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1. What Is Unemployment Benefit Fraud?

The unemployment benefit system is a social security program designed to help workers maintain a minimum standard of living while preparing for reemployment after leaving a job.
 

However, eligibility is restricted if a worker is dismissed for serious misconduct or voluntarily leaves employment without a justifiable reason.
 

The system operates on the premise that eligible recipients receive official “recognition of unemployment” from the head of an employment security office and make sincere efforts to find new employment.
 

Accordingly, the very foundation of the system is considered undermined in the following situations:
 

• Failing to report work activity or income despite having earned income

• Repeating only superficial or formal job-search activities

In practice, the key issue in unemployment benefit fraud cases is not whether the recipient claims it was a simple mistake, but how the facts are evaluated.
 

Under Article 47 of the Employment Insurance Act, recipients are required to report any employment during the unemployment recognition period. Concealing employment, failing to report income, or similar conduct is repeatedly deemed as receiving benefits through false or fraudulent means.
 

It has become increasingly difficult to overturn a fraud determination merely by arguing that there was no intent.
 

Administrative authorities and courts comprehensively assess not only the individual’s subjective intent, but also objective conduct, the actual nature of work and income, and the circumstances surrounding the failure to fulfill reporting obligations.
 

2. Common Types of Cases That Lead to Problems

The most frequently identified cases in practice include:
 

• Failing to report income from part-time work or freelance activities

• Working at a business registered under a family member’s or acquaintance’s name

• Assuming that short-term or irregular income does not need to be reported

• Falsely processing a resignation by agreement with the employer while continuing to receive wages

Although some of these practices are treated as “customary” in certain circles, they clearly constitute unlawful conduct and are legally classified as fraud.
 

During investigations, authorities examine factors such as the form of work, whether compensation was provided, and the continuity of the activity. As a result, many of these cases ultimately lead to penalties for unemployment benefit fraud.
 

3. What Happens If You Are Caught?

Once an issue is identified, an investigation by the employment center typically begins.
 

You will then be asked to provide an explanation, and if fraud is confirmed, not only will the full amount of benefits received be recovered, but additional penalties may also be imposed.

 

Depending on the case, an additional surcharge of up to twice the fraudulently received amount may be imposed (up to five times if there was collusion with the employer). In cases where benefits were obtained through false or fraudulent means, criminal liability may also arise (Article 62(2) of the Employment Insurance Act).
 

In particular, if the employer was involved in the scheme, penalties can include up to five years’ imprisonment or a fine of up to KRW 50 million (Article 116(1)(2) and (2)(2) of the Employment Insurance Act).
 

The critical point is that this issue may not end as a mere administrative matter. Depending on how the facts are assessed, it can escalate into criminal proceedings. Unemployment benefit fraud penalties should never be taken lightly.
 

The assumption that “this probably won’t be a problem” is often the most dangerous decision.
 

4. If You Have Been Contacted for an Investigation — and How Decent Law Firm Can Help

If you proceed with statements before properly organizing the facts, you may place yourself at a significant disadvantage.
 

However, if a recipient voluntarily reports the issue before an investigation begins, additional penalties may be waived under Article 105(4) of the Enforcement Rules of the Employment Insurance Act. Moreover, the consistency and sincerity of your explanation can significantly affect the level of sanctions imposed.
 

For those lying awake at night worrying about this issue, it is important to understand that the decisions you make and the way you respond at this very moment can shape the direction of your future.
 

Conversely, ignoring the issue or responding carelessly can lead to irreversible consequences, such as restrictions on future unemployment benefits or a criminal record.
 

Decent Law Firm has advised clients on unemployment benefit fraud matters where intent is ambiguous, where the existence of employment or income is disputed, and where the possibility of criminal proceedings has already been raised, helping them develop response strategies from the earliest stage.
 

In this area, early judgment and response determine the outcome.
 

Rather than trying to handle this alone, it is crucial to recognize that this is the point at which proper legal review and guidance are necessary.