As a TEFL teacher in Korea, you are likely familiar with the concept of severance pay (퇴직금), which is a legal right for workers who complete more than one year of continuous employment at a single workplace. However, understanding the intricacies of severance pay, especially when renewing contracts without a break in employment, is essential. In this article, we will break down key aspects related to severance pay and mid-term settlement (퇴직금 중간정산) based on South Korea’s labor laws.
Continuous Employment and Contract Renewal
If your employment continues seamlessly after the end of your contract (meaning there is no gap between the expiration of the old contract and the signing of a new one), your employment is considered continuous. In such cases, you are entitled to severance pay at the end of your employment. However, if the employer provides severance pay before the actual end of your employment period—during contract renewals, for example—this could be considered a mid-term settlement of severance pay.
What is Mid-Term Settlement of Severance Pay?
A mid-term settlement of severance pay refers to receiving severance before your employment officially ends. This practice, however, is restricted by the Korean Labor Standards Act and can only occur under specific conditions. Simply requesting a mid-term settlement as a worker, without meeting these conditions, will not be legally recognized.
Legal Grounds for Mid-Term Settlement
Under the revised Guarantee of Workers’ Retirement Benefits Act (근로자퇴직급여보장법), mid-term settlements of severance pay are only allowed under specific circumstances, as outlined in Article 3 of the Enforcement Decree of the Act (근로자퇴직급여보장법 시행령 제3조). These circumstances include:
- Purchasing a Home: If you are a worker without home ownership and you purchase a home under your name, you may be eligible for mid-term settlement.
- Rental Deposits: If you are renting a home and need to provide a jeonse (전세) or deposit, you are eligible for mid-term settlement once during your employment with the same employer.
- Medical Expenses: If you or a family member (spouse, dependents) require medical care for more than six months and the medical costs exceed 12.5% of your annual wage, you may request a mid-term settlement.
- Bankruptcy or Rehabilitation: If you have declared bankruptcy or entered personal rehabilitation proceedings within five years prior to the application for mid-term settlement, you can be eligible.
- Extended Retirement: If your employer agrees to extend your retirement age while reducing wages according to a collective agreement or employment rules, you may be entitled to mid-term settlement.
- Reduced Working Hours: If you and your employer agree to reduce your working hours by at least one hour per day or five hours per week, and you continue working under the reduced hours for more than three months, you can qualify.
- Reduction in Severance Due to Shorter Working Hours: If changes in the law lead to a reduction in your working hours and consequently lower severance pay, you may request mid-term settlement to prevent financial losses.
- Natural Disasters: If you suffer losses due to a natural disaster as determined by the Ministry of Employment and Labor, you may apply for mid-term settlement.
Important Considerations
It is important to note that outside of these specific situations, a mid-term settlement of severance pay is not permitted, even if both the employee and employer agree. Any mid-term settlement conducted without these legal grounds may be deemed invalid under Korean labor law.
Conclusion
As a TEFL teacher in Korea, it is crucial to understand your rights regarding severance pay, especially when renewing contracts. If you face one of the conditions listed above, you may be eligible for a mid-term settlement of your severance pay. Otherwise, you will receive your severance when your employment formally ends. If you are unsure about your eligibility or need further clarification, consulting a labor attorney or your school’s HR department is recommended to ensure your rights are protected.
Stay informed, and protect your rights as a foreign worker in Korea!
