In South Korea, the Labor Standards Act (LSA) stipulates the legal requirements for notice periods during employment termination.

Employer Notice Period

Employers are legally obligated to provide a minimum of 30 days' written notice to an employee before terminating their employment contract. This applies to businesses with five or more employees and situations where termination is due to reasons initiated by the employer.

Employers have two options:

1. Provide 30 days' advance written notice: This notice should clearly state the effective termination date and the reason for termination.
2. Offer 30 days' pay in lieu of notice: Instead of providing a notice period, employers can choose to compensate the employee with 30 days' worth of regular wages.

Exceptions to Notice Period

The 30-day notice requirement doesn't apply in all situations. Employers may be exempt from providing written notice under specific circumstances, such as when the employee causes severe harm to the company.

Additionally, employers are not required to provide a 30-day notice period for employees who have been employed for less than three consecutive months. This exemption might be overridden by terms outlined in the individual employment contract or the employer's established rules.

Employee Notice Period

There's no minimum legal requirement for employees to provide a notice period when resigning from their job in South Korea. The terms regarding notice periods during employee resignation are typically defined within the individual employment contract.

Severance pay in South Korea is a legal entitlement for employees upon termination of their employment, irrespective of the reason for separation. The Employee Retirement Benefit Security Act (ERBSA) is the primary legislation that governs severance pay.

Eligibility

All employees covered under the Labor Standards Act (LSA) are entitled to severance pay. This includes most workers across various industries. Employees with a minimum of one year of continuous service with their employer are eligible for severance pay.

Calculation

The law mandates that employees receive at least 30 days' average wage for each year of continuous employment. The average wage is typically determined by taking the total wages earned during the last three months of employment and dividing it by 90 (the number of days in three months).

Payment Options

Employers in South Korea have three main options for providing severance pay to eligible employees:

1. Severance Pay System: Employers establish a severance pay reserve where they make regular contributions based on employees' wages. Severance pay is then drawn from this reserve when an employee leaves the company.
2. Severance Pay Insurance: Employers secure severance pay insurance to cover potential liability for severance payments.
3. Retirement Pension System: Employers can establish a defined benefit or defined contribution retirement pension system to substitute for traditional severance payments.

Important Considerations

Severance pay in South Korea is a legal requirement. Employers cannot contract out of their obligation to provide severance pay to eligible employees. Severance pay must be paid regardless of the reason for termination, including voluntary resignation, dismissal, retirement, or company closure.

Terminating employees in South Korea involves a strict set of legal requirements designed to protect employee rights and ensure fair dismissals. There are two main types of termination: dismissal with cause and dismissal for urgent managerial reasons.

Types of Termination

Dismissal with Cause: This occurs when the employer terminates the employee for reasons directly attributable to the employee's actions, such as misconduct, poor performance, or violation of company rules.

Dismissal for Urgent Managerial Reasons: This termination is driven by significant business reasons such as restructuring, mergers, or economic downturns. These dismissals are more complex and must follow a strict process.

General Termination Requirements

Regardless of the termination type, employers must adhere to these fundamental requirements:

Written Notice: Employers must provide a minimum of 30 days' written notice with the termination date and specific reason or cause for dismissal. Compensation in lieu of notice is an option.

Just Cause (For Dismissal with Cause): Employers must ensure sufficient and demonstrable justification for the reason behind the termination. Causes must be directly related to the employee's performance, behavior, or ability to perform job duties.

Dismissal for Urgent Managerial Reasons

This type of termination involves additional obligations for the employer:

Prior Consultation: Employers must engage in sincere consultation with the union or employee representative at least 50 days before the effective dismissal date. This involves discussing efforts to minimize layoffs and establishing fair selection criteria.

Fair Selection Criteria: Employers must create and implement reasonable and objective criteria for selecting employees for termination. Factors like job performance, length of service, and difficulty of re-employment may be considered.

The Role of the Labor Relations Commission

If an employee disputes the reason for dismissal or the selection process (for urgent managerial reasons), they may file a claim with the Labor Relations Commission for mediation and resolution.