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Rules to be implemented for application of employment insurance for the dependent self-employed

 Rules to be implemented for application of employment insurance for the dependent self-employed

 

 Rules stipulate standards for exclusion of industrial accident compensation insurance for the dependent self-employed 

 

   □    The State Council on Tuesday, July 1, 2021 discussed and passed four amendment bills under the jurisdiction of the Ministry of Employment and Labor, including Enforcement Decree of the Employment Insurance Act”, “Enforcement Decree of the Act on the Collection of Insurance Premiums for Employment Insurance and Industrial Accident Compensation Insurance, and ”Enforcement Decree of the Industrial Accident Compensation Insurance Act“. The main changes are as follows.

 

Enforcement Decree of the Employment Insurance Act and Enforcement Decree of the Act on the Collection of Insurance Premiums for Employment Insurance and Industrial Accident Compensation Insurance (Effective date: July 1, 2021)

  □   As the “Employment Insurance Act” and the “Act on the Collection of Insurance Premiums for Employment Insurance and Industrial Accident Compensation Insurance” regarding the application of employment insurance for the dependent self-employed will come into effect on July 1, 2021,

    ㅇ  The matters delegated by the law and the matters required for enforcement were stipulated in the enforcement decree.

 

 

<Application of employment insurance for the dependent self-employed> 

   □  The main changes made with the amendments to the enforcement decree of the “Employment Insurance Act“ and the “Act on the Collection of Insurance Premiums for Employment Insurance and Industrial Accident Compensation Insurance“ related to the application of employment insurance for the dependent self-employed are as follows.

    ❶ (Those subject to application) 12 occupations selected among occupations covered by industrial accident compensation insurance will become eligible to receive employment insurance from July 1, 2021.

       *    Insurance agents, supplementary educational programs instructors, supplementary education instructors, parcel delivery workers, loan solicitors, credit card solicitors, door-to-door salespersons, door-to-door rental equipment examiners, electronic home appliance delivery workers, after-school instructors, construction machinery workers, truck owners

    ㅇ  (Income standard for exclusion) If a person’s monthly earnings from labor based on a labor contract is less than 800,000 won, he/she is excluded from those eligible for employment insurance.

        -   From January 2022, a labor provider who signed two or more labor contracts can apply to have his/her monthly income calculated together. If the sum of monthly income is more than 800,000 won, he/she would be eligible to subcribe to employment insurance.

    ❷ (Insurance premium rate) Considering that parental leave benefit programs do not apply to labor providers, the premium rate is set at 1.4%, which is lower than that of workers (1.6%), and the labor provider and business owner each contribute 0.7%.

      ㅇ  (Insurance premium cap) For the sake of financial soundness of employment insurance and equity with workers, the premium cap is set to no more than 10 times the average of the subscribers’ premium, with the specific cap to be determined by a public notice.

     ❸ (Income standard for charging insurance premiums) The earnings* of labor providers is the “amount excluding non-taxable income and expenses from business income (Article 19) and other income (Article 21) under the Income Tax Act.”

          *Income standard for charging insurance premiums = Total income - Non-taxable income - Expenses

        ㅇ  Expenses excluded from earnings are based on the basic expense rate of the National Tax Service, but will be adjusted based on the survey results and announced by a public notice.

    ❹  (Job-seeking benefits) The job-seeking benefits are offered when insurance premiums are paid for more than 12 months out of the 24 months prior to the date of job change.

      ㅇ   Eligibility criteria for benefits must be met, which include not being subject to restrictions on the payment of insurance benefits such as a voluntary job change or a job change for a cause involving serious fault of their own, not employed, and making active efforts for reemployment.

          -   However, in the case of labor providers, a “job change due to a reduction in income*” is recognized as a reasonable reason for job change.

* “The wage for the three months prior to the month of job change decreased by 30% or more compared to the same period in the previous year” or;

    ②“The wage for the 12 months prior to the month of job change decreased by 30% or more compared to the average monthly wage in the previous year for more than five months.”

    ㅇ    In principle, the waiting period is seven days (from the filing date of unemployment report to the first day of receiving job-seeking benefits). In the case of a job change due to a reduction in income, the waiting period is set to four weeks if the reduction rate is 30% or more, and two weeks if it is 50% or more.

   ㅇ    The maximum amount of job-seeking benefits was set at 66,000 won a day, which is the same as that of workers’ benefits.

   ❺  (Perinatal benefits) When meeting certain requirements, including more than three months of unit period of insurance before a delivery date, and not providing labor for a certain period of time,

    ㅇ    100% of the average monthly earnings for one year prior to a delivery date is paid as perinatal benefits for 90 days.

<Expanding the application of industrial accident compensation insurance for the dependent self-employed>

Enforcement Decree of the Act on the Collection of Insurance Premiums for Employment Insurance and Industrial Accident Compensation Insurance (Effective date: July 1, 2021)

    □ Unlike wage earners, the dependent self-employed pay half of their industrial accident compensation insurance premiums.

      ㅇ  In addition, as the reasons for exclusion from application are strictly restricted with the amendment to the Industrial Accident Compensation Insurance Act (to be enforced from July 1, 2021), the premium burden on business owners provided with labor is expected to increase to a certain degree.

      ㅇ   Accordingly, premiums for high-risk and low-income dependent self-employed persons will be temporarily reduced by up to 50%* to alleviate the burden on business owners and workers.

         * Among the occupations with an accident rate of 50/100 or more of the average accident rate in all industries, the types of occupations to benefit will be decided considering the insurance premiums and the number of workers, and will be announced along with the reduction level and reduction period.

          - Meanwhile, there is a special voluntary reporting period of industrial accident insurance for the dependent self-employed, allowing workers to be exempt* (up to three years) from retroactive collection of premiums.

        *  January 5, 2021 to December 31, 2021 - Reporting of industrial accident insurance: 100%exemption, January 1, 2022 to December 31, 2022 - Reporting of industrial accident insurance: 50% exemption

    □  In addition, if a paid holiday system is introduced earlier than the mandated period, industrial accident insurance premium rate will be reduced. (Effective date: Immediately from the date of announcement)

      ㅇTo ensure workers with time to rest, an initiative to reduce the actual working hours, the initiative to apply the paid holiday system* for public holidays of government offices, has been in place since 2018 and is being implemented step by step by taking into account the burden of companies.

           *   Businesses with 300 or more workers: effective from January 1, 2020;
Businesses with 30 to less than 300 workers: effective from January 1, 2021;
Businesses with 5 to less than 30 workers: effective from January 1, 2022.

   ㅇ   Accordingly, the government will temporarily reduce the industrial accident compensation insurance premiums by up to 10%. This allows small businesses with 5 to 29 employees to introduce the paid holiday system for public holidays earlier than the mandated period, thereby guaranteeing the right to rest for workers at small businesses.

 

Enforcement Decree of the Industrial Accident Compensation Insurance Act

Restriction on the allowed reasons to be excluded from the insurance for the dependent self-employed(Effective date: July 1, 2021).

  □   Up until today, the dependent self-employed were allowed to apply to be exempted from industrial accident compensation insurance regardless of the reasons for wanting to be excluded, which increased the need to expand those benefitting from the insurance.

  ㅇ    Accordingly, the Industrial Accident Compensation Insurance Act and its Enforcement Decree was amended to limit the allowed reasons for applying to be excluded from the insurance.

  □    From July 1 of this year, this allows the dependent self-employed to be excluded from industrial accident insurance only when it is confirmed that they are actually not working due to reasons* stipulated by law, such as illness or parental leave. This includes:

    *     1. Suspension of work for more than a month due to the dependent self-employed person’s illness, injury, pregnancy, childbirth, or childcare.

2. Suspension of work for more than a month due to reasons attributable to the business owner.

3. When business owners inevitably close the business for more than a month due to a natural disaster, war, or similar disasters, or the spread of infectious diseases pursuant to the "Infectious Disease Control and Prevention Act".

□      Pursuant to the amendment, the dependent self-employed who had previously applied to be excluded and were excluded from industrial accident compensation are eligible to receive industrial accident insurance compensation benefits.

  ㅇ   In order for people who were previously excluded to remain excluded after the effective date, another request for exclusion has to be made to the Korea Worker's Compensation & Welfare Service for an approval.

   *        Insurance premiums for high-risk and low-income dependent self-employed persons will be reduced by up to 50% to ease the burden on business owners and workers following the expansion of the application of industrial accident insurance for the dependent self-employed. (Amendments to the Act on the Collection of Insurance Premiums for Employment Insurance and Industrial Accident Compensation Insurance)

 

Allowing unpaid family workers to sign up for industrial accident compensation insurance (Effective date: June 9, 2021)

In principle, industrial accident compensation insurance is applied to workers under the Labor Standards Act, but small and medium-sized business owners can choose to enroll in industrial accident compensation insurance by paying the entire premium.

Meanwhile, unpaid family workers who do not receive earnings in exchange for labor have been unable to enroll in industrial accident insurance even though they are exposed to the risk of occupational accidents similar to those of small and medium-sized business owners.

Therefore, the amendments allow unpaid family workers working with small business owners (spouse of small business owners and relatives within the fourth degree of relationship) to subscribe to industrial accident compensation insurance in the same way* as small business owners if they wish.

*The entire insurance premium to be self-funded, and the base pay to be applied for charging insurance premiums and paying insurance benefits.

 

Last Modifide Date   :   Wed June 9, 2021
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