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Dodge7
Joined: 21 Oct 2011
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 Posted: Thu Mar 29, 2012 4:59 am Post subject: Why is there even Severance? |
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Why do we get it?
It seems like a total steal on our part. I mean, you spend three years working here with the same company then, all of a sudden, they owe you 8,000,000 on your final paycheck.
Do they put aside this severance money every month for you? |
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Skippy
Joined: 18 Jan 2003
Location: Daejeon
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| Posted: Thu Mar 29, 2012 5:16 am Post subject: |
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Well it is a incentive and a law.
If you are a good business you plan for that expense. If you are bad, then you get surprised by it.
It is usually the bad business that will try to cheat or can not pay it. |
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northway
Joined: 05 Jul 2010
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| Posted: Thu Mar 29, 2012 5:36 am Post subject: Re: Why is there even Severance? |
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| Dodge7 wrote: |
| It seems like a total steal on our part. |
Us and everyone else in Korea. I'm pretty sure it originated as a kind of retirement plan prior to their being much of a social safety net in Korea. A guy could work for one of the chaebols for his whole life then get a massive lump sum payment upon retirement that would allow him the funds to finance his retirement, whether it be from sitting on his ass or opening up a corner store. |
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DaeguNL
Joined: 08 Sep 2009
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| Posted: Thu Mar 29, 2012 4:58 pm Post subject: |
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| I wouldn't really call it a steal. In most western countries we get paid for every week we work, which turns out to be 26 pay periods. That would be the equivalent of 13 monthly pay periods in Korea. That severance bonus just covers the extra 2 pay day's we miss out on. |
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alistaircandlin
Joined: 24 Sep 2004
Location: Seoul
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| Posted: Thu Mar 29, 2012 5:03 pm Post subject: |
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They do put aside an amount each month. It's law in Korea. It's not really a bonus, it's more like they are deducting money from your monthly pay, and giving you this when you finish working there.
Here's something that Hagwon owners might keep quiet, too: if you extend your contract for over a year, but then you end before completing the second contract, they legally have to pay you pro-rata for your second year.
For example, you work for a hagwon for one year. Then you re-sign for a second year. After six months you find a better job, and give your two months' notice. So you've not completed your second contract, but you have worked there for eight months, plus you've finished your initial one year contract. The Hagwon has to pay you 8/12 of your monthly salary as severance pay. Of course, they also have to pay a full months' salary after the first year. |
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alistaircandlin
Joined: 24 Sep 2004
Location: Seoul
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| Posted: Thu Mar 29, 2012 5:06 pm Post subject: Re: Why is there even Severance? |
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| northway wrote: |
| Dodge7 wrote: |
| It seems like a total steal on our part. |
Us and everyone else in Korea. I'm pretty sure it originated as a kind of retirement plan prior to their being much of a social safety net in Korea. A guy could work for one of the chaebols for his whole life then get a massive lump sum payment upon retirement that would allow him the funds to finance his retirement, whether it be from sitting on his ass or opening up a corner store. |
That's interesting. I never thought of that. So it's like a pension plan? Perhaps we all should start putting these severance payments into savings accounts. |
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ttompatz
Joined: 05 Sep 2005
Location: Kwangju, South Korea
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| Posted: Thu Mar 29, 2012 7:12 pm Post subject: Re: Why is there even Severance? |
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| alistaircandlin wrote: |
| northway wrote: |
| Dodge7 wrote: |
| It seems like a total steal on our part. |
Us and everyone else in Korea. I'm pretty sure it originated as a kind of retirement plan prior to their being much of a social safety net in Korea. A guy could work for one of the chaebols for his whole life then get a massive lump sum payment upon retirement that would allow him the funds to finance his retirement, whether it be from sitting on his ass or opening up a corner store. |
That's interesting. I never thought of that. So it's like a pension plan? Perhaps we all should start putting these severance payments into savings accounts. |
Might be why the legislation is in the "Employee Retirement Benefit Security Act" http://www.moel.go.kr/english/topic/laborlaw_view.jsp?idx=260&tab=Standards
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alistaircandlin
Joined: 24 Sep 2004
Location: Seoul
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| Posted: Thu Mar 29, 2012 7:25 pm Post subject: |
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thompatz - can you confirm my point above about being entitled to pro rata severance pay after you have worked for one year?
I've never looked this up, but my father-in-law pointed it out when my wife gave in notice to a Hagwon in January.
I'm assuming this is the case for NETs in public schools too? They are legally entitled to pro rata severance pay as long as they extend their contract for a second year? If you quit within the first year though, I don't think you have any entitlement. |
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TheUrbanMyth
Joined: 28 Jan 2003
Location: Retired
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| Posted: Thu Mar 29, 2012 7:30 pm Post subject: |
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| alistaircandlin wrote: |
They do put aside an amount each month. It's law in Korea. It's not really a bonus, it's more like they are deducting money from your monthly pay, and giving you this when you finish working there.
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Yes but they have to match that. That's where the "bonus" part comes in. But yeah it's not really a "bonus" just severance. |
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OculisOrbis
Joined: 17 Jul 2006
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| Posted: Thu Mar 29, 2012 8:04 pm Post subject: |
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.....
Last edited by OculisOrbis on Thu Mar 29, 2012 10:12 pm; edited 1 time in total |
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OculisOrbis
Joined: 17 Jul 2006
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| Posted: Thu Mar 29, 2012 8:16 pm Post subject: |
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| alistaircandlin wrote: |
They do put aside an amount each month. It's law in Korea. It's not really a bonus, it's more like they are deducting money from your monthly pay, and giving you this when you finish working there.
Here's something that Hagwon owners might keep quiet, too: if you extend your contract for over a year, but then you end before completing the second contract, they legally have to pay you pro-rata for your second year.
For example, you work for a hagwon for one year. Then you re-sign for a second year. After six months you find a better job, and give your two months' notice. So you've not completed your second contract, but you have worked there for eight months, plus you've finished your initial one year contract. The Hagwon has to pay you 8/12 of your monthly salary as severance pay. Of course, they also have to pay a full months' salary after the first year. |
If you are paid the severance after your first year, the clock resets to zero and you have to work another complete year before you are eligible for severance again.
If you re-sign your contract, not taking the severance payment, then you are entitled to one year's severance plus pro-rated amount for you second partial year.
It's not really supposed to be one month's salary,,it's actually supposed to be your average daily earnings in your final 3 months X 30 for a complete year....If you working lots overtime in your final 3 months, your severance could be higher than your monthly salary.
Also, if you renewed your contract, not taking the severance, then your severance for the entire time you were employed (1st year plus partial second year) would be calculated using your final three months of earnings -- assuming you shrewd enough to negotiate a raise in your second year, your severance will be more. |
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goreality
Joined: 09 Jul 2009
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| Posted: Thu Mar 29, 2012 9:40 pm Post subject: |
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| DaeguNL wrote: |
| I wouldn't really call it a steal. In most western countries we get paid for every week we work, which turns out to be 26 pay periods. That would be the equivalent of 13 monthly pay periods in Korea. That severance bonus just covers the extra 2 pay day's we miss out on. |
Interesting theory but no.
We get paid about 26/12 times more money every check here. 45k a year is still 45k a year. 12$ an hour worked is still 12$ an hour worked.
Severance is just another type of pension if you quit. It could also be viewed as unemployment insurance since they don't have that here on a national level. Personally I prefer getting back what you put in for these kind of schemes. |
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pkang0202
Joined: 09 Mar 2007
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| Posted: Thu Mar 29, 2012 11:58 pm Post subject: |
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| TheUrbanMyth wrote: |
| alistaircandlin wrote: |
They do put aside an amount each month. It's law in Korea. It's not really a bonus, it's more like they are deducting money from your monthly pay, and giving you this when you finish working there.
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Yes but they have to match that. That's where the "bonus" part comes in. But yeah it's not really a "bonus" just severance. |
Match what? Maybe you are confusing severance and Pension.
When an employee hires you, they automatically figure in severance in your salary.
To YOU you see 2.5 mil won / month, 30 Million / year (pretax). And then you get an additional severance of 2.5 at the end..
To THEM they see it as 2.7 mil per month for 12 months. They deduct 200k per month and that goes to your severance. If you quit before 12 months they see it as a bonus. If you finish your contract then they just break even.
So, you aren't really getting any bonus at all. |
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northway
Joined: 05 Jul 2010
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| Posted: Fri Mar 30, 2012 7:41 am Post subject: |
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| alistaircandlin wrote: |
thompatz - can you confirm my point above about being entitled to pro rata severance pay after you have worked for one year?
I've never looked this up, but my father-in-law pointed it out when my wife gave in notice to a Hagwon in January.
I'm assuming this is the case for NETs in public schools too? They are legally entitled to pro rata severance pay as long as they extend their contract for a second year? If you quit within the first year though, I don't think you have any entitlement. |
Hagwon here, but I've received pro-rated severance, and I'm pretty sure the Chosun Ilbo wasn't just giving me a million won out of its love for foreigners. |
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Who's Your Daddy?
Joined: 30 May 2010
Location: Victoria, Canada.
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| Posted: Fri Mar 30, 2012 7:48 pm Post subject: |
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| I thought it was there to encourage you to finish your contract. I wanted to quit at month 10. |
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