Ⅳ. Social Insurances


There are four major insurances: Industrial Accident Compensation Insurance, Employment Insurance, National Health Insurance, and the National Pension Plan.



① Industrial Accident Compensation Insurance applies to foreigners as well, but the remaining social insurances vary in application. ② Regarding Employment Insurance, most foreign workers stay in Korea temporarily, so it is often optional. ③ National Health Insurance is naturally applicable if a foreign worker is employed at a workplace. ④ National Pension is naturally applied in principle, but the principle of reciprocity means it varies in accordance with relations with each foreign country.

The following describes in detail the application of social insurances with foreign workers.


1. Industrial Accident Compensation Insurance (IACI) Act

IACI premiums are fully paid by the employer, and are calculated by multiplying the total income of all workers in the workplace by the insurance rate announced by the government according to the business’ risk level. In applying the industrial accident insurance premium rate for the same business, if the premium benefits to workers exceed 85% or less than 75% of the previous three years of premium payments, the premium rate applied to the business is determined up to 50% higher or lower for the next business year. As a result, industrial accident insurance premiums may increase the following year if a lot has been paid out in IACI benefits, which will affect the company’s intention to apply to IACI as it can expect higher premiums.

Insurance benefits shall be paid at the worker’s(or survivor’s) request if a worker at a workplace covered by IACI has an injury, illness or accident requiring at least four days of medical care. Types of insurance benefits include nursing care, leave of absence, sick compensation pensions, disability, survivor, nursing care, funeral expenses, and vocational rehabilitation.

(1) Application to foreign workers

Since the IACI Act stipulates in Article 1(Purpose) that its purpose is to compensate workers for work-related accidents promptly, foreign workers must be protected. Regardless of their eligibility for working visas, all are covered by the IACI Act. If a foreigner is injured while providing work, whether he or she is an industrial trainee or an illegal foreign worker, the accident will be compensated for as an occupational accident. This has been confirmed by a Supreme Court case. Workers are eligible for workers’ compensation in the event of a work injury, regardless of whether they are Korean workers or illegal workers. The Supreme Court has made it clear that illegal stays are subject to crackdowns, but that illegal residents shall also be covered by industrial accident insurance in the sense that workers must be protected by labor law for labor already provided.

The IACI Act is a social insurance system in which the State carries out compensation on behalf of the employer under the Labor Standards Act if a worker is injured or ill from work. Accident compensation is applied to all businesses or workplaces using workers, taking into account the risk, size and place of business. The following types of work are not covered by the IACI Act(Article 6): ① household service ② work for businesses with fewer than five workers in agriculture, forestry, fishing and hunting, etc. Therefore, in the event a business or workplace is not covered by the IACI Act and has an industrial accident requiring medical treatment for three days or less, the Labor Standards Act requires the employer to compensate for the work injury/illness.

(2) Related issues

There are legal and environmental limitations in relation to industrial accident insurance and foreign workers. Legal restrictions are related to application of the Industrial Accident Compensation Act, as workplaces hiring fewer than 5 workers and engaged in agricultural, livestock, and fishery work receive limited coverage for accidents and are excluded from work-related accident compensation. Most agriculture and livestock farming workplaces employ fewer than 5 workers, so there is no industrial accident insurance coverage, and the employer must deal with work accidents him or herself. As an individual employer has a limited amount of property, an injured or ill worker may not be able to receive sufficient compensation.

The environmental limitations of the IACI Act are as follows. First, the industrial accident rate among foreign workers is higher than among workers who are Korean nationals. The reason is that foreign workers do not communicate well in Korean, so safety instructions are not delivered correctly, and they often work in poor workplaces that do not have industrial safety facilities. Second, illegal foreign workers are at risk of forced deportation, so they do not want to get medical treatment unless they are seriously injured. Companies do not want to apply for work-related compensation, but only pay for medical treatment, leaving foreign workers without Industrial Accident Compensation Insurance coverage and vulnerable to permanent effects of injuries. Third, when an industrial accident involves a foreign worker, the employer is afraid that his/her IACI premiums will increase or he/she may be audited by the Labor Office due to work-related accidents frequently occurring at the workplace. There is also the risk of disadvantageous consequences from the Labor Office, and so they pay the medical fees directly for foreign workers. This is often accepted by foreign workers because they do not know the industrial accident compensation system.

2. Employment Insurance Act (EIA)

Employment insurance premiums are classified into unemployment benefits and premiums for employment stability and vocational skills development projects. Unemployment benefit premiums are borne by both workers and employers, while employers are responsible for employment security and vocational skills development projects(Article 6 of the EIA). Unemployment benefits are payable only when a worker is involuntarily unemployed and seeking work.

(1) Application to foreign workers

Employment insurance grants benefits to eligible people to prevent undue hardship from unemployment, promote job-seeking activities and employment, and develop the vocational skills of workers. It thereby contributes to the economic and social development of the nation(Article 1 of the EIA). Employment insurance applies to all businesses or workplaces in principle, with exceptions in consideration of business size. It applies to all workers because its main purpose is to provide stability for unemployed persons, so does not apply if those persons do not need help or are protected by other insurance. Those excluded from employment insurance are: ① 65 years of age or older, ② working fewer than 60 hours a month(15 hours a week), ③ civil servants under the National Civil Service and Local Public Service Act, ④ those to whom the Private School Teachers Pension Act applies, ⑤ sailors under the Seafarers Act, ⑥ foreign workers who are not eligible for residency. However, foreigners with status of residence may subscribe and benefit.



As previously stated, employment insurance is divided into unemployment benefits and employment stability and vocational skills development projects. Unemployment benefits of course include unemployment payments, but also maternity leave allowances and childcare leave benefits. Therefore, foreigners cannot receive maternity leave benefits and childcare leave benefits or unemployment benefits if they do not have employment insurance. If a foreign worker who is staying for employment in Korea does not intend to receive unemployment benefits, he or she may choose not to subscribe.

Professional foreign workers(E-1 to E-7) can continue to stay on their job search visa(D-10) for six months after termination of an employment contract. However, unemployment benefits are limited for non-professional foreign workers(E-9) even if they subscribe, as they are subject to compulsory deportation if they cannot find another job within 3 months after termination of their previous employment contract(Article 25, paragraph 3 of the Foreign Employment Act). Unemployment benefits are the basic item of social insurance in view of the last hold that workers can depend on when there is no economic return due to unemployment. Therefore, foreign workers should also be able to protect their right to live during a period of unemployment by having to subscribe to the unemployment benefit portion of employment insurance rather than being permitted to opt out.

Premiums for employment security and vocational skills development projects under Employment Insurance are all paid for by the employer. Therefore, workers can participate in a variety of education related to the development of their vocational skills, and can pursue their own education programs with the support of employment insurance. The amount a company can receive for employment security and vocational skills development projects shall be less than the amount paid in employment insurance premiums(240/100 for workplaces receiving preferential support).

(2) Related issues

Systematic support for vocational skill development of foreign workers is necessary. This will encourage the retention of skilled and professional workers rather than just non-skilled ones. In addition, many labor-management conflicts and industrial accidents occur due to insufficient communication abilities and a lack of understanding of Korean culture. Therefore, policy consideration is required for the development of vocational skills for foreign workers by utilizing the vocational skills development project under Employment Insurance. Article 43 of the UN Convention on the Rights of Foreign Workers states that foreign workers shall enjoy equal treatment with their host country workers in relation to ① the use of vocational guidance and job placement services, ② the use of vocational training and retraining facilities and institutions. In Germany, foreign workers are required to attend at least 600 hours of inclusive education.

Even if a worker chooses to subscribe to Employment Insurance, he/she cannot get the basic benefits provided by the social insurances. Professor Kwang-seok Jeon has stated, It is not reasonable to limit beneficiaries simply because they are foreign subscribers to social insurance. The Social Insurance Act regulates the legal relationship between paying premiums and providing benefits should be equivalent in the event of social risk. Therefore, in the Social Insurance Act, the legal relations related to paying premiums should be integrated with the legal relations related to payment of salaries.

For non-professional foreign workers, it is difficult to receive stable unemployment benefits because Article 25(3) of the Foreign Employment Act stipulates that they must leave the country if they cannot find employment within three months after termination of their employment contract. Increasingly, however, the importance of unemployment benefits is on the rise due to introduction of the extension of the long-term stay in Korea. Foreign workers must also be enrolled in unemployment benefits before they can receive maternity leave benefits or childcare leave benefits. Therefore, it is necessary to review the optionality for foreign workers in subscribing to employment insurance.