of employee status, and the revision of the Labor Standards Act to protect those who are in fact workers but have been denied protection due to the form of their contracts. An official from the Ministry of Employment and Labor explained, "The initiative began with concerns about whether the constitutional concept of a worker should be limited only to those defined as workers under the Labor Standards Act. We concluded that a basic law is necessary because fragmented individual laws have their limitations."

The "Basic Act on the Rights of Working People" is notable for its declarative and foundational nature, which is rare in the labor law system. It broadly enumerates constitutional rights such as non-discrimination, safety and health, fair contracts, and appropriate compensation, but rather than imposing direct penalties or mandatory regulations, it places greater emphasis on the responsibilities of the state and employers. As a result, in the short term, it is more likely to serve as a reference point for future amendments to individual labor laws than to immediately change workplace practices. Heo Kihun, Director of the Service Provider Support Division at the Ministry of Employment and Labor, stated, "Given the basic law's nature, individual laws will inevitably take precedence. However, once the basic law is established, individual laws should be revised to reflect its spirit."

In terms of effectiveness, the key feature is the establishment of a dispute mediation function within the Labor Relations Commission and a separate support system. The plan is to resolve the most common issues faced by freelancers and service providers-such as contract termination and non-payment of compensation-through administrative mediation, which can significantly reduce litigation costs and time. However, since mediation requires both parties to apply and agree, there are clear limitations if the employer refuses to participate or if the dispute is particularly contentious.

Yonhap News Agency

The government intends to address these shortcomings by strengthening its administrative investigation powers. Notable measures include granting labor inspectors the authority to request documents, establishing an advisory body to assess employee status, and linking with National Tax Service income data. For example, victims of sexual harassment or bullying can seek legal remedies through the "Working People’s Rights Support Foundation," and complex cases regarding employee status will be professionally reviewed by a separate assessment committee. If anyone takes disadvantageous action in response to administrative guidance or a dispute mediation request, a fine of up to 5 million won will be imposed as part of the support system.

The presumption of employee status is expected to have a more direct impact. By shifting the burden of proof to employers, the government aims to structurally address the so-called "fake freelancer" issue. However, the government's decision to limit the presumption's effect to civil disputes is a clear restriction. It will not apply to cases involving criminal liability, such as wage arrears or minimum wage violations, due to the constitutional principle of presumption of innocence. Kang Sungjin, Professor of Economics at Korea University, commented, "If the burden of proof is shifted to employers, the scope of who qualifies as a worker could become very broadly defined. Since the government has left the definition open, confusion may increase unless clear guidelines are established."

There are more concerns than expectations among some labor and management circles regarding the push for the legislative package. Labor groups have pointed out that "the basic law may remain merely declarative," while business groups have warned that "an increase in disputes over employee status could lead to greater labor market rigidity." They specifically cited the potential burden of an increase in cases where former workers claim employee status after their contracts have ended. A Ministry of Employment and Labor official stated, "Before the law takes effect, we plan to review Supreme Court precedents, strengthen training for inspectors, and prepare criteria for major occupational categories."