Coupang subcontractors caught hiring over 40,000 uninsured workers

E-commerce giant initiates cancellation of contracts with violators

By Jun Ji-hye

More than 40,000 workers employed by 90 Coupang subcontractors have not received unemployment insurance or occupational injury insurance, which are considered the main forms of social security offered to workers, according to information released Wednesday by the Korea Workers’ Compensation and Welfare Service (K-COMWEL).

K-COMWEL, which is directly subordinate to the Ministry of Employment and Labor, has announced the results of an investigation into 528 delivery subcontractors and 11 logistics subcontractors that signed contracts with Coupang Logistics Service, a subsidiary of the Korean e-commerce giant.

The investigation was conducted from December 20 to May 30 and covered cases from the last three years.

K-COMWEL reported that it found that 90 subcontractors failed to provide proper social security services to a total of 40,948 employees. Of these, 20,080 employees did not receive employment insurance and 20,868 employees did not receive occupational accident insurance.

Given that the scope of employee insurance largely overlaps with the scope of occupational accident insurance, the number of employees affected by the insolvency of Coupang’s subcontractors was approximately 20,000.

Korean law requires all workplaces with at least one employee, including temporary and part-time workers, to provide the employee with social insurance within 14 days of starting employment.

Following an investigation, K-COMWEL was satisfied that the subcontractors in question were providing adequate insurance to uninsured workers.

It also plans to impose 4.74 billion won ($3.4 million) in unpaid insurance premiums that should have been paid if subcontractors had insured workers in a timely manner, as well as a fine of 296 million won.

“Employment insurance and occupational injury insurance must be offered regardless of the size and type of workplace,” said K-COMWEL President Park Jong-kil.

“We will continue to investigate similar industries to prevent a recurrence of uninsured workers,” he added.

The investigation was launched after it was found that a subcontractor managing the Coupang logistics centre had required employees to sign documents waiving their right to occupational accident insurance last year.

Business owners typically use this practice to avoid compliance with labor laws or liability for paying insurance.

Referring to the results of the investigation, Coupang stated that the cases of uninsured workers are linked not only to its subsidiary but also to other logistics companies, citing the fact that the investigation covered incidents from the past three years.

“Even before the investigation began, we consistently encouraged our subcontractors to insure their workers,” a Coupang official said.

“We have already initiated the process of canceling contracts with some subcontractors who did not offer sufficient insurance services to employees.”