the government's reform of 110 economic penalties will significantly reduce the burden on small businesses and the self-employed. minor violations of obligations will be fined instead of punished, and excessive regulations that have stifled business activity will be eased.
table of contents
- key takeaways from the rationalization of economic penalties
- key examples of the shift from penalties to fines
- regulatory relief for businesses
- frequently asked questions
highlights of the economic penalty rationalization improvements
the first round of economic penalty rationalization announced by the government includes 110 penalty reforms to address the problem of small businesses and the self-employed facing criminal penalties such as imprisonment and fines for minor infractions caused by simple mistakes or lack of knowledge of regulations.
the biggest change is that fines will be imposed instead of criminal penalties for minor violations of obligations. Unlike criminal penalties, fines do not leave a criminal record, which greatly reduces the psychological and practical burden on small businesses.
in addition, to prevent excessive economic penalties from discouraging business activity, we have added an exemption clause to the minimum wage penalty and abolished the embezzlement law, which was ambiguous in scope.
key cases that will be converted from penalties to fines
unauthorized structural changes to a vehicle
if a car owner modifies the luggage compartment without the approval of the local governor, he or she faces up to one year in prison or a fine of up to 10 million won. Now, he or she will only be fined 10 million won with a corrective order. the big difference is that there is no criminal record.
failure to report a business name change
if you run an accommodation business, hairdressing business, laundry business, etc. and failed to report the name change, you were previously subject to imprisonment for up to 6 months or a fine of up to 5 million won. Now, you will only have to pay a fine of up to 1 million won. no longer will you become a felon because you forgot to file while you were busy running your business.
rental car maintenance referral fee
if a rental car company provided a referral fee to a mechanic after a vehicle accident, it was previously punishable by up to one year in prison or a fine of up to 10 million won. Now, it will be treated as a fine of up to 5 million won.
by imposing fines instead of penalties for minor offenses such as this, which are caused by mistakes or inexperience, we prevent small businesses and the self-employed from having criminal records and ease the burden on economic activities.
regulatory relief for businesses includes
new minimum wage penalty exemptions
until now, both wage managers and employers have been penalized for failing to comply with minimum wage regulations, but going forward, employers will be able to avoid penalties if it is determined that they have met their duty of care and supervision.
if a manager in a large workplace makes a mistake and fails to pay the minimum wage, the employer may not be held liable if they have fulfilled their duty of care by having a proper management system in place and conducting training. this creates an environment that encourages businesses to be more proactive in their management activities.
repealing and replacing the law of embezzlement
the crime of embezzlement is applied when a person entrusted with the management of another's property breaches their duties and causes damage. However, it has been criticized for its broad scope and vague requirements, which unduly chill business activities.
the fear that even normal business judgments could be punishable as embezzlement has led companies to hesitate to make new investments or take on challenging businesses. The government plans to repeal the embezzlement law, but to develop replacement legislation that clarifies the requirements and scope of punishment to ensure that actual malicious infringement of property is punishable.
these reforms are expected to prevent a downturn in business activity and contribute to increasing economic vitality.
frequently asked questions
Q. what is the difference between a fine and a penalty?
A. A fine is a type of criminal penalty that results in a criminal record, while a fine is an administrative penalty that does not result in a criminal record. Even if you pay the same amount of money, there is a significant difference in whether or not you have a criminal record, which will not affect your employment or business activities.
Q. what happens if I've already received criminal penalties in the past?
A. The reforms are prospective, so they will not apply retroactively to penalties that have already been finalized in the past. However, cases that are currently under investigation or trial may be subject to the new standards after the law is amended.
Q. are there any additional reforms planned beyond the 110 rules?
A. This announcement is a first step, and the government plans to further review the economic penalties regulations and improve them step by step. we will continue to reflect the voices of small businesses and enterprises on the ground.
Q. does the exemption from the minimum wage penalty rule apply to all cases?
A. No. The immunity is only available if the business owner is deemed to have exercised due care in the management and supervision of their employees. if you intentionally fail to pay the minimum wage or neglect to supervise, you are still subject to penalties.
Q. are there any legal gaps due to the repeal of the law of embezzlement?
A. The government plans to introduce replacement legislation that clarifies the requirements and scope of penalties along with the repeal of the embezzlement law. malicious infringement of property will still be punishable, but the balance will be struck to ensure that normal business judgment is protected.
closing thoughts
the reforms to economic penalties will significantly reduce the burden on small businesses and the self-employed, and are expected to encourage more entrepreneurial activity. people will no longer become criminals for minor breaches of their obligations and will be able to focus on their business, free from over-regulation. let us know in the comments if this will have a positive impact on your business. for more useful economic information, please subscribe.