I even made a double ledger… the startup CEO screams all over the place

'이중장부'까지 만들었다…스타트업 CEO 곳곳서 비명

Mr. A, who founded a startup in the Silicon Valley of the United States, assigned a Korean freelancer to consult with customers through chat. It’s 1-2 cases per hour, 1-15 minutes per chat. Mr. A decides to pay 4,000 won per hour and hire 8 people.

After the contract was terminated, the freelancers reported Mr A to the Ministry of Employment and Labour, claiming he was “a worker, not a freelancer”. The goal of the freelancers was that if they were recognized as workers, they would receive unemployment benefits with a salary increase based on the minimum hourly wage system. Mr. A had to come to Korea several times to investigate a special judicial police officer at the Ministry of Employment and Labor. This is due to non-compliance of minimum wage and non-payment of night pay and holiday pay. Unfair dismissal, delayed wages and lack of written employment contracts were also cited as problems.

He went to the local labor relations commission, paid a settlement of 1/3 of the amount demanded and got the job done. The Local Labor Relations Commission considered the matter and said, “This is a more ambiguous case than general platform employment.” “There are a lot of startup representatives who feel burdened by the mention of criminal punishment, and the settlement pays,” Mr. A said.

There are no shortage of startups caught up in strict labor regulations. In allied industries, the labor law formulated with a view to large-scale employment and long-term employment is considered to have revealed its limitations. If existing labor law is applied to start-ups that rapidly start, grow, change business models and go out of business, inevitably Mr. A.

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An in-depth interview report conducted on six companies by the startup organization Korea Startup Forum contains the same content. All of the startups interviewed responded that they had difficulty applying the current Labor Standards Act, i.e. 52 hours per week and flexible working hours, in the field.

Jeong Jin-soo, a representative labor attorney at Noel Labor Law Firm, said, “In many startups, employers and workers are virtually equal,” he said.

I even made a 'double ledger'... the startup CEO screams all over the place

At the start of my business I have to work overtime… 52 hours a week working hours and difficulties in applying flexible working hours

Company A, a two-year-old logistics startup, experienced headaches due to an employee who had recently left the company. Company A never instructed this employee to work overtime because the employee reported to the job center that he voluntarily resigned because the company allowed him to work more than 52 hours per week.

An official at Company A said, “It appears that the employee who voluntarily left the company claimed that the company violated the 52-hour work week in order to receive unemployment benefits.” I couldn’t assemble it properly. Company A escaped criminal punishment, but was ordered to pay back wages to employees who left the company. We had to postpone the launch schedule of the service we were preparing to respond to the possibility of a major dispute.

I even made a 'double ledger'... the startup CEO screams all over the place

◆ “52 hours a week, I don’t know if it varies from site to site”

According to the Startup Group In-Depth Interview (FGI) report received by Representative Kwon Myung-ho at the Korea Startup Forum on the 27th, many startups are having difficulty applying the current Labor Standards Act, which includes the 52-hour week. Requirements for application of flexible working hours system in the field

All 6 startups interviewed with the question about implementing flexible working hours system were not aware of the ‘Employee Representative Election and Written Agreement’ requirements set out in the Labor Standards Act. Most of the startups responded that they implement flexible working hours system by contracting with individual employees without separate written assignments. Failure to comply with the requirements of a flexible work system such as written contracts is a violation of Article 52 of the Labor Standards Act. Although they face up to two years in prison or a fine of up to 20 million, most startups don’t even know they’re illegal.

The level of understanding of the 52-hour workweek system has also declined. Only one in six said overtime was prevented under the 52-hour workweek. Five other companies did not agree to the 52-hour work week requirement. A startup said, “Information Technology (IT) development requires constant programming supplementation, so it is difficult to estimate work hours separately.” Said.

The Labor Standards Act, which creates benefits

The problem is that labor regulations that do not match the nature of startups are not just procedural inconveniences, but lead to on-site exploits and illegal activities. Startups that need to grow rapidly in a short period of time need to work overtime in the early stages of their business. In response, startups are addressing overtime work by giving employees annual leave on the dates they want or proposing special bonuses.

Actual work hours and documented work hours are necessarily different. A representative of a startup said, “It is common for team members to be compensated for long vacations after starting service to avoid complaints about overtime work.”

There are many startups that are stuck in disputes with employees related to labor issues. Company B, a 30-employee startup, recently faced a dispute over unfair dismissal. The contract with the employee was terminated after three months of probation, but the employee reported to the Ministry of Labor and Employment saying that he could not understand the reason. “We have collected all the materials, such as verbal warnings and written statements, which led to the termination of the contract, but the process of proving and arguing was overwhelming, so we paid and agreed,” said an official at Company B.

Also problematic is the CEO of a US-based startup hiring Korean workers on a temporary basis. If a worker files a complaint, he or she must return to Korea and investigate labor law violations.

◆76% of startups “don’t have a time and attendance management system”

It is pointed out that startups require relatively large working hours in the early stages of their business, but their financial situation is often poor, so the labor system needs to be improved to take this into account. It is necessary to take into account the particular circumstances in which startups find themselves. A person in charge of personnel management (HR) at a start-up said, “A start-up has a wide range of employee functional areas and frequent changes, and a rigid system does not seem to reflect this situation. “

According to the results of a survey conducted among startup companies and startup workers by the Startup Alliance, a public-private partnership network, 46.0% of startups were positive about the 52-hour work week. Less than large companies (66.0%). 75.8% of startup respondents answered that their company does not have a dedicated time and attendance management system.

Reporters Go Eun-yi/Lee Sang-eun/Choi Da-eun koko@hankyung.com

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