Social Insurance Changes in 2018


The government recently passed the proposed changes in Enforcement Decrees of Employment Insurance Act, Industrial Accident Compensation Insurance Act, etc. in its Cabinet Meeting held on December 19, 2017. The major changes can be summarized as below that can be of special interests to foreign companies doing business in Korea and domestic companies alike.

n Increase in Benefits for Reduced Working Hours during Child Care Period

When a worker parenting his/her children aged 8 years or younger reduces working hours for child care, he/she is eligible to receive benefits for reduced working hours during the period of child care. From January 1, 2018, benefits for reduced working hours during the period of child care have increased to 80% from previous 60% of the ordinary monthly wage in proportion to the reduced working hours (max KRW 1,500,000, min KRW 500,000).

This change shall apply to workers who reduced working hours for child care starting from January 1, 2018.

n Increase in Maximum Amount of Maternity Leave Pay

Employers shall grant a female employee who is pregnant a total of 90-day maternity leave before and after childbirth. In such cases, at least 45 days of the leave period after childbirth shall be allowed. Also, the Minister of Employment and Labor shall pay maternity leave benefits to the female employee who has been granted maternity leave. Maternity leave benefits shall be payable in an amount equal to the employee’s ordinary monthly wage during maternity leave, however capped at KRW 4.8 million effective from January 1, 2018 (increased from KRW 4.5 million in 2017).

n Increase in Daily Maximum Unemployment Insurance Pay

The daily maximum unemployment insurance pay is increased from KRW 50,000 to KRW 60,000 in consideration of the minimum wage increase in Korea. This increased daily maximum unemployment insurance pay shall be applicable to workers who are laid off from jobs on or after January 1, 2018.

n Subsidies for Employment of Seniors Aged 60 or More

Currently businesses which employ more than certain threshold of the seniors aged at least 60 or more are eligible for government subsidies for employment of seniors aged 60 or more (threshold varies by industry). The provision which was set to expire as of December 31, 2017 will remain effective until December 31, 2020. The amount of quarterly subsidies is as follows:

Fiscal Year



KRW 240,000 per eligible senior employee


KRW 270,000 per eligible senior employee


KRW 300,000 per eligible senior employee

n Clarification on definition of ordinary commute related accidents

Under the Korean Industrial Accident Compensation Insurance Act, any accident that occurs while an employee commutes to or from work using a transportation means provided by employers or other similar means under the control and management of employers is deemed an occupational accident that are covered by the Industrial Accident Compensation Insurance in Korea. In addition, from January 1, 2018, accidents occurred during commutes using ordinary routes and manners are also considered an occupational accident.

Generally, if accidents occurred in deviation from ordinary routes and manners, they cannot meet the definition of an occupational accident. However, if it is determined that the deviation from ordinary routes and manners are necessary to carry out the daily life of the employees as listed out below, any accidents resulting from such acts shall still be allowed as occupational accident.

Purchase of necessities

Participation in education, training in connection with employees’ duties

Exercise of rights to vote

Nursing, treatment, school run of family members

n Increase in Minimum Wage

Under the revised Labor Standards Act, the minimum hourly wage has risen from KRW 6,470 to KRW 7,530. This change took effect from January 1, 2018.

n Revision to Minimum Level of Reserves under Defined Benefit Retirement Pension Plans

Previously, the minimum level of reserves had to be maintained at least at 80% of the standard policy reserve. Revised minimum level of reserves under the revised Enforcement Regulation of the Employee Retirement Benefit Security Law (ERBSL) shall increase as follows:


Minimum Level of Reserves

For the period from January 1, 2018 to December 31, 2018


For the period from January 1, 2019 to December 31, 2020


From January 1, 2021