Bankruptcy Substitute Payment (도산대지급금) coverage expanded 2-fold to the final 6 months — cap raised from 21 million won to 31.5 million won, effective August 20
Source material is a Korean government announcement (in Korean).
From August 20, 2026, the coverage of 'wages, etc.' under the Bankruptcy Substitute Payment (도산대지급금) is expanded 2-fold from the final 3 months to the final 6 months, and the maximum amount receivable also rises from 21 million won to 31.5 million won.
Key facts
| Effective date | August 20, 2026 (amended Wage Claim Guarantee Act (임금채권보장법) and its enforcement rules) |
|---|---|
| Expanded coverage | Bankruptcy Substitute Payment 'wages, etc.' (wages · business suspension allowance · pay during pre- and post-childbirth maternity leave): final 3 months → final 6 months |
| Cap | 21 million won → 31.5 million won |
| Retirement benefits | Final 3 years (unchanged from before) |
| Employer loan ceiling | 150 million won → 200 million won |
| Loan limit per worker | 15 million won → 20 million won |
| New special loan | For employers with large-scale unpaid wages exceeding 200 million won within the past 3 months, up to 1 billion won on condition of providing real-estate collateral valued at 120% or more of the loan application amount |
| Inquiries and lookup | Ministry of Employment and Labor Labor Portal (labor.moel.go.kr), Korea Workers' Compensation & Welfare Service Geunro Bokji Net (welfare.comwel.or.kr), Ministry of Employment and Labor 1350 (no area code), Korea Workers' Compensation & Welfare Service 1588-0075 |
Last checked:
On August 19, 2026, the Ministry of Employment and Labor said the amended Wage Claim Guarantee Act (임금채권보장법) and its enforcement rules take effect on August 20. The coverage of 'wages, etc.' (임금등 — wages, business suspension allowance, and pay during pre- and post-childbirth maternity leave) under the Bankruptcy Substitute Payment (도산대지급금) is expanded 2-fold from the final 3 months to the final 6 months, and accordingly the maximum amount receivable rises from 21 million won to 31.5 million won. The loan ceiling for employers who seek to clear unpaid wages on their own rises from 150 million won to 200 million won, and the limit per worker rises from 15 million won to 20 million won.
Background — why this change
The Bankruptcy Substitute Payment (도산대지급금) is a system under which the state pays wages on behalf of the employer to workers who went unpaid because their workplace became insolvent. The Ministry of Employment and Labor said it expanded the coverage to strengthen protection for workers facing livelihood difficulties from long-term unpaid wages. Details on the expanded wage claim guarantee system can be checked on the Ministry of Employment and Labor's Labor Portal and the Korea Workers' Compensation & Welfare Service's Geunro Bokji Net (근로복지넷) website, or by contacting the customer counseling centers (Ministry of Employment and Labor 1350, Korea Workers' Compensation & Welfare Service 1588-0075). Inquiries: Ministry of Employment and Labor, Retirement Pension and Welfare Division (044-202-7072).
Summaries below are factual notes based on government announcements and primary sources — not evaluations or opinions.
FAQ
What is increasing, and by how much?
The range of 'wages, etc.' that can be received through the Bankruptcy Substitute Payment increases 2-fold from the final 3 months to the final 6 months. 'Wages, etc.' includes wages, business suspension allowance, and pay during pre- and post-childbirth maternity leave. Accordingly, the maximum amount receivable also rises from 21 million won to 31.5 million won. Retirement benefits remain the final 3 years, as before.
When does it take effect?
The Ministry of Employment and Labor said the amended Wage Claim Guarantee Act (임금채권보장법) and its enforcement rules take effect on August 20, 2026.
Is support for employers clearing unpaid wages also changing?
The loan ceiling for employers under the unpaid-wage clearance support program rises from 150 million won to 200 million won, and the limit per worker from 15 million won to 20 million won. In addition, a 'special loan' program is introduced that provides up to 1 billion won to employers with large-scale unpaid wages exceeding 200 million won within the past 3 months, on condition of providing real-estate collateral valued at 120% or more of the loan application amount.