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  • Seoul to provide the employment maintenance subsidy to small business with less than five employees

  • SMG 1046
    • The Seoul Metropolitan Government will support those working at small businesses with fewer than five employees, providing the unpaid-leave workers with up to 500,000 won per month for two months
    • It is expected to benefit at least 25,000 workers who had been on unpaid leave for more than five days since February 23 when the central government raised the COVID-19 alert to the highest level
    • Applications will open from April 1, and the payment will be made directly to the applicants

    SEOUL, SOUTH KOREA, March 30, 2020 — The Seoul Metropolitan Government announced that it will support those working at small businesses with fewer than five employees. Under the plan, if a worker from a small company hit by the COVID-19 outbreak was forced to be on unpaid leave, the city government will provide the worker with up to 25,000 won (US$ 20) per day, or 500,000 won (US$ 400) per month, for two months as a “leave allowance” (40-day leave in total).

    Such an employment maintenance subsidy offered by the Seoul Metropolitan Government is to help workers working at small businesses who have difficulty in applying for a paid leave and also who are not eligible for the central government’s employment retention grants. The Korean government announced February 28 its special employment subsidy program to support the businesses that maintain their workforce while providing paid leaves despite financial problems and temporary shutdown. In case of businesses providing unpaid leaves to their workers, at least 10 eligible workers at each business should be on the leave for at least 90 days.

    According to the city’s scheme, only one worker per small business can be supported, however up to two workers from tourism-related companies hit the hardest by the COVID-19 crisis may apply for the subsidy.

    The Seoul Metropolitan Government has met small business owners to listen to their difficulties since mid-February, before the COVID-19 crisis became serious, and recognized that they need a sort of employment security measures because small businesses cannot get the benefit from the central government’s coronavirus relief measures.

    Eligible workers for the support plan are those working at small businesses * in Seoul with no more than five employees and being signed up the employment insurance while having been on unpaid leave for more than five days since February 23 when the government raised the COVID-19 alert to the highest level. The financial aid will be centered on workers from tourism-related businesses, wholesale and retail industries, accommodation and restaurants, as well as technology start-up companies ** that are suffering the most from the coronavirus and subsequent economic slowdown.

    * According to Article 2 (1) of the Enforcement Decree of the Protection and Support of Small Business, a small business is the one with less than ten employees in industries of manufacturing (mining), construction and transportation; and the one with less than five employees in other industries.

    ** According to Article 2 of the Seoul Start-up Support Ordinance, a technology start-up company is the one with knowledge-intensive innovative technologies in industries of manufacturing, information and communication technology, professional science and technology services, etc.

    Through the supplementary budget, the Seoul Metropolitan Government urgently set aside 25 billion won (including state funds) for the aid, which is expected to benefit at least 25,000 unpaid-leave workers. Out of the total amount, 5 billion won will be offered to tourism businesses, 3 billion won to technology start-ups and 17 billion won to the remaining businesses.

    As of the end of 2018, the number of small businesses with less than five employees in Seoul excluding one-person companies stood at 306,106, out of which 5,094 were tourism-related companies and 11,431 were tech start-ups.

    The application can be made at the district office where the business office is located. Applicants may complete the application form and submit it to the district office by visit, online, mail or fax. Upon request, a staff member from the district office may also visit the applicant and pick up the application form. For this service, four additional staff will be dispatched to each district office.

    The application will be open from April 1. Those who took the unpaid leave in the previous month may apply until the 10th day of the next month. Every application will be reviewed, and the payment will be made directly to the applicants. Exceptionally in this April, eligible applicants are those taking the unpaid leave between February 23 and March 31.

    Application documents and procedures will also be simplified to facilitate convenience for applicants. Just in order to prevent fraudulent receipts, in addition to its statement of the worker’s unpaid leave with the application form, the employer shall submit the business certificate, small business certificate, and employment insurance certificate, which can be issued online at each organization’s website.

    If the number of applicants exceeds the total amount of support prepared at each district, ① workers having the employment insurance for a longer period at each business, and ② those from businesses with smaller sales volumes.