Retirement benefit system

Category Labor standards Date 2010-11-04
Title Retirement Pay(퇴직금) System expanded to workplaces with 4 workers or fewer
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Dear Foreign workers & managements,
This is the National Labor Consultation Center.
We'd like to introduce revised retirement pay system applied to workplaces with 4 workers or fewer as follows:

Retirement benefit system to cover all the workplaces from December 1, 2010

The related enforcement ordinance is amended at the cabinet meeting on September 14th to cover additional 1.52 million workers of workplaces with four or fewer employees.

The Korean workers in workplaces with four or fewer employees will be eligible to retirement benefit system starting from December 1st, 2010. To be eligible for the retirement benefit, a worker must work continuously more than one year at the same workplace, the real date for the actual implementation of the system will be from December 1, 2011.
The government passed the motion for the amendment of the ‘Enforcement Ordinance on Workers’ Retirement Benefits Guarantee Act’ at the cabinet meeting held on September 14. Accordingly, it became institutionally possible that approximately 1,526,000 workers of small businesses with four or fewer employees will additionally benefit the system and be able to accumulate future income resources.
However, in consideration of burden by employers of small sized businesses for premium for retirement benefits (retirement pay or retirement pension), they will pay 50% of the premium that employers of workplaces with five or more employees pay only from December 1st, 2010 to December 31, 2012 and 100% of the premium will be charged from 2013.
In addition, to encourage adoption of retirement pension system at as many workplaces as possible at the initial stage of the implementation of the system, the amended enforcement ordinance had designated Korea Workers’ Compensation & Welfare Service as a retirement pension service provider for businesses with four or fewer employees so that the small businesses can use the retirement pension service at low commissions.
In 1961 when the retirement pay system was first adopted under the revised Labor Standards Act, the system was to apply to companies with 30 employees or more. In the following years, the coverage had been extended steadily, until it came to include workplaces with five or more employees in 1989. In January 2005, Workers’ Retirement Benefits Guarantee Act was legislated, and the Act specifies that the retirement benefit system (retirement pay or retirement pension) should be implemented for workplaces with four or fewer employees by the end of 2010. The revision of the enforcement ordinance this time is in accordance with the provision.
And We'd like to inform you that Revised bill for retirement pay system is pending in the National Assembly.
Thank you for using our service.
Best regards,
NLCC