Is it possible to pay salaries in Bitcoin or gift vouchers in South Korea?

May 13, 2024
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The question of whether it is possible to pay salaries in bitcoin or vouchers is sometimes raised. The short answer is that it is currently illegal under Korean law. There are four principles of wage payment under the Labour Standards Act, which are violated. Let’s take a closer look at them.

Legal basis

Article 43 (Wage Payment) of the Labour Standards Act defines wages as follows.

  1. Wages shall be paid in full in currency directly to the worker. However, if special provisions are made in laws or collective agreements, part of the wages may be deducted or paid in other than currency.
  2. Wages must be paid at least once a month on a fixed date. However, this shall not apply to temporary wages, allowances, and other similar payments or wages prescribed by presidential decree.
    – The wages prescribed by presidential decree (Article 23 of the Enforcement Decree of the Labour Standards Act) in paragraph 2 above are as follows.
    – Regular wages paid according to attendance performance for a period exceeding one month
    – Longevity pay for continuous service for a period exceeding one month
    – Incentive, efficiency, or bonus payments that are calculated based on reasons over a period of time exceeding one month.
    – Any other allowances paid irregularly.

Four Principles of Wage Payment

Article 43 of the Labour Standards Act stipulates the following principles.

1. Payment in currency: Wages must be paid in currency.
2. Direct payment: Payment must be made directly to the worker.

  • Even if you are a minor, you can claim wages on your own.
  • The money must be transferred to an account in the worker’s name.

3. Full payment: When paying wages to workers, the full amount must be paid.
4. (Paragraph 2) Regular payment: Wages must be paid at least once a month on a fixed date.

Exceptions

Paragraph 1 states, “However, if special provisions are made in laws or collective agreements, part of the wages may be deducted or paid in other than currency.” which is often the legal basis for the following cases

  • (Case) Employee was a student and took advantage of the “post-employment student loan repayment system” operated by the government, and the company paid the employee after deducting taxes at source.
  • (Case) Several municipalities attempted or stopped paying part of the allowance in local currency with the employee’s free and prior consent.

Unless you are in one of the rare exceptions mentioned above, you must comply with the above four principles of wage payment.

Conclusion

Since “currency” means legal tender issued by the Bank of Korea, it is illegal to pay salaries by depositing them into a prepaid recharge card that is bearer and cannot be withdrawn. It is also illegal to pay salaries in Bitcoin or gift vouchers as it violates the principle of currency payment. Although the definitions of “money” and “currency” are still changing as the times change, the Korean Ministry of Employment and Labour’s position is as follows.

“According to Article 43(1) of the Labour Standards Act, wages must be paid in full directly to the worker in currency; however, if there are special provisions in laws or collective agreements, part of the wages may be deducted or paid in other than currency. “In accordance with the principle of currency non-payment set forth in Article 43 of the Labour Standards Act, wages must be paid in a currency with enforceable currency pursuant to Article 48 of the Bank of Korea Act, and payment of wages in Bitcoin would constitute a violation of the Labour Standards Act.

Ministry of Employment and Labour Administrative Interpretation (Labour Standards Policy Division-2288, 2022.7.21.)

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