Korean Severance pay (retirement pay) is the compensation that an employee in Korea is entitled to receive from his employer doing business in Korea once the employment has ended. Under Korean Employee Retirement Benefit Security Act, a regular full-time employee in South Korea shall receive a severance pay within 14 days from termination of employment. The amount of severance pay is equal to employee’s one month salary for every year of consecutive service.
For similar articles, you may read: Statutory Severance Obligations in Korea after Acquisition of Company in Korea and Status of Interns Under the Korean Labor Standards Act: Employees Entitled to Severance/Minimum Wage?
How to Compute Severance Pay in Korea?
The severance pay is computed by obtaining the average daily salary of the employee for the last three months and multiplying it by 30 days. The sum (Average Daily Salary x 30) will then be multiplied to total days of consecutive service divided by 365 days. Severance pay is, only, owed after one year of continuous service to the employer.
Severance Pay = Average Daily Salary x 30 (days) x (total days of consecutive service/365).
Right to Receive Severance Payment
Full time employees are entitled to receive severance payments regardless of the reason for termination of employment. Hence, an employee who voluntarily resigned from work and an employee who was terminated for a justifiable cause are both qualified to receive severance pay in Korea.
However, severance pay is not owed to an employee in Korea who works less than 15-hours a week and employees who have less than one year of service to the company.
If you would like to know more about Severance Payments or Korean Labor or Employment Law, you may schedule a No-Charge Initial Consultation with a lawyer at: Please Schedule a Call.
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