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November 2019 - Social Insurance and Insurances Exclusive to Foreign Workers |
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Social Insurance and Insurances Exclusive to Foreign Workers
I. Introduction
There are four major insurances: Industrial Accident Compensation Insurance, Employment Insurance, National Health Insurance, and the National Pension Plan. (i) Industrial Accident Compensation Insurance applies to foreigners as well, but the remaining social insurances vary in application. (ii) Regarding Employment Insurance, most foreign workers stay in Korea temporarily, so it is often optional. (iii) National Health Insurance is naturally applicable if a foreign worker is employed at a workplace. (iv) National Pension is naturally applied in principle, but the principle of reciprocity means it varies in accordance with relations with each foreign country.
Employers are obliged to subscribe to Departure Maturity Insurance, Guaranty Insurance for unpaid wages, Foreign Workers’ Care Insurance and Return-Expense Insurance. When an employer re-employs a foreign worker, he/she shall extend the existing insurance coverage period of the Departure Maturity Insurance and Guaranty Insurance for unpaid wages (Article 13 of the FEA).
The following describes in detail the application of social insurances with foreign workers.
II. Social Insurance for Foreign Workers
Social Insurances and their Application to Foreign Workers
1. Industrial Accident Compensation Insurance (IACI) Act
Since the IACI Act stipulates in Article 1 (Purpose) that its purpose is to “compensate workers for work-related accidents promptly,” foreign workers must be protected. Regardless of their eligibility for working visas, all are covered by the IACI Act. If a foreigner is injured while providing work, whether he or she is an industrial trainee or an illegal foreign worker, the accident will be compensated for as an industrial accident. This has been confirmed by a Supreme Court case. Workers are subject to workers' compensation in the event of a work injury, regardless of whether they are Korean citizens or illegal workers. The Supreme Court has made it clear that illegal stays are subject to crackdowns, but that illegal residents should also be covered by industrial accident insurance in the sense that workers must be protected by labor law for labor already provided.
The IACI Act is a social insurance system in which the State carries out compensation on behalf of the employer under the Labor Standards Act if a worker is injured or ill from work. Accident compensation is applied to all businesses or workplaces using workers, taking into account the risk, size and place of business. The following types of work are not covered by the IACI Act (Article 6): ① construction with a total construction cost of less than 20 million won, ② construction by a non-housing business or non-contractor, construction of buildings with a total floor area of less than 100 square meters (200 square meters for waterline construction), ③ household service ④ businesses with fewer than five workers in agriculture, forestry, fishing and hunting. Therefore, in the event a business or workplace is not covered by the IACI Act and has an industrial accident requiring medical treatment for three days or less, the Labor Standards Act requires the employer to compensate for the work injury/illness.
2. Employment Insurance Act (EIA)
Employment insurance grants benefits to eligible people to prevent undue hardship from unemployment, promote employment, develop the vocational skills of workers, and promote job-seeking activities. It thereby contributes to the economic and social development of the nation (Article 1 of the EIA). Employment insurance applies to all businesses or workplaces in principle, with exceptions in consideration of the size of business. It applies to all workers because its main purpose is to provide stability for unemployed persons, so does not apply if those persons do not need help or are protected by other insurance. Those excluded from employment insurance are: ① 65 years of age or older, ② Those working fewer than 60 hours a month (15 hours a week), ③ Civil servants under the National Civil Service and Local Public Service Act, ④ Those to whom the Private School Teachers Pension Act applies, ⑤ Sailors under the Seafarers Act, ⑥ Foreign workers who are not eligible for residency. However, foreigners with status of residence may subscribe and benefit.
Foreign Worker Eligibility for Employment Insurance (as of Dec. 2016)
Source: Korea Labor Welfare Corporation, “Working Guide for Workers and Workers' Compensation and Employment Insurance 2017,” p. 18.
※ ‘×’ denotes those foreigners ineligible for employment insurance.
Unemployment benefits of course include unemployment benefits, but also maternity leave allowances and childcare leave benefits. Therefore, foreigners cannot receive maternity leave benefits and childcare leave benefits as well as unemployment benefits if they do not have employment insurance. If a foreign worker who is staying for employment in Korea does not intend to receive unemployment benefits, he or she may not subscribe.
3. National Health Insurance Act (NHIA)
All business and local subscribers covered by National Health Insurance are required to pay premiums. However, foreign workers (E-9) and visiting Korean workers (H-2) under the employment permit system in the Foreign Employment Act and in Article 7 (4) of the Long-Term Care Insurance Act can be exempted through a separate application process through a nursing care insurance subscriber. All other foreign workers who do not have a basis for exemption are automatically subscribed to long-term care insurance and pay the premium along with the health insurance premium.
4. National Pension Act (NPA)
Foreigners working in workplaces are subject to the National Pension Act (Article 126) and foreign nationals residing in Korea shall, of course, become business or regional subscribers. However, if the law equivalent to Korea’s NPA in the foreigner’s country of citizenship does not apply to Republic of Korea nationals living there, the national pension system in Korea corresponding to the national pension shall be taken as the principle of a reciprocity with foreign countries Those not covered by the National Pension Scheme are those here on temporary stay visas or without income.
National Pension applies to foreign nationals when they are employed at a workplace that must subscribe to it. To receive the pension benefit, the foreign national must have paid into the national pension for at least 10 years and reach the age of 60. This is not easy for most foreign workers to do. In this case, a lump-sum refund will be given, which will be handled in accordance with the social security agreement Korea has with that national’s country of citizenship. In addition, the National Pension Act was amended in January 2015 in accordance with the decision of the Constitutional Court in recognition of the property value of national pensions (Article 126 of the NPA).
III. Insurances Exclusive to Foreign Workers
Insurances Exclusive to Foreign Workers
Source: MOEL, 2016 Manual of Employment Permit System, p. 452.
1. Departure Maturity Insurance
Departure Maturity Insurance replaces severance pay but accumulates at the same rate. It is payable when the foreign worker leaves the country(Article 13 of the Foreign Employment Act: FEA). The employer must pay a monthly premium of 8.3% of a worker’s monthly ordinary wage stated in the employment permit system (EPS). This is to prevent lat
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20220329181930_572.pdf |
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