Hello, this is attorney Choi Jong-ha of Cheongchul Law Firm.

In practice, it is not unusual at small businesses for an employee to cite various personal circumstances and ask, “Don’t register me for the four social insurances, just pay me in cash,” or “I will sign a statement that I am not an employee, so skip the insurance enrollment and pay me more in cash.” Employers tend to assume there is no problem because they merely granted the employee’s request, but this is a highly risky course of action. The four social insurances are not optional rules that an employee and employer can exclude by agreement; they are mandatory provisions that apply automatically once the statutory requirements are met.

Regarding workplace subscribers under the National Pension Act (국민연금법), the Supreme Court held that “an employee is obligated to pay pension contributions as a matter of course from the time they acquire workplace-subscriber status, and has no right to voluntarily decline to pay them,” and ruled that a written statement declaring that “I do not wish my subscription period to be applied retroactively and will raise no objection whatsoever” was itself void (Supreme Court Decision 2008Du20444, January 28, 2010 (대법원 2010. 1. 28. 선고 2008두20444 판결)).

The same applies where an employer skipped enrollment believing the worker was not an employee under the Labor Standards Act (근로기준법). The Supreme Court explained that “the insurance relationship under employment insurance and industrial accident compensation insurance arises as a matter of course upon commencement of the business, except for businesses exempted by statute, and once the insurance relationship is established, the business owner bears the duty to report and pay premiums while the insurer bears the duty to pay insurance benefits,” and held that “the business owner cannot be relieved of the duty to report and pay premiums merely because they were unaware that the insurance relationship had been established and did not claim insurance benefits” (Supreme Court Decision 2011Du6745, February 13, 2014 (대법원 2014. 2. 13. 선고 2011두6745 판결)).

This risk is not eliminated by obtaining a firmer written statement or pledge from the employee. Employers must therefore file the enrollment without delay once the statutory requirements for the four social insurances are met, and must not accept an employee’s request to forgo enrollment, whatever the reason.

Both sides should bear in mind that the four social insurances are not a switch that an employee and employer can turn on or off by mutual agreement.