TITLE : FAQ ON FDI IN KOREA 2023 (Q156~Q160)
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■ FAQ on FDI in Korea 2023 (Q156~Q160)
Labor
Q156 | What are the conditions that must be satisfied in order to make an interim settlement of severance paymennts? |
Article 8 (2) of the Act on the Guarantee of Employees' Retirement Benefits stipulates that "Any employer may,upon request by an employee due to a ground prescribed by Presidential Decree, pay such employee a retirement allowance for his/her continuous service period prior to his/her retirement. In such cases, the continuous service period to be used for the calculation of the amount of a retirementallowance accumulated thereafter shall be reckoned anew from the time when the balance is settled."
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"Grounds prescribed by Presidential Decree" (as in Article 3 of theEnforcement Decree of the Act on the Guarantee of Employees'Retirement Benefits) are as follows:
- Where an employee who is a non-homeowner purchases a house inhis/her own name
- Where an employee who is a non-homeowner pays a tenancy depositunder Article 303 of the Civil Act or a security deposit under Article 3-2of the Housing Lease Protection Act for residential purposes. In suchcases, the number of such occurrences shall be limited to one timewhile the employee works in the same business
- Where an employee pays the medical care costs incurred forconvalescence from illness or injury of any of the folowing persons,which requires at least six months of convalescence:a. The employee himself/herselfb. The spouse of the employeec. The family members dependent on the employee or on the spouseof the employee
- Where an employee is declared bankrupt pursuant to the DebtorRehabilitation and Bankruptcy Act within five years retroactivelyfrom the date he/she applies for interim settlement of a retirementallowance
- Where an employee receives a decision to commence individualrehabilitation procedures pursuant to the Debtor Rehabilitation andBankruptcy Act within five years counted retroactively from the datehe/she applies for interim settlement of a retirement allowance
- Where an employer implements a system of reducing wages basedon a particular age, length of consecutive service, or amount ofwage through a collective agreement, employment rules, etc. on thecondition of extending or guaranteeing the current full retirement age
- Where an employer reduces contractual work hours by one hour perday or five hours per week or longer according to an agreement withthe employee, and the employee agrees to work for three months orlonger according to the reduced contractual work hours.
- Where an employee receives a reduced retirement allowance due toshortened working hours as the Labor Standards Act (No. 15513)enters into force
- Where damage was caused due to disaster and the cause falls underthose publicly announced by the Minister of Employment and Labor.
- In addition, the following special conditions must be met for interimsettlement:
- Interim settlement of severance pay is possible "only when there issuch a demand from the employee." When there is no such demandfrom the employee, the employer’s unilateral payment of severancepay as interim settlement is not effective.
- There must be approval by the employer for interim settlement ofseverance pay. The employer is not obligated to make an interimsettlement of severance pay, and he/she can refuse the demandof the employee for mid-term
※ When severance pay has been settled mid-term with the consent of the employer, in order to pay the remaining severance pay, the number of continuous years of service must be calculated anew from the time of interim settlement. Even if the severance pay has been settled mid-term, the employee has not actually left the company. Therefore, interim settlement of severance pay will not affect the calculation of the employee’s continuous service period for HR management such as calculation of annual paid leave days, certification of career, or promotions
Q157 | When an employee’s work attitude and performance are poor, can he/she be dismissed? |
In Article 23 (1) of the Labor Standards Act, it is prescribed that "An employer shall not, without justifiable cause, dismiss, lay off, suspend, or transfer an employee, reduce his/her wages, or take other punitive measures (hereinafter referred to as "unfair dismissal, etc.") against him/her."
- Therefore, for the dismissal to be justified, there must be an accountablereason "that prohibits the continued service of the employee accordingto social norm." This is judged based on various overall circumstances,such as the purpose of the punitive measures, nature of the business,status of the employee, and the motivation for engaging in inappropriatebehavior, and whether the order of the company has been disrupted.
- In addition, as per subparagraph 12 of Article 93 of the Labor StandardsAct, the rules of employment must prescribe "matters regarding rewardand punishment". In terms of procedure, they can have legitimacy onlywhen they are impartially exercised according to the prescriptionsmade by an institution of authority in a collective agreement or rules ofemployment.
- Poor work attitude is generally a behavior in which the employee doesnot focus on his/her work and undermines efficiency or production. Ofcourse, poor work attitude and negative performance alone can not besufficient reasons for the employee to be subject to punitive treatment.However, when the employee continues to show lack of diligence orimprovement despite numerous instructions for correction and orders forparticipation in training, he/she could be subject to punitive measures.
Q158 | As it is difficult to hire an employee that is suitable for a position, and to dismiss an employee that is not suitable for a position, can the company assign a period in which to test the capabilities of a new employee? |
A probation period can be established in the labor contract to give the company time to test the capabilities of the new employee. In general, probation refers to "a form of labor in which a definitive labor contract has been established, and the purpose of which is to promote work skills and capabilities." The Labor Standards Act is also fully applied to probationary employees, and they can only be dismissed if there is a valid reason.
- The Labor Standards Act does not stipulate separately on the trainingperiod. However, based on subparagraph 1 of Article 26 of the LaborStandards Act, "where the period during which the employee has workedcontinuously is less than three months", the obligation to provide a 30day advance dismissal notice is not applied. As a result, a probationperiod of three months is set in most cases.
Q159 | The minimum wage was calculated based on statutory monthly work hours of 209 hours. How were the work hours calculated? |
According to Article 50 of the Labor Standards Act, workhours should not exceed 40 hours a week. Based on this, theaverage monthly fixed work hours were calculated as follows:
- The monthly average number of weeks in a year is 4.345 weeks (365days ÷ 7 days ÷ 12 months). Including eight work hours per day andeight hours of weekly holiday, the total work hours comes to 48 hours perweek. Therefore, if the monthly average number of weeks is multipliedwith 48 hours per week, the total monthly work hours comes to 208.59hours (4.345 X 48 = 208.56). In other words, the hourly minimum wagewas calculated based on 209 hours of statutory monthly work hours.
Q160 | A worker works 15 hours a day three days a week, and the total weekly work hours are 45 hours, which is within the total weekly work hour limit of 52 hours. Is this still a violation of work hour regulations? |
According to Article 50 of the Labor Standards Act, the statutory work hours cannot exceed eight hours a day and40 hours a week excluding recess hours. Also, Article 53 of the Labor Standards Act limits weekly extended work hours to 12 hours.
- In the above case, the worker has worked seven hours in excess of eighthours per day, which makes the extended work hours a total of 21 hours(7 hours x 3 days). Therefore, even if the total weekly work hours is within52 hours, if weekly extended work hours exceed 12 hours, it constitutesa violation of the law