earticle

영어

Since the mid-1990s, many Korean companies have begun to switch to the annual salary system from the pre-existing seniority system in order to introduce an incentive-based work environment. The majority of such companies often adopt an installment severance payment system by including severance pay in a worker's annual salary. However, a worker's right to receive severance pay cannot be abandoned on an involuntary basis before his retirement considering the importance of the pay to the welfare of a retired worker. Many legal cases went to court because of the disharmony between the nature of severance pay and installment severance payment, and relevant case law has been formed incrementally. Basically, a worker's right to receive severance pay should be subject to full-blown legal protection, and thus, installment severance payment should be illegal in principle. However, as the relevant en banc Supreme Court decision shows, a question is raised whether installment severance payment is null and void even in case a worker voluntarily agrees to receive such payment. The Court's recognition of an employer's restitution right based on the illegality of installment severance payment in fact results in implicitly legalizing a worker's agreement on installment severance payment, because severance pay cannot be considered part of salary. Therefore, it is more realistic to expressly legalize the agreement on installment severance payment between the worker and the employer in terms of cost and legal stability, and to examine into its permissibility under the Statute on the Protection of a Worker's Severance Pay, which allows such payment under limited conditions. The fundamental solution is to regulate the method and procedure of installment severance payment by enacting new legislation.