South Korea: All Employers Must Fund Severance Pay Externally by 2030
South Korea's Ministry of Employment and Labor announced on October 29 that all employers will be required to fund workers' severance pay through external financial institutions rather than holding it in-house, in phases to be completed by 2030, so employees are not left unpaid when a company fails.
Workplaces with 100 or more employees must comply from 2028, those with 10 to 99 employees from 2029, and workplaces with fewer than 10 employees from 2030. The requirement is not retroactive and applies only to entitlements arising after it takes effect.
Ministry data show severance pay accounted for 41.1 percent of unpaid wages last year, 822.9 billion won, the largest single category. Small and medium-sized firms will be automatically enrolled in the "Blue Seed" retirement pension fund, and benefits after age 55 will default to annuity payments. The government has set aside 12.2 billion won in the 2027 budget to help smaller firms comply.
In a ministry survey of 1,500 workplaces, 52.5 percent of owners called the mandate a burden. Labor Minister Kim Young-hoon said the change imposes real additional costs on many businesses, but that unpaid severance fundamentally harms people who worked diligently.
Source: GSM · USA (original Chinese edition)
Photo: 照片：韩国首尔江南街景，Qhairy 摄，Wikimedia Commons，CC BY 4.0 授权 / Photo of a Gangnam street in Seoul by Qhairy, Wikimedia Commons, CC BY 4.0
