State plan to protect independent contractors draws fire from labor, business groups
The South Korean government’s plan to strengthen protections for independent contractors is drawing criticism from both business groups and labor organizations.
The proposal announced on Tuesday includes shifting the legal burden of proof of employment from the workers themselves to the businesses. Those working in an employment form not defined in the Labor Standards Act — such as freelancers and commission-based delivery workers — could be regarded as "de facto laborers," and will be eligible for benefits such as insurance policies, overtime and legally mandated leave.
The current system has workers themselves prove their employee status upon legal dispute, in the absence of a formal employment contract. But with the change, companies receiving their services would bear the burden of proving that no de facto employment relationship exists between the two parties, if a worker claims unfair treatment related to income or other working conditions.
However, the plan is facing criticism for increasing legal risks for companies without altering the legal status of workers who continue to fall outside the scope of the Labor Standards Act.
According to the Ministry of Employment and Labor, the planned package of legislation aimed at enhancing protections for workers who are not covered by existing labor laws will be finalized by May 1.
Independent contractors include a broad range of workers currently classified as freelancers, such as delivery drivers, insurance planners and visiting study-material instructors. Their number is estimated at 8.62 million in Korea.
Because they are rarely recognized as employees in disputes, these workers have been largely unable to claim basic protections guaranteed only to employees under Korean labor law, including the minimum wage, the 52-hour workweek, severance pay, paid weekly rest allowances and mandatory social insurance coverage.
Business groups strongly criticized the proposal, arguing that it would increase labor costs, including delivery and personnel expenses, particularly for small and medium-sized businesses.
Amid weakening consumer sentiment, the number of self-employed businesses closing has risen for two consecutive years, with more than 1 million small businesses shutting down in 2024.
“Small business owners often lack the legal knowledge needed to prove that they are not in an employment relationship, which requires complex legal analysis,” the Korea Federation of Micro Enterprises said in a statement Wednesday. “This will inevitably result in excessive time and financial costs, leading to abuse of litigation and disruption to business operations.”
Labor unions have also voiced opposition, calling the proposal a stopgap measure that fails to bring substantive change to the legal status of workers excluded from labor law protections.
They also criticized the plan to regulate the provision under a separate law rather than amending the Labor Standards Act itself.
“The shift in the burden of proof does not directly lead to a recognition of worker status under the Labor Standards Act, which guarantees core labor rights,” the Korean Confederation of Trade Unions said.
The umbrella union added that creating a separate legal framework for platform and special employment workers would only entrench their discriminatory status rather than recognizing them as full rights holders.
Legal experts also say additional legislation will be needed to provide meaningful protection for independent contractors, noting that reliance on legal presumptions has inherent limitations in addressing the harm they face in practice.
“For the new law to function properly, the issue of worker classification that excludes independent contractors must be addressed. Presumption alone, without redefining the concept of a worker, inevitably has limits,” said Park Eun-jung, a law professor at Korea National Open University.
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