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MOEL finds labor law violations in 79 out of 83 IT service firms

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Jul. 26, 2017


On July 27th (Thu.) the Ministry of Employment and Labor (MOEL) released the results of its labor inspections of 83 IT service companies which had been conducted from March until June 2017.


The labor inspections were carried out with a focus on whether the IT service companies require their workers to work long hours and pay them overtime allowances, whether they use illegally dispatched workers, and whether they give any discriminatory treatment against non-regular workers (i.e. dispatched or fixed-term workers).


Inspections of system development & maintenance/repair companies (53 principal contractors and 22 subcontractors), which are likely to use in-house subcontracting, were conducted separately from inspections of game development companies (8 principal contractors).


A close look at violations found and corrected through the inspections revealed the following.
First, as a result of checking workplaces mainly for working hour violations and extended work by female workers, of the 83 workplaces inspected, 29 or 35.0% were found to be in violation of the relevant labor law.


Many system development & maintenance/repair companies* as well as game development companies** were found not complying with the statutory working hours.


* Of the 53 system development & maintenance/repair companies, 21 and their two subcontractors had committed a working hour violation.


** Of the eight game development companies, six (six cases) were found to have committed a working hour violation.


In particular, the practice of working more than 12 extended hours a week was widespread, and apart from working hour violations, workplaces were found to have not paid additional allowances for working extended hours, at night or on holidays.


Working hour violations, such as requiring workers to work extended hours, at night or on holidays, mostly lead to pay delays. In relation to working hour violations, 2.009 billion won was owed to 3,291 workers in 15 workplaces. Of the total unpaid amount, 1.555 billion won was accounted for by four game development companies.


As a result of inspecting the IT service firms, it was found that a total of 3.159 billion won in unpaid wages was owed to 5,829 workers in 57 workplaces (112 cases). Those companies were ordered to pay off all unpaid wages.


Meanwhile, discriminatory treatment against fixed-term, part-time or dispatched workers was found in 12 workplaces (13 cases).


By type of discriminatory treatment, five cases of discrimination in monetary benefits were found in five companies. They failed to pay 16 workers a combined total of 1.78 million won in meal expenses, welfare points, self-development expenses, etc.


Eight cases of regulatory discrimination were found in seven companies. They did not have regulations on leave, working hours and fringe benefits applicable to fixed-term or dispatched workers.


* discrimination against dispatched workers (3 workplaces, 4 cases) and discrimination against fixed-term or part-time workers (9 workplaces, 9 cases)


Moreover, one workplace was found to be in violation of the Act on the Protection, etc., of Fixed-Term and Part-Time Employees. It violated the law by using dispatched workers beyond the scope of jobs permitted for worker dispatch. The principal contractor was ordered to directly employ 11 out of the 12 illegally dispatched workers. (One worker refused employment because he wanted to leave the company.)


* Game companies do not use in-house subcontracting for security reasons, and in the case of system development & maintenance/repair companies, most of contracted work is carried out at client firms outside the company.


Meanwhile, basic employment standards violations, such as paying less than the minimum wage, failing to pay various statutory allowances and failing to grant holidays or leave, occurred in most workplaces (377 violations in 74 workplaces). This suggests that continuous monitoring is needed. 


Chung Hyoung-woo, the Director-General of the Labor Standards Bureau, said, "The IT service firms' main types of violations revealed as a result of the inspections would be common across the whole IT service industry. That is why continuous monitoring is important."


He stressed, "MOEL will hold meetings with the inspected workplaces and other related people in the same industry to disseminate information on violations discovered during the inspections and to encourage voluntary improvement."


He added, "In the second half of this year, MOEL will also conduct labor inspections targeting industries, such as electronic parts manufacturing, in which multi-layer subcontracting is widespread, one after another."

Last Modifide Date   :   Thu August 24, 2017
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