Severance pay (retirement pay) is the compensation that an employee is entitled to receive from his employer once the employment has ended. And under 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?
The severance pay is computed by getting 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 and divide it 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 payment 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.
However, severance pay is not applicable to an employee who works less, in most cases, than did not work more than 15 hours a week and employee who has less than one year of service in the company.
If you want to know more about Severance Payment or want to discuss other legal matters in South Korea, you may schedule a No-Charge Initial Consultation with a lawyer: Please Schedule a Call.
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