Reward for Reporting Fraudulent Wage Payment Claims Increased to KRW 200 Million Amendment to the Enforcement Decree of the Wage Claim Guarantee Act Approved … Labor Minister: “We Will Enhance the Sustainability of the Substitute Payment System”
The maximum reward for reporting fraudulent claims involving substitute payments for unpaid wages will be doubled from KRW 100 million to KRW 200 million.
Under the substitute payment system, the government first pays workers a portion of their unpaid wages when an employer fails to make payment and subsequently seeks reimbursement from the employer.
The Ministry of Employment and Labor announced that the Cabinet reviewed and approved an amendment to the Enforcement Decree of the Wage Claim Guarantee Act on October 6. The increased maximum reward will take effect on January 1, 2027.
The substitute payment system is designed to protect workers from wage arrears by allowing the government to pay part of the unpaid wages in advance and later recover the amount from the responsible employer.
However, concerns have continued to arise over the financial sustainability of the system. Of the total amount paid out under the substitute payment scheme to date, only about 30% has been recovered from employers. In addition, fraudulent claims have occurred in which individuals falsely reported wage arrears in order to receive substitute payments.
The Ministry plans to encourage more whistleblower reports by increasing the reward, noting that fraudulent claims frequently involve collusion between employers and workers and are therefore difficult to detect through external investigations alone. The Ministry expects that raising the maximum reporting reward will help uncover concealed fraudulent practices and reinforce the original purpose of the substitute payment system: protecting workers who have suffered from unpaid wages.
Minister of Employment and Labor Kim Young-hoon said, “The increase in the maximum reward for reporting fraudulent claims is a measure aimed at eradicating fraudulent receipt of substitute payments.” He added, “Building on this amendment to the Enforcement Decree, we will continue to enhance the sustainability of the substitute payment system so that employers fulfill their responsibility to settle unpaid wages while workers affected by wage arrears receive stronger protection.”
By Eom Jae-hee October 7, 2026, 6:30 a.m. eom@labortoday.co.kr
Source: Maeil Labor News (Labortoday)
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