Overview

According to a recent amendment to the Enforcement Decree of the Employee Retirement Benefit Security Act, while only companies employing five or more employees had been obligated to provide statutory separation (severance) pay, companies employing four or fewer employees will also be obligated to provide statutory separation pay amounting to 30 days' average wage for each year of service effective from December 1, 2010. In an effort to ease the burden to companies employing four or fewer employees, from December 1, 2010 until December 31, 2012, those companies are only required to provide at least 50% of the statutory separation pay and from December 31, 2012 are obligated to provide the full amount thereof. Kim & Chang reviews the changes.