Severance Pay

severance pay

Severance Pay Eligibility and Details

  • If the employee finishes one-year contract successfully, they get paid for an extra month of work, severance pay, which is equal to one-month’s salary. Therefore, at the end of a one-year contract, they will get their monthly salary plus severance pay. Also, they have to pay the appropriate severance payment tax at the end of year.
  • To be eligible for severance pay, the employee has to complete a one year contract at least and must be employed full time (more than 15 hours/week or 60 hours/month).
  • Severance pay is calculated as an average wage for 30 days of the last 3 months of pay.
  • The amount should be paid within 2 weeks of termination of contract.
  • After one year, severance pay accumulates on a month by month basis being prorated based on a 1 year calendar, 365 days.
  • Severance pay is stipulated by Korean law (under article 34 of the Labor Standard Act of Korea) therefore severance pay is not a right that can be waived. Even if your contract states that you will not receive severance pay, you are entitled to it.
  • Article 22 of the Labor Standard Act of Korea stipulates that a foreign worker cannot be discriminated against even if that employee violates immigration law. In other words, even if you are working in Korea illegally, you are entitled to severance pay.

How to Cope with the Severance Pay Denial in Steps

  1. The first step is to approach your employer regarding your severance pay, and attempt to resolve any difficulties at an early stage in a friendly and professional manner without need of further difficulties.
  1. In the event that your employer refuses to pay you, your next step will be to contact the Ministry of Employment and Labor. Please refer to how to contact info below and note that your employer legally has 14 days to pay you before they are in violation of the law, so even if your employer has stated that they will not pay you, you must wait 14 days before filing a complaint. Once you arrive at the Ministry of Labor, you will need to state your case to an officer of the Ministry. You will also need to have documentation in the form of pay stubs for at least the last three months, in order to calculate your correct severance amount. This is also proof that you have been employed as a full time worker.
  1. A representative from the Ministry will contact your employer and schedule an interview. You will typically be required to attend that interview, which should be scheduled within two weeks. Your employer must attend the meeting or forfeit the case. If you meet the legal qualifications outlined above, you will win this hearing and the Ministry will “recommend” that your employer pay you. The ministry has no real authority and can not enforce its verdict, but a favorable ruling here will virtually guarantee your victory if a civil case is needed.
  1. The next step, in most cases unnecessary, is to file civil charges against your employer in an effort to collect your severance. This is done by going to the Ministry of Justice and filing your case. You do not need a lawyer for this, although an interpreter is recommended. Action will be taken with a few weeks. Your employer will be required to attend a hearing, and with the recommendation of the Ministry of Labor against them, they will be required to pay the severance amount. The court can and will enforce this by seizing property from your employer and selling it if your employer still refuses to pay.

How to Contact NLCC (National Labor Consultation Center) of Ministry of Employment and Labor

The NLCC of the Ministry of Employment and Labor provides counseling service on employment & labor administration such as wage, retirement pay, dismissal, trade unions, occupational safety, equal employment, general labor matters, etc. Phone counseling service is available from Monday to Friday, from 9:00 to 18:00.

NLCC (National Labor Consultation Center) Homepage
Domestic Phone: 1350 (ext.4)
Overseas: +82-52-702-5089 (ext.4)