Opposition is emerging from both the insurance industry and insurance agents as the government moves to revise labor laws to incorporate special employment workers and freelancers into the formal employment framework, industry officials said Tuesday.
Under the proposed system, around 650,000 insurance agents in Korea could be classified as statutory employees, making them subject to mandatory provisions of the Labor Standards Act, including severance pay. The resulting financial burden on insurers is expected to be several trillion won.
Insurance agents, who have traditionally been treated as special employment workers — self-employed contractors — are also concerned that reclassification as employees could ultimately lead to a decline in their take-home earnings.
The government and the ruling Democratic Party of Korea are advancing a legislative package that includes the “worker presumption rule” and a basic act governing working people’s rights. The related bills are expected to clear the legislative process around May 1, which is Labor Day.
Among the proposed measures, the insurance sector is most wary of the worker presumption rule, which would assume a person is classified as a worker once it is established that they provided labor, unless the employer can present evidence to the contrary. This would effectively reverse the current system, under which individuals must prove that they qualify as employees.
Insurance agents have traditionally been categorized as self-employed contractors under the special employment worker system. Should they be reclassified as employees, they would become subject to the Labor Standards Act, including rules covering the minimum wage, the 52-hour workweek, severance benefits, paid weekly leave and participation in the four major social insurance programs.
At the end of 2024, the number of insurance agents in Korea was 651,256.
Industry estimates suggest that about 60 percent, or some 400,000 agents, could shift to workplace enrollment in the national pension and health insurance programs if the policy is passed. Based on agents’ average monthly earnings of 3.38 million won ($2,300), the resulting cost burden is projected to reach around 1.3 trillion won per year, with insurers and agents expected to shoulder the expenses equally.
Insurers are also increasingly concerned that the proposed worker presumption rule could lead to a surge in legal disputes and related costs. If agents are presumed to be employees, conflicts may arise over benefits such as severance pay that were not previously provided.
The industry fears that this could substantially increase expenses tied to labor management and compliance.
Source: Korea Times News
