To resolve these problems, a new payment solution has been proposed in addition to legal preventive measures. A high rate of 20% interest is placed on employers to facilitate their payment of delayed wage. This is to preclude employers avoiding punishment if they do not pay the unpaid wage until they are prosecuted. In addition, the unpaid workers, regardless of their employer’s ability to pay their wage, can receive up to 10 million won in unpaid wage from the Wage Claim Guarantee Fund, after the Labor Office confirms that wage were not paid, and issued the confirmation of unpaid wages. This is called the Small Amount Insolvency Claim System. The maximum payout was increased from 4 million won to 10 million won on July 1, 2019, which will assist greatly with resolving financial problems related to unpaid wage. Herein, the following are the related legal preventive systems for unpaid wage and the Small Amount Insolvency Claim System in detail.

1. Purpose for Introduction
The existing insolvency payment claim system is limited to those who were employed by companies declared legally bankrupt, but does not apply to employees who have not received their wage from a company that is still operating. To better implement the basic purpose of the Wage Claim Guarantee System and improve the livelihoods of unpaid workers, the Small Amount Insolvency Payment Claim System(Small Amount IPC System) was introduced on January 20, 2015. For those unpaid workers whose employment ended with companies still in operation, a certain amount of the insolvency payment can be paid when the when the labor inspector confirmed the unpaid wage and issued the certificate of unpaid wages.183) The Small Amount IPC System is simpler than the existing general IPC System, which helps to protect, in actual terms, the rights of unpaid workers. While the general IPC system requires that the company has gone bankrupt, compensation through the Small Amount IPC System only requires confirmation from the court that a worker’s wage remain unpaid.

2. Process of Making a Small Amount IPC
(1)        Petitioning the Labor Office for unpaid wages
When a worker complains to the Labor Office about failing to receive wage owed, an investigation begins. The labor inspector begins by requesting attendance of the relevant parties to a hearing. If a settlement agreement is concluded between the parties or the unpaid wage are paid, the case is closed. If the unpaid wage are not paid, despite an order to do so from the labor inspector, the criminal punishment process begins, and the worker can also obtain a confirmation certificate of the unpaid wage from the labor inspector.
(2)        Applying for an insolvency payment claim
If a worker applies for a Small Amount IPC with a Confirmation Certificate of Unpaid wage attached, the Labor Welfare Corporation shall decide whether to pay the Small Amount IPC within 14 days of receiving the claim.194).184)
(3)        Scope of payment
Both general and Small Amount IPCs are paid on behalf of the employer for the final three months’ wage(including suspension allowances) and the final three years’ retirement allowances. However, 2.2 million won to 3.5 million won per month(up to 2 million won) can be paid out under the general IPC, depending on age. The Small Amount IPC is based on the criteria of the general IPC as well, but the maximum payout is 10 million won, while the maximum amount per wage item(including suspension allowance) and retirement benefits is separated and shall not exceed 7 million won each.