Coupang subcontractors accused of employing over 40,000 uninsured workers

E-commerce giant initiates contract cancellation proceedings with offenders

By Jun Ji-hye

More than 40,000 workers at 90 Coupang delivery subcontractors have been denied employment insurance and work-related injury insurance, which are considered the main social safety nets provided to workers, according to the Korea Workers’ Compensation and Welfare Service (K-COMWEL) on Wednesday.

K-COMWEL, which is under the direct control of the Ministry of Employment and Labor, announced the findings of an investigation into 528 delivery subcontractors and 11 logistics subcontractors that signed contracts with Coupang Logistics Service, the subsidiary of the Korean e-commerce giant.

The survey was conducted from December 20 to May 30 and covered cases that occurred over the past three years.

K-COMWEL said it found that 90 delivery subcontractors had failed to provide proper social insurance services to a total of 40,948 workers. Among them, 20,080 workers had not received employment insurance, while 20,868 workers had not received work-related accident insurance.

Given that there is a significant overlap between workers covered by employment insurance and workers’ compensation insurance, the number of workers affected by the lapse in insurance coverage 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 social insurance within 14 days of the worker’s hiring.

Following the investigation, K-COMWEL ensured that the subcontractors in question provided adequate insurance coverage to these uninsured workers.

It also plans to impose 4.74 billion won ($3.4 million) in unpaid insurance premiums, which should have been paid if these subcontractors had insured workers at the right time, as well as a fine of 296 million won.

“Employment insurance and workers’ compensation insurance should be offered regardless of the size and type of workplace,” said K-COMWEL Chairman Park Jong-kil.

“We will continue to investigate similar sectors to prevent cases of worker insurance failure from happening again,” he added.

The investigation was launched after a subcontractor operating the Coupang logistics center asked its employees last year to sign documents waiving their right to workers’ compensation insurance.

Through this practice, business owners typically seek to avoid compliance with labor laws or the responsibility of paying for insurance coverage.

Regarding the investigation results, Coupang said the cases of uninsured workers were linked not only to its subsidiary but also to other logistics companies, citing that the investigation examined incidents that occurred over the past three years.

“Even before the investigation began, we have been constantly encouraging our subcontractors to insure their workers,” a Coupang official said.

“We have already taken steps to cancel contracts with some subcontractors who have not provided sufficient insurance services to workers.”