When receiving wage arrears consultation, the most flustered moment for business owners is often receiving a summons to appear before the labor relations committee. This year, the name of the investigator and the relevant legal basis are changing. If it's a construction site where contracts are layered, there are also changes in the way money is paid.
This concerns three laws under the Ministry of Employment and Labor (establishment of the Labor Inspector General Act, revision of the Labor Standards Act, and revision of the Employment and Industrial Accident Insurance Premium Collection Act), which passed the National Assembly on March 12, 2026, and were promulgated on April 7. These are not being implemented all at once, but at different times depending on the articles, so it's a good idea to determine when they will apply to your business.
## 1. 'Geunro Gamdokgwan' (Labor Supervisor) becomes 'Nodong Gamdokgwan' (Labor Inspector) — Effective October 8th
Effective Date — October 8, 2026 (6 months after promulgation)
Key Changes — Previously, the duties and authority of labor supervisors were scattered throughout the Labor Standards Act and its enforcement decrees and regulations. With the enactment of a separate law, "Labor Supervisor Execution Act," the duties, authority, obligations, and work procedures of the supervisor are now consolidated into a single law. The name is also changing from 'Labor Supervisor' to 'Labor Inspector.'
Scope of Impact — A more noteworthy point in practice is that the authority to delegate supervisory power to local governments for businesses with fewer than 30 regular employees is now permitted. This establishes a structure where both the central government (Ministry of Employment and Labor) and local governments conduct supervision, which means that small businesses may see a change in the entity conducting inspections.
Preparations — Responding to a summons or order to correct is the same even with the name change. - Always respond to a summons. Failing to respond twice or being unreachable will result in the case being closed without investigation, which is not a good outcome for either the employee or the employer. - Prepare a table with wage ledgers, pay stubs, employment contracts, attendance records, and bank transfer records, organized by period, amount, and item. - If a violation is confirmed, a corrective order is issued first, and the case is closed if it is complied with. If it is not complied with, it will be referred to the prosecution with a recommendation for investigation. It is always faster to organize things at the correction stage.
⚠️ The specific scope and timing of delegation to local governments will be determined in subordinate regulations. Whether your business falls under the delegation target requires checking the original enforcement decree.
## 2. Paying Contract Payments - Separating Wages - Article 44-4 of the Labor Standards Act
Effective Date — January 1, 2027
Key Changes — Article 44-4 is newly added to the Labor Standards Act. When a principal pays the contract amount to a subcontractor, the subcontractor must pay out the cost corresponding to wages that should be paid to their own workers separately from other business expenses. In addition, there is an obligation to confirm whether the subcontractor actually paid wages to the workers in the previous month.
The purpose is to separate the portion of wages that were lumped into the contract amount from materials costs and expenses, so that the money intended for wages does not flow elsewhere.
Scope of Impact — It applies not only when ordered by the national government, local governments, or public institutions, but also includes private principals. However, it is limited to industries and sizes determined by the Enforcement Decree.
Preparatory Steps - Please prepare a format for separately listing the amount equivalent to wages as a separate item in the subcontract agreement. - It is recommended to establish methods of confirmation and storage procedures (such as copies of wage ledgers, bank transfer confirmations, etc.) for how to confirm the subcontractor’s previous month’s wage payment.
⚠️ The industries and sizes subject to application and the details of sanctions in case of violation will be specified in the Enforcement Decree and Enforcement Regulations. As of September 21, 2026, it is not yet finalized, so please refer to the original document.
## 3. Workers' Compensation Insurance Premiums Previously Reduced in Cases of Serious Accidents Will Be Recalculated
Key Changes — The “Act on the Collection of Insurance Premiums for Employment Insurance and Industrial Accident Compensation Insurance” has also been amended. Until now, industrial accident insurance premiums were recalculated only in cases where recognition of safety prevention activities was obtained through false or fraudulent means. Going forward, insurance premiums can be recalculated and imposed on workplaces where recognition of safety prevention activities has been revoked due to the occurrence of a serious industrial accident, even if they previously received a premium reduction.
Scope of Impact — Workplaces that have received recognition for safety prevention activities and are receiving a reduction in industrial accident insurance premiums. In the event of a serious industrial accident, there is an additional burden of having to return the previously reduced premiums, separate from penalties and fines.
Preparations — If you are maintaining disaster prevention activity recognition, check whether the recognition requirements are actually being met. The changed aspect is that retroactive obligations follow when recognition is revoked.
⚠️ The effective date of each article of this law is divided into October 8, 2026, and January 1, 2027. Checking the original text of the special provisions is necessary to determine which applies to the re-calculation of tax credits.
## In Summary
- October 8 — Launch of the labor inspector system. There is a possibility of local government supervision for businesses with fewer than 30 employees.
- January 1, 2027 — Separation of wages from contract payments, and obligation to confirm whether subcontractors are paying wages.
- Already in effect — Penalties for wage and retirement benefit arrears have increased from September 18 to imprisonment for up to 5 years or a fine of up to 50 million won.
In this revised law, the effective date varies depending on the article, so in practice, the most important thing is to confirm when it applies to your workplace. If the subcontracting structure is complex, it is time to revise the contract templates.
*This article is an administrative trend guide compiled by Hwang Yun-sang Administrative Agent Office based on publicly available information. Whether it applies to individual cases requires confirmation from the relevant authority.*