Ecommerce regulation update– South Korean investigators are widening their scrutiny of Coupang as senior executives face questioning over labor practices and a separate data security investigation.

A special counsel team has summoned the head of a key Coupang logistics unit as part of an ongoing probe into allegations that employees were denied severance pay through changes to internal employment rules. The questioning marks another step in a case that has raised concerns about worker protections at one of the country’s largest e-commerce companies.

Senior Logistics Executive Questioned as Suspect

Chung Jong-chul, the chief executive of Coupang Fulfillment Services, appeared at the office of special counsel Ann Gweon-seob on Thursday morning. Investigators questioned him in the capacity of a suspect, focusing on decisions made at the logistics subsidiary regarding employee retirement benefits.

Coupang Fulfillment Services handles warehouse operations and deliveries for the parent company. Prosecutors are examining whether recent changes to company rules unfairly altered how severance pay eligibility was calculated for certain workers.

Employment Rule Changes Under Scrutiny

According to investigators, Chung and former chief executive Eom Seong-hwan are suspected of revising employment regulations in May 2023 in a way that disadvantaged workers with more than a year of service. The revisions reportedly affected daily and part-time employees who had previously qualified for severance pay under more flexible conditions.

Under the updated rules, workers employed for over a year became eligible for severance pay only if they consistently worked more than 15 hours every single week. Any interruption, even a brief period with fewer hours, could disqualify them from receiving retirement benefits.

Impact on Long-Term Daily Workers

Before the changes were introduced, the calculation method was more lenient. Weeks in which employees worked fewer than 15 hours were excluded from the total, rather than resetting the entire eligibility period. This meant that long-term workers could still qualify for severance pay as long as they met the required average over time.

Investigators argue that the revised system effectively nullified previous service if a worker’s schedule dipped below the weekly threshold even once. Critics say this approach placed an undue burden on employees whose hours often fluctuate due to the nature of logistics and delivery work.

Legal Standards and Financial Implications

South Korea’s retirement benefits law states that employees are entitled to severance pay if they have worked continuously for at least one year and averaged 15 or more working hours per week over a four-week period. Authorities are examining whether Coupang’s internal rules conflicted with these legal standards.

The special counsel team has already questioned Eom Seong-hwan and conducted raids at the headquarters of both Coupang and its logistics arm. During the searches, investigators reportedly obtained an internal document estimating that the company could save tens of billions of won by implementing the revised employment rules.

Separate Probe Into Alleged Data Breach

In a parallel investigation, police are continuing to examine allegations related to a major data breach at Coupang. Harold Rogers, who previously served as interim chief executive, underwent nearly 12 hours of questioning by the Seoul Metropolitan Police Agency over accusations of destroying evidence linked to the incident.

Rogers left the police station without addressing questions from reporters about whether he acknowledged the charges or planned to leave the country. Authorities suspect he may have obstructed the official investigation into the breach.

Disputed Scale of User Data Exposure

The data breach is believed by investigators to have affected close to 33 million user accounts. Coupang, however, has maintained that only about 3,000 accounts were compromised, a claim that has been challenged by law enforcement.

Police are now assessing the credibility of the company’s internal investigation. Government officials have publicly criticized Coupang’s findings, describing them as one-sided and insufficiently transparent.

As both investigations continue, regulators and labor advocates are closely watching how the cases may influence corporate governance standards, worker protections, and data security practices in South Korea’s rapidly growing e-commerce sector.