The statute of limitations for wage claims is three years. Here, "wages" include all items covered by the Labor Standards Act, such as bonuses, overtime pay, paid annual and monthly leave, and retirement pay. If an employer fails to pay wages or retirement benefits to a worker whose employment has ended due to retirement or other reasons, they will be subject to a mandatory payment of a delayed interest rate of 20% per annum (Article 37 of the Labor Standards Act). However, during the period in which reasons stipulated by law, such as force majeure or bankruptcy, exist, the application of the delay interest rate is excluded.
The statute of limitations for claims for accrued vacation and holiday pay is three years, and the starting point is the day after the year has passed in which the vacation was not taken. Supreme Court ruling 1995. 6. 30. 94Da47155 Decision
Contracts with working conditions that are less favorable than those established by the Labor Standards Act, such as wages below the legal minimum, are invalid. Therefore, even if an agreement is reached between labor and management to exclude regular bonuses and other wages from the calculation of the regular wage, which is equivalent to the legal minimum wage, the agreement is invalid as it violates the Labor Standards Act. Since such an agreement is invalid, the regular bonuses and other wages that qualify as the legal minimum wage must be included in the calculation of the regular wage for the purpose of calculating overtime pay. The difference between the overtime pay already received and the additional pay resulting from this calculation can be claimed as back pay. However, if the employer raises a statute of limitations defense, only the final three years of back pay can be claimed. Supreme Court ruling 2013. 12. 18. 2012Da89399 Decision
Extinctive prescription is a system that, in the case where a factual state in which rights are not exercised for a certain period of time continues, even if that state does not conform to the true relationship of rights, recognizes that factual state. Oh Younghwan, Lee Romoon, 「General Rules of Civil Law」, 2009, MJ Media, p. 350.
In other words, if the right is not exercised for a certain period of time, it can no longer be exercised due to the expiration of the prescription period. The reason for this statute of limitations is to seek legal stability by limiting unexercised rights and to facilitate the rapid establishment of rights relations. The Labor Standards Act also has a statute of limitations for the non-exercise of rights to protect workers.
Since the statute of limitations for wage claims is as short as 3 years, the amount of wage arrears that can be claimed gradually decreases due to the expiration of the statute of limitations. In particular, at the stage of complaint by the Ministry of Employment and Labor, the interruption of the statute of limitations for overdue wages is not recognized, so a civil procedure, a judicial claim, must be made to resolve it. In other words, the statute of limitations does not affect the statute of limitations at all in the complaint or complaint stage of the Labor Office, where the labor inspectorate determines the workers whose wages are in arrears and the corresponding employer. On the other hand, since a claim for industrial accident compensation is recognized as a judicial claim in compensation for work-related accidents, the statute of limitations is suspended, and the statute of limitations for the right to claim accordingly is also extended to five years.
Despite being the same special law for the protection of workers, the Labor Standards Act and the Industrial Accident Compensation Act differ in the suspension and period of extinctive prescription. Let's take a closer look at the overall statute of limitations under the Labor Standards Act related to this.
■ Statute of Limitations Jeong Bong-su, "Prescription of Statute of Limitations under the Labor Standards Act", Monthly Labor Law, Central Economy, April 2019
❍ Concept of Statute of Limitations
Extinctive prescription refers to a state in which a right can no longer be exercised because the right was not exercised during the relevant period, even though the right could be exercised. The principle applies that the law does not protect those who sleep above their rights. This means that there is a right to exercise it, but if the right is not exercised for a certain period of time, it prevents it from being exercised, thereby maintaining the state of legal equilibrium that has already been established. In most labor laws, the statute of limitations is three years. A concept similar to the statute of limitations under the Labor Standards Act is the exclusion period. After the period of exclusion, no further legal objections can be raised. Since the purpose of the exclusion period is to quickly determine the legal relationship, there is a difference between the statute of limitations and its period. Supreme Court ruling 1996. 9. 20. 96DA2537 Decision
❍ Statute of Limitations
(1) Wage Claims under the Labor Standards Act
Wage claims expire after three years of non-exercise under Article 49 of the Labor Standards Act. Wage claims can be classified into categories such as monthly salary, retirement pay, and unused annual shutdown allowance, and each category has a different statute of limitations. Monthly salary (basic salary, overtime pay, holiday work pay, etc.), which is paid every month, generates an obligation to pay on the payment date, and the statute of limitations starts from the regular payment date. Bonus pay generates an obligation to pay when the right to receive the bonus arises, and the statute of limitations for retirement pay starts the day after the employee retires. The statute of limitations for paid annual leave is calculated from the point at which the 15 days of annual leave are converted into wage claims, which occurs after the completion of the one-year vacation usage period. Supreme Court ruling 1992. 9. 14. 92da17754 Decision
In other words, for employees who entered the company in 2018, if assessed by year, 15 days of paid annual leave will be granted only to those who worked more than 80% from January 1, 2019, to December 31, 2019. They must use their paid annual leave in 2020. The statute of limitations for wage claims on unused annual leave starts on January 1, 2021, and is valid for three years under Articles 36 and 60 of the Labor Standards Act.
(2) Compensation benefits under the Industrial Accident Act
Under the Industrial Accident Compensation Insurance Act, the right to claim compensation for occupational injuries or diseases expires after three years of non-exercise. However, the right to receive disability benefits, surviving spouse benefits, medical expenses, lung compensation pension, and surviving spouse pension expires after five years of non-exercise. Effective date: 2018. 12. 13.. Law No 15665, 2018. 6. 12. partly amended
Insurance benefits under the Industrial Accident Act can be divided into three categories: ① Continuous insurance benefit claims, ② Lump sum insurance benefit claims, ③ Annuity insurance benefit claims, and each claim has a different starting point for extinctive prescription.
Firstly, there are various claims for continuous insurance benefits, such as medical benefits and leave of absence benefits. Medical benefits are paid to workers who are injured or become ill due to work-related reasons, and the principle is to provide in-kind benefits (Article 40 of the Industrial Accident Compensation Insurance Act). Therefore, the statute of limitations for the right to receive insurance benefits begins not on the day the worker is injured or becomes ill due to work-related reasons, but on the day the cost of medical treatment is incurred (Hwang Un-hee, "Statute of Limitations for Industrial Accident Compensation Insurance Benefits"). Hwang Woon-hee, “The date on which the statute of limitations for industrial accident compensation insurance benefits began,” 「Labor Law Journal」 Vol. 27, Korean Society of Comparative Labor Law,
April 2013, p. 382; Supreme Court 2008.4.17 Decision 2006da35865 Enclave Decision.
Leave of absence benefits are paid to workers who are unable to work due to injury or illness and require medical treatment, so the statute of limitations starts from the day after the worker is unable to work (Article 52 of the Industrial Accident Compensation Insurance Act).
Secondly, there are claims for lump-sum insurance benefits, such as disability compensation, survivor's compensation, and funeral expenses. Disability compensation is paid to workers who are left with disabilities even after recovering from work-related injuries or illnesses. Disability benefits are determined at the point when the disability is fixed after the worker's treatment has ended (Article 57 of the Industrial Accident Compensation Insurance Act). Survivor's compensation is paid only if there are no beneficiaries of pension entitlements, and the statute of limitations begins on the day after the worker dies (Article 62 of the Industrial Accident Compensation Insurance Act). Funeral expenses are paid only if the worker has actually passed away (Article 71 of the Industrial Accident Compensation Insurance Act).
Third, pension insurance benefits include disability compensation annuities and survivor compensation annuities , and the payment period begins on the first day of the month following the month in which the cause occurred. In particular, in the case of noise-induced hearing loss, the previous guidelines of the Labor Welfare Corporation determined that the statute of limitations of 3 years was completed based on 'when you left the noise work place' in the claim for disability benefits, but the Supreme Court judged that disability compensation in relation to noise-induced hearing loss It was decided that the right to make a claim should be viewed as the point of 'healing'. Supreme Court ruling 2014du7374, 2014. 9. 4., Park Jong-tae, "Review of Standards for Recognizing Occupational Injuries for Noise-Induced Hearing Loss," Monthly Labor Law, Central Economics, May 2017
Accordingly, in 2016, the Ministry of Employment and Labor changed the statute of limitations for noise-induced hearing loss to "start from the diagnosis date." As a result, recent court rulings indicate that "even if a person who was diagnosed with noise-induced hearing loss long after leaving a noisy workplace applies for disability benefits after the three-year period has passed since the diagnosis, the statute of limitations cannot be deemed to have expired. Seoul Administrative Court Sentence 2017gudan50655, 2017. 4. 20. Decision
❍ Statute of Limitations for Wage Claims and of Limitations for Prosecution
The statute of limitations refers to the period during which a worker who has the right to receive money can exercise the right to claim unpaid wages or retirement benefits against the employer. On the other hand, the statute of limitations for prosecution refers to the period during which a penalty can be imposed against an employer who violates labor laws, such as wage withholding.
The statute of limitations for criminal prosecution of labor law violations, including wage withholding, was extended from three years to five years in 2007 (Article 249(1)(5) of the Criminal Procedure Act). The starting point of the statute of limitations for prosecution is from the date when the criminal act is terminated until 14 days after the payment of wages or retirement benefits (Article 252 of the Criminal Procedure Act). In contrast, the statute of limitations for wage claims is three years (Article 49 of the Labor Standards Act). Even if the statute of limitations for wage claims of three years has expired, criminal prosecution against the employer for wage withholding is still possible if the statute of limitations for prosecution has not yet expired. Ministry of Employment and Labor, Labor Standards Policy Division, "Guidelines for Handling Wage Withholding Cases," 2016, pp. 31-32.
Therefore, workers can claim unpaid wages for up to five years based on the statute of limitations for prosecution.
■ Suspension of Statute of Limitations
❍ Concept of Suspension of Statute of Limitations The suspension of the statute of limitations refers to the occurrence of a factual state that serves as the basis for the statute of limitations to be suspended.
The grounds for suspension of the statute of limitations are as follows: ① Filing a lawsuit (Civil Act Article 170): The statute of limitations is not suspended if the claim is rejected or dismissed. ② Participation in bankruptcy proceedings (Article 171), ③ Request for payment order (Article 172): If an application for a payment order is made to the court, ④ Summons for reconciliation (Article 173), ⑤ Voluntary appearance (Article 173), ⑥ Judgment (Article 174): In the case of a monetary claim, the statute of limitations is not suspended if no action is taken within six months after filing a lawsuit, participating in bankruptcy proceedings, etc., except for appeals. ⑦ Seizure, provisional seizure, and provisional disposition (Article 176), ⑧ Approval (Article 177): This means that the debtor acknowledges that they owe a debt to the creditor, and it generally applies to payment certificates, etc.
❍ Suspension of Statute of Limitations
(1) Reasons for Suspension
Wage claims have a statute of limitations of three years, meaning that if an employee does not make a claim for three years, the statute of limitations expires, and they cannot make a claim any longer. However, the statute of limitations is suspended if there is a legal claim, or if the employer agrees to pay the wage claim, or if the employer provides a written statement acknowledging the debt and pays a portion of the unpaid wage. Supreme Court ruling 2010. 6. 10., in case no. 2010da8266 Decision
In the case of wage claims that are partially unpaid, if the employee provides a written statement of the claim to the employer and seeks payment within six months, the statute of limitations is suspended (Civil Act, Article 174). However, if the employee does not take any further action, such as filing a legal claim, participating in bankruptcy proceedings, summoning the employer for reconciliation, or obtaining a seizure or disposition order within six months of making the written claim, the statute of limitations is retroactively terminated, and the suspension of the statute of limitations becomes ineffective. Ha Kab-rae, "Labor Standards Act," 28th edition, 2016, Central Economic Society, p.315.
(2) Relationship with Unpaid Wages
Firstly, whether a claim for unpaid wages by an employee constitutes a statutory limitation interruption: when a criminal complaint or a lawsuit is filed with a labor inspector or other judicial authority, it is not recognized as a claim in court and does not have the effect of interrupting the statute of limitations. Supreme Court 1999. 3. 12., Sentence No. 98da18214, Kumho Construction case
However, in an administrative lawsuit against the Central Labor Commission as the defendant and with the employee as an auxiliary plaintiff in an unfair dismissal case, the suspension of the statute of limitations for wage claims was recognized. Supreme Court 2012.2.9, Sentence No. 2011DA20034 Decision
Secondly, whether the issuance of an unpaid wage confirmation certificate by a labor inspector constitutes a suspension of the statute of limitations: when a worker whose wages are unpaid reports to the Ministry of Employment and Labor to confirm the unpaid wages, the confirmation of the employer's unpaid wages does not constitute a suspension of the statute of limitations. However, if the employer issues a confirmation letter that they will pay the unpaid wages, it can be considered a suspension of the statute of limitations. Kang Ji-hyun, "Practical Issues Related to the Statute of Limitations for Wage Claims," [Lawyer], Vol. 49, 2016 p. 216, Seoul Central District Court Decision 2015da42147, 2016. 1. 21.
(3) Relationship with Industrial Accident Compensation Law
Claims for industrial accident insurance for work-related injuries or diseases under the Industrial Accident Compensation Law suspend the statute of limitations and also suspend the statute of limitations for all claims related to industrial accident insurance benefits (Article 113 of the Industrial Accident Compensation Law). Generally, reporting to the Ministry of Employment and Labor, filing a lawsuit, or filing a complaint for wage claims is not considered a claim in court, but in the case of reporting to the Korea Workers' Welfare & Safety Agency for industrial accidents, it is considered a claim in court and a reason for suspension of the statute of limitations due to the nature of industrial accident work. In a related case, when a recipient of industrial accident insurance benefits applied for benefits but received a rejection and was informed that they must file a lawsuit within 90 days but did not file a lawsuit and instead applied for insurance benefits again within three years, the Korea Workers' Welfare & Safety Agency issued a decision stating that the statute of limitations had expired. In response, the Supreme Court recognized that a claim for insurance benefits under Article 36(1) of the Industrial Accident Compensation Law is a separate and unique statute of limitations suspension ground from those under the Civil Code. Supreme Court ruling 2018. 6. 15. 2017da9119 Decision
