Legal responses every employer accused of violating the Labor Standards Act must review
Violations of the Labor Standards Act start with “structure,” not “intent”
In practice, many employers say, “I didn’t know the law,” or “I was just following common practice.”
However, violations of the Labor Standards Act may result in criminal liability once intent is recognized, and ignorance of the law does not exempt an employer from responsibility.
In reality, most problems do not stem from bad faith, but from the gap between statutory standards and actual workplace operations.
Industry practices, internal customs, or long-standing methods may feel familiar in daily operations, but they can lead to completely different conclusions in legal assessments.
In particular, when a business expands without a structured HR and labor management system, small mistakes tend to accumulate and eventually develop into disputes.
The party experiencing the greatest anxiety and pressure in this process is often the employer.
For those lying awake at night, struggling alone to determine how to respond, this article aims to provide a realistic framework for understanding the situation.
One point must be made clear: issues under the Labor Standards Act are never trivial. A misstep in the initial assessment can escalate into full criminal proceedings.
Common types of Labor Standards Act violations involving employers
Cases that proceed to investigations or litigation show consistent patterns of violation.
First, wage-related issues.
These include failure to meet minimum wage requirements, misinterpretation of what counts toward wages under Article 5 of the Enforcement Decree of the Minimum Wage Act, and miscalculation of overtime, night work, or holiday work allowances.
In particular, many employers use the label “comprehensive wage system” (fixed overtime pay) without satisfying the legal requirements established by case law—such as difficulty in calculating working hours, absence of disadvantage to employees, and explicit or implicit agreement—resulting in frequent legal issues.
Second, working hours and break-time management.
Situations where attendance records are missing or merely formal, or where break times exist only on paper and employees cannot freely use them, are investigated as violations of Article 54 of the Labor Standards Act (see Supreme Court Decision, July 12, 2018, 2013Da60807, among others).
Misunderstandings also frequently arise regarding special industry exceptions under Article 59 of the Act and the written agreement requirements for flexible working-hour systems.
Third, disputes over severance pay and continuous service periods.
Employers may believe that they created a formal break during contract renewals, but courts assess continuity based on the substance of ongoing employment, not formal interruptions (see Supreme Court en banc Decision, July 11, 1995, 93Da26168).
This category also includes cases where the label “freelancer” or “fixed-term employee” does not align with the actual working arrangement.
Fourth, violations related to documentation and formal requirements.
Failure to prepare or deliver employment contracts, failure to report workplace rules, and omission of mandatory items in wage statements are often treated as simple mistakes, but are clearly regarded as violations during investigations.
The real risks employers face when violating the Labor Standards Act
Many employers assume the matter will end with an administrative fine, but the reality is different.
Labor inspections can begin with corrective orders and escalate into criminal charges.
It is not uncommon for a complaint by a single employee to expand into an investigation covering the entire workforce.
Under Article 115 of the Labor Standards Act (the joint liability provision), not only the corporation but also the individual representative may be subject to criminal punishment, including the possibility of a criminal record due to fines.
That said, if the employer can demonstrate that they exercised substantial care and supervision to prevent violations, exemption from liability may be possible (proviso to Article 115).
Beyond this, employers must consider civil claims for retroactive wages or severance pay, damage to business reputation, and the spread of issues into investment and labor risks.
Ultimately, a single HR issue can affect the entire business.
How Decent Law Office changes the direction of response
When an investigation or complaint is initiated, the first thing an employer should do is not to immediately provide statements or submit documents.
The priority is to organize the facts, separate legal issues, and establish a response strategy.
Internal attendance data, wage structures, and the consistency between contracts and actual practices must be reviewed first.
Accordingly, Decent Law Office focuses on building statement strategies for labor inspections, conducting advance reviews of wage, working-hour, and severance structures, and establishing early defenses to minimize criminal risk.
The firm also works in coordination with labor and accounting professionals to propose solutions that consider the entire business structure, rather than addressing violations in isolation.
Whether Labor Standards Act issues remain a matter of post-incident damage control or are transformed into a preventive management system depends on the initial response.
Before finding yourself labeled as an employer in violation of the Labor Standards Act, reviewing your structure and correcting course is the most realistic choice.
