Labor Ministry Uncovers 72 Businesses Illegally Classifying Workers as 'Fake Self-Employed'

The Ministry of Employment and Labor has uncovered 72 workplaces that deceptively contracted 1,070 workers as 'self-employed individuals' to avoid obligations such as severance pay or the four major insurances, and has initiated corrective measures to help these workers regain their rightful labor rights. As a result of supervising 108 workplaces nationwide suspected of disguised employment, the Ministry confirmed that 1,070 workers were wrongly classified as business income earners in 72 of these locations.

This supervision targeted businesses suspected of utilizing workers as freelancers, leveraging tax withholding data from the National Tax Service and reports from labor organizations. Workers at the uncovered businesses were found to have been subject to withholding tax as business income (3.3%) and denied protections under labor laws, including non-enrollment in the four major insurances, despite being actual employees.

This practice of 'fake 3.3% disguised employment' was observed across all sectors, including accommodation and food services, manufacturing, wholesale and retail, and transportation and warehousing. In the Gyeongnam region, violations were found in 4 out of 7 businesses, with outstanding wages totaling 111 million won for 64 workers already settled.

The Ministry of Employment and Labor plans to proceed with mandatory enrollment in the four major insurances, retroactive premium assessments, and fines for the violating businesses, and will notify the National Tax Service of the violations. Minister of Employment and Labor Kim Young-joo defined this disguised employment scheme as tax evasion and pledged to continue intensified oversight, adding that wage information by industry will be collected and disclosed.