Legal News

[Labor] Expansion of the number of persons eligible for unemployment insurance coverage and flexibility in payment rates under the revised Draft Employment Act2.

2024/03/21

The Ministry of Labor, Sick and Sick Soldiers’ Social Welfare (MOSSW) has released a revised Draft Employment Law2 dated March 15, 2024, which provides the following guidance regarding the expansion of persons eligible for unemployment insurance and the flexibility of the payment rate.

1. Expansion of persons eligible for enrollment
Under the current Employment Law, not all workers with whom there is a labor relationship are eligible to enroll in unemployment insurance. For example, workers who have a labor contract of more than one month but less than three months are not eligible for unemployment insurance, even though they are at high risk of unemployment.
Therefore, the Ministry of Labor, Sickness and Social Welfare proposes to add workers with a fixed-term labor contract of more than one month, part-timers, businessmen, and managers to the list of those eligible for unemployment insurance coverage.

2. Flexibility in payment rates
Under current employment law, the fixed payment rate for unemployment insurance for workers and employers is set at 1% of monthly wages. Even when there is a large surplus in the fund, there is no flexibility to adjust unemployment insurance premiums in the event of natural disasters, epidemics, economic crises, or recessions.
Therefore, the draft revised Employment Law proposes to modify the unemployment insurance payment rate as follows.
・Workers would pay a “maximum” of 1% of their monthly wages.
・The employer will contribute “up to” 1% of the monthly salary fund of a worker enrolled in unemployment insurance.

We will update this newsletter as new information regarding the draft revised employment law is released by the government.

References:
・The 2013 Employment Law of November 16, 2013
・Draft Employment Law 2 of March 15, 2024 (as amended)