South Korea Passes New Contract, Gig Worker Protection Laws

December 16, 2020

Last week, South Korea's National Assembly approved a new bill providing greater protection to the nation’s independent contractor and gig workers after a string of delivery worker deaths this year.  The updated law marks the government’s latest attempt to improve working conditions for contract workers.  Critics, however, note the law’s impact can be quite limited and several aspects remain ambiguous. 
Background: The number of gig workers, such as delivery riders, has grown significantly amid the pandemic in South Korea.  However, like many major economies worldwide, relevant oversight of this category of worker has not caught up.  
In South Korea there are approximately 2.2 million gig workers – equivalent to 8% of the South Korean workforce.  Under the current regulatory and legal frameworks in South Korea, these individuals do not earn the minimum hourly wage, have no cap on weekly work hours, and have no insurance for on-the-job injuries.  Frequently, these workers are also held accountable for any costs resulting from delays or accidents.  Multiple deaths in South Korea were attributed to a system that forces gig workers to put in unreasonably long hours to make ends meet due to the lack of basic protections. 
Insurance Coverage Now Easier to Get – But Can be Waived:  The biggest improvement in the law makes it easier for gig workers to request documentation from employers in order to access occupational health and safety insurance and accident insurance.  However, under the new bill, workers are still allowed to apply to be exempt from the occupational accident insurance coverage.  Thus, gig, platform, and contract workers can be required to apply for the exemptions by their employer.  This is highly problematic as there have been reports of delivery being forced to apply for insurance exemptions by the platform companies. 
Employment Status, Right to Unionize Still Ambiguous:  In recent months, a few food delivery service firms and the delivery driver’s labor union signed a memorandum of understanding (MOU) to voluntarily recognize their delivery workers as laborers and promised to improve their working environment.  This agreement is the first of its kind between a company and a union in the private sector in South Korea.  
Under the agreement, the platform operators would be required to: 
  1. Provide documents for drivers to sign up for occupational health and safety insurance;

  2. Fairly and reasonably allocate orders to drivers and not press them to make a quick delivery nor punish them for shipment delays; and 

  3. Prioritize contract workers if the companies need to recruit permanent delivery workers.
Unfortunately for companies and workers seeking clarity on these issues, the effectiveness and legal enforcement of the voluntary agreement is highly questionable.  First, contract and gig workers haven’t been officially allowed to be represented by union, nor given a clear classification. Additionally, other delivery platform operators who did not join the agreement might not follow the same standards. 
Outlook: The bill goes into effect on July 1, 2021 for logistics workers and Jan. 1, 2022, for gig economy workers who work on digital platforms. Global companies who hire contract workers in South Korea need to ensure compliance and put a policy in place to better manage this emerging workforce.