Guide to Eligibility and Procedures for Applying for a Small-Amount Substitute Payment

Based on 10 consultation cases · Updated October 4, 2026 · Translated from the Korean original.

A small-amount substitute payment is a payment that may be made, subject to certain requirements, when a retired worker has obtained a final and conclusive court judgment, etc. concerning unpaid wages, regardless of whether the employer has become insolvent. After checking the payment coverage, employer requirements, and required documents such as a judgment, the worker must apply in sequence to the competent local labor office and the Korea Workers' Compensation and Welfare Service.

People involved → Retired worker → Employer → Retired worker seeks payment for unpaid wages → Is the applicant a retired worker? → Yes → Has the worker obtained a final and conclusive judgment or qualifying decision? → No → Requirements not met → Is the employer covered and has the business operated for at least six months? → May seek payment Insolvency is not required → What payment covers → Wages and shutdown allowances for the final three months Severance pay for the final three years → Application steps and documents → Get the wage confirmation from the local labor office Obtain a qualifying judgment or decision through civil proceedings Apply to the Korea Workers Compensation and Welfare Service → Prior payments and later insolvency → Without an express allocation, earlier claims are paid first A prior small-amount payment is deducted if the workplace later becomes insolvent

Key points

A small-amount substitute payment is a scheme that supports retired workers who have a judgment, etc. ordering payment of unpaid wages, regardless of whether the employer has become insolvent.
According to the case, an eligible person must be a retired worker and must have obtained a final and conclusive court judgment, etc.
The payment coverage is wages and shutdown allowances for the final three months, and severance pay for the final three years.
The application process is to obtain a Confirmation of Unpaid Wages, etc. by Employer from the competent local labor office, obtain a final and conclusive judgment, etc. through civil proceedings, and then apply to the Korea Workers' Compensation and Welfare Service.
Final and conclusive judgments, etc. include final and conclusive final judgments and payment orders, judicial settlements and admissions of claims, mediation, and recommendation decisions to perform.
According to the case, the employer must be an employer at a workplace covered by the Industrial Accident Compensation Insurance Act and must have operated the business for at least six months after becoming such an employer.
If some wages or severance pay have been received before a substitute payment is made, and there was no express indication that the payment was for wages for the final three months or severance pay for the final three years, it is treated as having been applied to claims that arose earlier or became due earlier.
If a substitute payment is sought because the workplace becomes insolvent after a small-amount substitute payment has been received, the small-amount substitute payment already received is deducted.

Frequently asked questions

Q. Can I apply for a small-amount substitute payment even if my employer has not become insolvent?

According to the case, a small-amount substitute payment may be applied for regardless of whether the employer has become insolvent. However, the applicant must be a retired worker and meet the requirements, including having obtained a final and conclusive court judgment concerning unpaid wages, etc.

Q. What is the coverage of wages or severance pay payable as a small-amount substitute payment?

The payment coverage described in the case is wages and shutdown allowances for the final three months, and severance pay for the final three years. The specific amount payable is not stated in the case.

Q. What steps do I need to take to apply for a small-amount substitute payment?

First, obtain a Confirmation of Unpaid Wages, etc. by Employer from the competent local labor office. Then, after obtaining a final and conclusive judgment, etc. through civil proceedings, apply to the Korea Workers' Compensation and Welfare Service with the relevant documents.

Q. What documents are included among the final and conclusive judgments, etc. required to apply for a small-amount substitute payment?

This includes a final and conclusive final judgment, a final and conclusive payment order, and a judicial settlement or admission of a claim that has the same effect as a final and conclusive judgment. The case also identifies an established mediation, a final and conclusive decision in lieu of mediation, and a final and conclusive recommendation decision to perform as qualifying documents.

Q. Are there requirements that the employer must meet for a small-amount substitute payment to be made?

According to the case, the employer must be an employer at a workplace covered by the Industrial Accident Compensation Insurance Act. In addition, the employer must have operated the relevant business for at least six months after becoming an employer subject to the Act.

Q. Can I receive a substitute payment if my dismissal was invalid, even if it happened a long time ago?

The answer in the case explains that if a dismissal is invalid, the employment relationship is regarded as having continued validly. Accordingly, the worker is eligible for a substitute payment and may claim unpaid wages, etc.

Q. How is a substitute payment calculated if I received some wages or severance pay before or after leaving my job?

If there was no express indication that the money received was to be applied to wages for the final three months or part of the severance pay for the final three years, the case treats it as having been applied first to wage claims that arose earlier or became due earlier. On that basis, it is determined whether wages for the final three months and severance pay for the final three years remain unpaid.

Q. Can I receive an additional substitute payment if the workplace becomes insolvent after I have received a small-amount substitute payment?

According to the case, if a substitute payment is sought because the workplace has become insolvent, the small-amount substitute payment already received is deducted from the payment. The full amount is not paid twice.

Q. Does the wage claim exercised by the Korea Workers' Compensation and Welfare Service on another party's behalf take priority over another worker's wage claim entitled to the highest-priority preferential payment?

The case explains that a claim to which the Korea Workers' Compensation and Welfare Service is subrogated after paying a substitute payment has the same priority as another worker's wage and other claims entitled to the highest-priority preferential payment, where that worker has not received a substitute payment.

Relevant laws

Former Wage Claim Guarantee Act (구 임금채권보장법)
Wage Claim Guarantee Act, Article 7 (임금채권보장법 제7조)
Enforcement Decree of the Wage Claim Guarantee Act, Article 7 (임금채권보장법 시행령 제7조)
Civil Execution Act, Article 24 (민사집행법 제24조)
Civil Execution Act, Article 56, Subparagraph 3 (민사집행법 제56조제3호)
Civil Execution Act, Article 56, Subparagraph 5 (민사집행법 제56조제5호)
Judicial Mediation of Civil Disputes Act, Article 28 (민사조정법 제28조)
Judicial Mediation of Civil Disputes Act, Article 30 (민사조정법 제30조)
Trial of Small Claims Act, Article 5-7(1) (소액사건심판법 제5조의7제1항)
Industrial Accident Compensation Insurance Act (산업재해보상보험법)

Watch out for

A small-amount substitute payment presupposes that the applicant is a retired worker who has obtained a final and conclusive judgment, etc.; obtaining only a Confirmation of Unpaid Wages, etc. by Employer does not complete the application process.
The payment coverage—wages and shutdown allowances for the final three months, and severance pay for the final three years—should be distinguished from the actual amount paid.
If some wages or severance pay have already been received, check whether there was an express indication at the time of payment that the money was to be applied to claims for the final payment period.
The explanations of the scheme and statutory provisions in the cases are limited to the content of each consultation case, so the specific application requirements and procedures should be checked separately.

Source cases

This guide was compiled by AI from the following Korea Legal Aid Corporation consultation cases (in Korean).

This guide is general legal information about Korean law, not legal advice for your situation. For a specific case, consult a lawyer or the Korea Legal Aid Corporation (call 132 in Korea).