Korean Job Discussion Forums

[willardmusa]

Someone has asked me and, not knowing precisely the details of it all, I ask here: How is severance supposed to be paid when one is leaving employment?

Is it supposed to be a part of the employee's last "paycheck" ?

Is it supposed to be paid separately?

Is there a period of time in which the employer has to pay it?

Does the employee have to submit some kind of request for it; or, should it be paid as a matter of course by the employer?

At what point would the employer be in violation, i.e. guilty of not paying it?

** Another question: This guy's employer, a university, is trying to "negotiate" terms upon which they will issue him a letter of release. He has acted under his contract terms by giving the uni a sixty-day notice. Can't discuss details here per his request, but the basic thing is: they think they can negotiate for the release letter to get some things they want that are not covered in the contract. Any comments on this? Is this a matter for the Labor Board; or, maybe for Immigration?

[kprrok]

If your friend is breaking the contract, legally or not, they do not have to give him an LOR. If they want to negotiate for it, more power to them. If your friend wants to work again in Korea, he has to have it so negotiating is probably a good idea.

KPRROK

[willardmusa]

[sadsac]

Serverance should not be accruable. It should be paid with the final pay at the completion of each contract. As your friend is leaving before his current contract is completed, then the university is not obligated to pay him severance. If they have not paid him as yet, he is liable to be paid the severance that is outstanding from the previous contracts.

[willardmusa]

The way I understand it, with "severance" meaning you are being "severed" from your employment, . . i.e., leaving employment with the company or such, the severance payment is supposed to be paid to an employee when they leave employment, not at the end of every year that he or she is employed. I have checked in the past the English translation of the relevant information and this is the way it is described. And, I have talked with Korean workers who've been with their companies for many years and they have never received severance, but instead will get it when they leave employment with their respective companies.

That many establishments do indeed pay foreign English teachers the severance out at the end of a yearly contract does not mean that this is the way it is supposed to be handled in fulfillment of the intent of the severance system. It is intended to give a worker some additional cash in hand while he is between jobs. It's a kind of unemployment insurance of sorts in this way.

When an employer pays out the severance on a yearly basis, he is likely doing so for his convenience. One, he doesn't have to maintain some account in which he holds the money longterm, avoiding the accounting, avoiding the temptation to dip into it and thereby avoiding major financial and legal headaches later on.

In addition, when an employer pays out the severance on a yearly basis, he is saving a potentially significant amount of money. How?

From my understanding, by regulation, your severance is to be calculated on the average salary you were earning in the last six months of your employment. (And that average would have to include overtime payments you received in that last six months, from what I have read of the calculation.) As most employees get a raise each year, the amount that an employer would have to pay would be based on a higher salary each additional year.

So, if say you were getting (to use an average advertised salary for foreign ESL teachers on Dave's) 2 million won a month in your first year, and 2.3 in your second year, and you left at the end of the second year, the employer would, if he followed the regulation to the letter, have to pay out two year's severance payment, . . . that's two months of your salary . . and it would be calculated on the 2.3 million won you were making in the last six months of your employment. So, he would have to pay you 4.6 million won.

If that employer paid out your severance at the end of your first year, and then paid it out at the end of your second year, he would pay 2 million won in the first year and 2.3 million won in the second year, for a total of 4.3 million won, which is 300,000 won less.

Extend this kind of calculation out over more years and the amount can truly become significant.

AND . . . let's address another issue at hand in the above reply: leaving "mid-contract". Once you have completed one full year, you are under the severance umbrella. Any time you leave after that, you will be eligible for severance compensation for the entire period of your employment, not only for years you completed. So, if you leave 2.5 years, having completed two yearly contracts and half of a third, you would be entitled to 2.5 months salary, calculated on your average salary over the last six months of your employment.

By paying out every year, the employer may be operating under the assumption (and making you assume so as well) that he is able to treat you as a new employee each year, starting the clock all over again and then, when you leave mid-contract of a later year, it may appear that he's off the hook, so to speak, from paying severance on the year that you did not complete.

Well, let's say you completed 8 months of your third year and your salary was 2.5 million won. By regulation, you, having been an employee for 2 years and 8 months, should be eligible for severance compensation calculated on the whole time you were with the employer, that is two years and eight months. This means that you should receive a pro-rated severance amount for your last 8 months, and that would be about 1.6 million won.

If your employer paid you at the end of each completed yearly contract, and did not pay you for a year that you did not complete, . . . keeping in mind the calculation above, . . you would in the end lose 2.3 million won.

How? If the employer had followed the intent of the severance system and paid it at the end of your employment relationship, he would have had to pay you for 32 months of employment, with the calculation being on the average salary of your last six months of employment, which would have been at 2.5 million won a month. That means he would have to pay you: 2.5 X 2 = 5.0 million won (for the two completed years) + 1.6 million won (pro-rated amount for the 8 months you worked of the third year) = 6.6 million won.

If he had paid your severance at the end of each year and treated you as if you were a new employee year-to-year (and therefore assumed that he didn't have to pay you severance when you didn't complete the 3rd year), he would pay you: 2.0 for the first year completed + 2.3 million won for the second year completed = 4.3 million won.

6.6 million won - 4.3 million won = 2.3 million lost on your part, saved on his part.

** Now, someone correct me if I'm wrong! However, this is the way I understand it from what I have read.

** Though I know this much about how it is supposed to be calculate, I still have the questions that I posed in my original post on this thread. How is severance processed? Does the employee have to request it ? Does the employee have to fill out some kind of form? Or, is it just supposed to happen; i.e. is the payroll department just supposed to know they owe it and pay it out. And, if it is latter (or the former) when is the severance due - - before one leaves the employment; with the final salary payment; within a certain period of time? At what point is it "late"?

I haven't had to deal with the severance issue but once and that was when the Information and Communications University refused to pay it; in that case, I knew before I left that they were intending not to pay it, so the answers to the above questions were not revealed to me as I had to handle it another way: through the Labor Board, which forced the university to pay it. I am with a Korean employer now, but the issue of severance won't come up until I leave in a couple of years (and I have already been assured the employer, a large and reliable firm, will be paying it, and in the way it was intended to be paid: for the entire employment period.)

So, . . any help in answering the questions of my original posting would be appreciated. A friend, who teaches for a uni, is asking me these and I'm asking you.

Thanks,

willardmusa