The Ministry of Employment and Labor (MOEL) said on the 4th that it will conduct a special inspection over the next two months on 100 business sites suspected of disguising "fake 3.3."
"Fake 3.3" refers to an employer signing a contract with an employee as a "freelancer (business income earner)" rather than a "worker" under the Labor Standards Act. Employers who hire employees as workers must cover part of the four major social insurance premiums and pay severance. Some business sites force sham contracts as business income earners to avoid these obligations. The term comes from the 3.3% business income tax rate, so this practice is called "fake 3.3."
The ministry first identified as suspected fake 3.3 disguised employment business sites those where "there are fewer than five earned income employees but many business income earners," and decided to select 100 of them for inspection. Because the Labor Standards Act applies in full to business sites with five or more employees, there is a high possibility of fake 3.3 contracts if the number of employees on paper is reduced to four or fewer and the rest are labeled freelancers.
A ministry official said, "We selected 100 business sites that, when counting the number of business income earners, employ a total of 30 or more," adding, "These are centered on industries with many business income earners, such as food and lodging, manufacturing, wholesale and retail, and parcel delivery and logistics."
The ministry plans to continue to identify business sites suspected of fake 3.3 contracts next year and conduct regular checks and inspections.
Minister Kim Young-hoon of the Ministry of Employment and Labor said, "Fake 3.3 contracts are not simply a matter of how taxes are filed, but a malicious matter in which employers intentionally evade labor laws," adding, "Through this inspection, we will strictly punish employers who have clearly committed illegal acts that infringe on the rights of people who work, and improve awareness among both employers and workers."