The Labor Standards Act (LSA)
In South Korea, the Labor Standards Act and the Employee Retirement Benefit Security Act mandate a retirement benefit system for all employees with at least one year of service.
Statutory Formula
- Formula: 30 days (1 month) of average wage for each year of continuous service.
- Average Wage: Calculated based on the total wages paid during the 3 months prior to termination.
- Eligibility: Applies to any employee who works more than 15 hours per week.
Employee Rights & Protections
Regardless of your location, most modern labor laws provide standard protections during the severance process. Ensure you are aware of your right to a written explanation, your right to receive your final settlement within a reasonable timeframe (usually 14-30 days), and your protection against unauthorized deductions.
Final Settlement Checklist
- Accrued Leave: Check if you are entitled to encashment of unused vacation days.
- Notice Pay: If you are terminated without notice, you may be entitled to pay-in-lieu.
- Tax Certificates: Ensure you receive all necessary tax documentation for your final year of service.
- Experience Letter: A mandatory requirement in many jurisdictions for your next career move.
How to Negotiate Your Severance
If you believe your severance calculation is incorrect or unfair, start by requesting a detailed breakdown from your HR department. Compare it against the official laws cited in this guide. If discrepancies persist, consider seeking legal advice or contacting your local labor department or ombudsman.
Calculate Your Korean Severance
Estimate your payment based on the statutory 30-day-per-year formula.
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