South Korea Expands Wage Protection
When a company becomes insolvent, unpaid wages can become a serious issue for employees.
From 20 August 2026, South Korea expanded the coverage of its insolvency-related wage payment system, known as Do-san Dae-ji-geum. The change mainly affects how much unpaid wages and related payments may be covered for eligible workers.
What changed?
The coverage period for eligible wages and related payments has been extended:
Before: Final 3 months
↓
From 20 August 2026: Final 6 months
The covered category includes wages, shutdown allowance, and pay during maternity leave. The coverage period for retirement benefits remains the final 3 years.
The payment ceiling also increased
Along with the longer coverage period, the maximum payment ceiling increased from:
KRW 21 million → KRW 31.5 million
This does not mean every eligible worker will receive KRW 31.5 million. The actual amount depends on the applicable requirements and payment limits. MOEL’s example shows that age-based monthly limits can affect the final amount paid.
Why does this matter?
The practical change is straightforward: eligible unpaid wages can now be covered over a longer period.
For workers facing prolonged wage arrears because of company insolvency, this can increase the portion of unpaid wages that falls within the payment system.
For employers and HR teams, the change is also relevant when reviewing payroll risks, employee claims, and obligations during financial distress or business closure.
What remains important?
The expanded coverage does not mean that all unpaid wages are automatically paid by the government.
Workers still need to meet the applicable conditions for the insolvency-related payment system, and the amount payable remains subject to the relevant limits.
In short
South Korea’s latest change is simple to remember:
3 months → 6 months
The coverage period for eligible wages and related payments has doubled, while the maximum payment ceiling has increased to KRW 31.5 million.
The next question is not simply how much is covered, but who qualifies and how the payment is calculated.
Source
South Korea Ministry of Employment and Labor (MOEL), 19 August 2026.
📌 Employing staff in South Korea?
Insolvency-related wage protection, eligibility conditions and payment ceilings all affect how unpaid-wage risk plays out in practice. Remoly’s global employment experts can help you review payroll exposure and employee claim obligations in Korea.
📧 contact@remoly.net · Talk to our team →
This article is provided for general informational purposes only and does not constitute legal, tax or payroll advice.
Published: September 2026
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