Korean Job Discussion Forums

[iggyb]

For those of you who have collected severance, what rate of taxes was taken out? Anybody (else) have 33% deducted?

I've been trying to figure out why my school (SMOE) deposited a large chunk of cash in my account Friday. My contract ends Feb. 28th. I wasn't expecting severance until mid-march - Feb. 24th at the earliest. (I had also discussed what we were going to do with the kids during the 2 1/2 weeks the kids will be in school in Feb with my CT...)

It took me awhile, but I think I figured out how the amount deposited works:

My monthly salary is 2.5. I'll be finishing 3 contracts with SMOE totalling 2.4 years if you knock Feb out of the picture.

They deposited 3.94 in my account along with my monthly salary. If you work backwards, 3.94 would be severance at about a 33% tax rate.

I know a FT who had that much deducted from her last pay when she left the institute under SMOE we were working at. She had been shocked at how much money was removed because it was a big difference from what had been taken out previous months. Her parents are Korean and live here and checked it out. The accountant said they had used a 33% tax rate.

I'm curious what other people who have finished at SMOE have had deducted.....What tax rate?

[thebektionary]

Pension should be a total of 9%, 4.5% for you and 4.5% for your employer. Pension and income tax are two different things. Your income tax should be around 1.6%.

I've never worked for SMOE so I can't comment on that but it is pretty much the same for everyone no matter where you're working, unless you're in a skeezy hagwon that is illegally listing you as self-employed.

[iggyb]

Thanks.

But, this isn't connected to the pension, I'm pretty sure.

This would be taxes taken out of my severance pay - which is taxable.

[pkang0202]

Severance is only paid for 365 days of completed work. If you worked 2 and a half years, you would only be paid severance for 2 years of it.


Your school's accountant shoudl have everything itemized. They don't just deposit lump sum into your bank accoutn without a detailed "payslip" of what is what.

Now, SMOE and your school are separate entities. If it was SMOE who depostied that money, you need to contact SMOE to make sure they didn't make a mistake. If it was your school, then your school will have the records.


BTW,

as a word of warning. An acquaintance of mine also had a mysterious "deposit" made to his account. He assumed it was his severance. He spent the money. 2 weeks later he is informed the deposit was a mistake and the school demanded their money back. He had spent the money. So, they withheld his last paycheck + severance to "repay" the school for their error. He had to call home to beg his family for money to fly back home.

[nathanrutledge]

It could be any number of things. Never worked for SMOE, but GEPIK and I never had any trouble with getting my severance.

There are a lot of unanswered questions. You mention in your OP that you're working for an institute that is working for SMOE? Are you working for SMOE directly, or for a third party?

This is the third contract, but you're finishing after 2.4 years, not a full 3?

Have you taken severance before?

According to the labor standards act, you get severance based on average monthly pay. So, if you haven't taken severance, then your average pay is based on your TOTAL AVERAGE - so if you got raises, you're getting the average of your lower and higher salaries. Also, if you don't take severance until the end, then the whole year long thing shouldn't matter - it's a minimum of a year, but it's NOT ONLY years. So, if you've worked for 2.4 years, then you should get paid severance based on your average income during that time for a total of 2.4 years, NOT 2 years.

Your institute could be screwing you.
Maybe they are paying based on your initial salary and not the average.
Maybe they are not paying that last part, only paying for the 2 years.
Maybe they are just stealing it.
Maybe it's a bank error.
Maybe it's not even the severance pay?

Too many unanswered questions to give a definitive answer.

[iggyb]

Anybody got severance before and know what the tax rate on it was?

Thanks all who replied.

I'll find out Wednesday but hate wondering in the meantime.

The school paid the severance.

I also believe severance is not based on yearly work. If you don't make it through the first year, you don't get severance anyway. After the first year, severance is based on total time worked - so even if you break a subsequent contract, you get severance based on the total time worked.

My first contract with SMOE was for half a year to fill a hole the school had. It was at an institute under SMOE where we taught Korean teachers. I was under contract to SMOE. The agreement was that I would work there 1 1/2 years then could transfer elsewhere within SMOE which I did. Now, I'm finishing up 1 year at a regular public school.

I'm feeling confident what happened was they took 33% out of the severance for taxes. The same thing happened to another FT when she left the teachers-training center after 3 years: She was shocked how much money was deducted from her pay and it turned out they taxed her severance at 33%...

If you think about it ---- the highest tax rate in Korea is 35% for 88 million a year and above. 2 1/2 years at 2.5 million a month would be a little over 6 million. That would be 72 million a year - if they paid you that every month for a full year....

Maybe that is why they took 33%?

It's crap to me: The school can figure out exactly how much money I made this year, because they paid me. They could add severance and other money that comes at the end fo the contract, and tax based on my actual year's earnings.

Taking out 33% means rather than getting the gross 6 million, I got a net of 4. If you're makint 72 million a year, maybe 2 isn't a big deal, but when you're making 28, it means a good bit more...

The 2nd thing is, why give me severance now?

The contract doesn't end until Feb. 29th.

I have half a feeling they will tell me they considered my job done when we finished Winter Camp the 2nd week in January. I saved up vacation time to use during Winter Break to help prepare to go home. All I have left is the 2 1/2 weeks of Graduation Week at the start of Feb in which we will not be teaching --- I asked but I'm not sure what we're going to be doing. Besides that, I have no desk warming duties left - I have vacation time.

Maybe the school decided it wasn't worth paying me for Feb. since I wasn't going to be doing much work???

We'll see. I'm torn 50/50 on caring. I saved up vacation time and I fulfilled the contract. I deserve the last month's pay whether we have regular classes or not. The other half of me doesn't care and just wants to get home. This school has been fine, but I've been here 2 1/2 years (a total of 7 overall) and it's time to go home....

[TheUrbanMyth]

[goreality]

Severance is based a formula roughly equal to total days worked / 365 * monthly pay average for last 3 months worked. If the number of days worked is less than 365, you won't get it.
Whoever said it is rounded to the nearest year is wrong.
The 33% tax rate seems a little high. For me it has always been taxed at the same rate I usually pay (maybe they should be charging closer to 5%). Medical and pension aren't deducted from it.
Seems they are overtaxing you. Likely in about a year, you will get a cheque from NTS sent to your house in Korea. Chances are you won't even be notified by whoever picks it up and the money will be donated to NTS.

[fezmond]

[iggyb]

I don' t know specifically how they calculate the time - months or days or what - but once you finish the first year, your severance covers the total amount of time you've worked for the same org - like SMOE - unless you've taken severance at the end of each year/completed contract. I don't know about that situation. The places I worked for always gave it when you left for good.

Like I noted before, I know someone else who got 33% taken out of her pay by a place connected to SMOE. She had 3 years worth severance.

I will find out tomorrow, but the only thing that makes sense is that they took out 33% and either don't want to pay Feb.'s salary due to the lack of work or somehow forgot my contract runs to March 1st...

The school deposited the money, so even if SMOE sent it early, they should know when my contract ends and when to deposit it.

Tomorrow will be a little interesting.

If 15% is the default rate, I'm out about 1 million for severance and 2.5 for Feb.'s pay if they say the job is over now.

If they say the money was deposited by mistake and I work through Feb., then it bites less, but I'm ready to go home. 2 1/2 weeks of non-real classes doesn't thrill me at this point...

[pkang0202]

[r122925]

[northway]

[iggyb]

Like said above, it's the law. It doesn't matter what the contract says.

The labor laws in English should be available online. There used to be a link to them here. Anybody thinking of working in Korea for a couple of years or more should give them a read.

[Wildbore]

The law essentially says that you get a retirement pay of one months salary for each consecutive year worked.

There is no mention anywhere in labor laws about pro-rating or partial payment for periods less than years of service.

And yes, the labor laws are in English on the minsitry of labor website.