Introduction: The Three Major Legal Risks Employees Face

Over the course of a working life, unexpected moments can arise in which your rights are infringed. In particular, the three most common legal risks faced by Korean employees are unfair dismissal, unpaid severance pay (toejikgeum), and wage arrears. According to statistics from the Ministry of Employment and Labor (goyong-nodongbu), about 240,000 wage arrears complaints and roughly 14,000 unfair dismissal remedy applications were filed in 2025 alone, and the total amount of unpaid wages exceeded 1.7 trillion won. These numbers are not just abstract statistics - they represent real threats that can happen at any time to your colleagues, your family, or you yourself.

The problem is that many workers do not know exactly what rights they have, or how to respond when those rights are violated. A unilateral dismissal notice from the employer, a single text message saying "Don't come in from today," a paycheck that never arrives accompanied by a promise to "just wait a little longer," severance pay that still hasn't been deposited more than 14 days after leaving the job - to handle these situations calmly and systematically, you need to be familiar with the remedy procedures grounded in the Labor Standards Act (geullo-gijunbeop), the Employee Retirement Benefit Security Act, and the Trade Union and Labor Relations Adjustment Act.

This article organizes step by step everything employees need to know - based on the laws and practical procedures in effect in 2026 - from filing unfair dismissal remedy applications, calculating severance pay, reporting wage arrears, and using the chedanggeum (state wage guarantee) system, to real-world cases and pitfalls to watch out for.

1. Unfair Dismissal Remedy Application - Labor Relations Commission

Article 23 of the Labor Standards Act clearly states, "An employer shall not dismiss, suspend, transfer, reduce the wages of, or otherwise punish a worker without justifiable cause." Employees at workplaces with five or more employees who are dismissed without justifiable cause can seek remedy through the Labor Relations Commission (nodong-wiwonhoe).

1.1 Distinguishing Dismissal vs. Recommended Resignation

The very first thing to clarify is whether what you received is a dismissal or a recommended resignation (gwon-go-sajik). The two have completely different legal characters.

  • Dismissal: An act by which the employer unilaterally terminates the employment relationship. The worker's consent is not required, and all statutory dismissal restrictions under the Labor Standards Act apply.
  • Recommended Resignation: A form in which the employer recommends resignation and the worker agrees and submits a resignation letter. Legally this is a termination of the labor contract by mutual agreement, so in principle it is not eligible for an unfair dismissal remedy application.
  • Key Criterion: A resignation submitted under coercion such as "If you don't write a resignation letter, you will be dismissed" can be effectively recognized as a dismissal (Supreme Court precedents).

1.2 Remedy Application Period (Within 3 Months of the Dismissal Date)

An unfair dismissal remedy application must be filed with the competent Regional Labor Relations Commission within 3 months from the date of dismissal. This is a statute of limitations (peremptory period) - even one day over means you permanently lose the right to seek remedy.

  • Reference date: not the date you received the dismissal notice, but the date on which the employment relationship actually ends.
  • Where to file: the Regional Labor Relations Commission with jurisdiction over the workplace location.
  • Fee: free (there is no filing fee for Labor Relations Commission remedy applications).
  • Required documents: remedy application, employment contract, notice of dismissal, pay slips, proof of enrollment in the four major social insurance programs, etc.

1.3 Procedure and Average Duration

The remedy application process proceeds as follows:

  1. First-instance hearing (Regional Labor Relations Commission): held within about 60 days after the application is accepted. Average processing time is around 60 to 80 days.
  2. Reconsideration application (National Labor Relations Commission): if you are dissatisfied with the first-instance ruling, you can apply for reconsideration within 10 days. Processing takes about 2 to 3 months.
  3. Administrative litigation: if you are still dissatisfied with the National Labor Relations Commission ruling, you can file suit in the Administrative Court within 15 days. First-instance proceedings take about 10 to 12 months on average.

Therefore, the entire remedy process can take anywhere from as short as 2 months to as long as more than 2 years, and you need to plan for living expenses during this time.

1.4 Enforcement of Remedy Orders

If the Labor Relations Commission finds that the dismissal was unfair, it orders the employer to reinstate the worker to the original position along with payment of wages equivalent to those for the dismissal period. If the employer fails to comply:

  • Enforcement fine: up to 30 million won, imposable twice per year (Article 33 of the Labor Standards Act).
  • Criminal punishment: failure to comply with a final remedy order is punishable by up to 1 year in prison or a fine of up to 10 million won.
  • Monetary compensation system: if the worker does not wish to be reinstated, they can apply for monetary compensation in the form of back wages plus consolation money.

2. Calculating Severance Pay and Responding to Non-Payment

Severance pay (toejikgeum) is a statutory benefit whose payment is mandatory under the Employee Retirement Benefit Security Act, and is a mandatory provision that cannot be waived by agreement between employer and worker. Even under an "annual salary inclusive of severance" contract, severance pay must still be paid separately at the time of actual retirement (Supreme Court ruling 2010Da91046).

2.1 Requirements: 1+ Year of Service and 15+ Hours Per Week

The eligibility requirements for severance pay are as follows:

  • Continuous service of 1 year or more: you must have worked continuously for at least 1 year from the date of hire to the date of separation. Probationary and internship periods are all included.
  • Prescribed weekly working hours of 15+ hours: your prescribed working hours averaged over 4 weeks must be at least 15 hours per week. Part-time (arbeit) workers who meet this requirement are also eligible for severance pay.
  • Workplace size does not matter: workplaces with fewer than 5 employees have also been subject to severance pay requirements since December 2010.
  • Employment contract type does not matter: regular, contract, day-labor, and dispatched workers are all eligible as long as they meet the requirements.

2.2 Average Wage × 30 Days × Years of Service

The statutory formula for calculating severance pay is as follows:

Severance Pay = Daily Average Wage × 30 days × (Days of Service / 365 days)
  • Average wage (pyeongyun-imgeum): the total wages paid during the 3 months immediately before retirement, divided by the total number of days in that period (Article 2 of the Labor Standards Act).
  • Included wages: base pay, bonuses (3/12 of annual paid amount), unused annual leave allowance (3/12 of prior year's unused portion), meal and transportation allowances, and any other amounts paid regularly and uniformly.
  • Excluded amounts: payments made on a temporary or contingent basis, and reimbursement-type payments for actual expenses.
  • Comparison with ordinary wage: if the average wage is lower than the ordinary wage (tongsang-imgeum), the ordinary wage is used instead (the more favorable standard for the worker is applied).

2.3 Retirement Pension vs. Severance Pay

Since 2025, newly established workplaces have increasingly been required by law to enroll in retirement pension schemes. It is important to understand the differences between the two systems:

  • Defined Benefit (DB): a plan in which the amount to be received at retirement is predetermined. The calculation is the same as for statutory severance pay, and the employer bears the investment risk.
  • Defined Contribution (DC): the employer deposits at least 1/12 of the annual total wages into the worker's account each year, and the worker manages the investment directly. The final retirement amount varies depending on investment performance.
  • Individual Retirement Pension (IRP): a personal retirement account into which retirement benefits can be rolled over and managed. There are significant tax benefits when received as a pension after age 55.
  • Restrictions on interim settlements: in principle, interim settlement of severance pay has been prohibited since July 2012, allowed only for statutory grounds such as buying a home as a non-homeowner, medical expenses, or individual rehabilitation (debt restructuring).

2.4 Complaint to the Ministry of Employment and Labor If Unpaid After 14 Days

Article 36 of the Labor Standards Act states, "When a worker dies or retires, the employer shall pay all wages, compensations, and any other money or goods within 14 days from the date on which the cause of payment arises."

  • After 14 days pass: a complaint or report can be filed with the Ministry of Employment and Labor (goyong-nodongbu) immediately.
  • Delay interest: starting 14 days after the separation date, 20% annual delay interest accrues (Article 37 of the Labor Standards Act; Article 17 of the Enforcement Decree).
  • Criminal penalty: up to 3 years in prison or a fine of up to 30 million won (Article 109 of the Labor Standards Act).
  • Civil lawsuit: separately from the labor ministry complaint, you can directly seek payment through a civil lawsuit; the statute of limitations is 3 years.

3. Reporting Wage Arrears - Ministry of Employment and Labor

Wage arrears are not merely a civil breach of contract - they are a criminal offense. Unpaid wages include not only base pay but also overtime pay, night-shift pay, holiday pay, annual leave allowance, bonuses, and more.

3.1 Difference Between Complaint and Criminal Complaint

Procedures that a worker can bring to the Ministry of Employment and Labor can be broadly divided into two.

  • Complaint (jinjeong): a procedure requesting administrative guidance and correction so that the employer pays the unpaid wages. It is closer to civil remedy, and the case is closed once the employer pays.
  • Criminal complaint (goso): a procedure requesting criminal punishment of the employer for violation of the Labor Standards Act. Because it exposes the employer to criminal liability, it puts significantly stronger pressure to pay.
  • Practical sequence: generally, one first files a complaint, then converts it to a criminal complaint if the employer misses the payment deadline or maliciously refuses.
  • Offense subject to the victim's intent: the crime of wage arrears requires the worker's intent to prosecute, so the criminal complaint can be withdrawn after a settlement.

3.2 Online Reporting (Ministry of Employment and Labor Portal)

As of 2026, wage arrears can be reported conveniently online through the Ministry of Employment and Labor's Labor Portal (labor.moel.go.kr).

  • Access: Labor Portal → Civil Affairs Application → Wage Arrears Complaint
  • Identity verification: joint certificate, financial certificate, and simple authentication (Kakao, Naver, Toss) are supported.
  • Attachments: employment contract, pay slips, bankbook copy, wage arrears calculation, screenshots of KakaoTalk conversations, etc.
  • Processing time: labor inspector investigation usually starts within 25 to 30 days of receipt; total processing takes 40 to 60 days on average.
  • Jurisdiction: the Regional Employment and Labor Office with jurisdiction over the workplace location.

3.3 Chedanggeum (State Wage Guarantee) Eligibility

When an employer goes bankrupt or cannot pay wages or severance due to financial difficulties, the government pays them instead. This system is known as chedanggeum (state wage guarantee) - officially now called daejigeupgeum (substitute payment).

  • Bankruptcy Substitute Payment (formerly General Chedanggeum): can be applied for when the employer has received a court rehabilitation or bankruptcy decision, or has been officially recognized by the Ministry of Employment and Labor as being in a state of insolvency. Covers the final 3 months of wages plus 3 years of severance pay.
  • Simplified Substitute Payment (formerly Small-Amount Chedanggeum): can be applied for even if the employer has not gone bankrupt, as long as there is a court's final judgment or a wage-arrears confirmation letter from the head of the Regional Employment and Labor Office. The cap is 10 million won (up to 7 million won in wages plus 7 million won in severance pay, combined maximum of 10 million won).
  • Filing deadline: the Bankruptcy Substitute Payment must be filed within 2 years of the bankruptcy/rehabilitation decision or the insolvency recognition date; the Simplified Substitute Payment must be filed within 1 year of the judgment becoming final.
  • Korea Workers' Compensation & Welfare Service: applications and payments for chedanggeum are handled by the Korea Workers' Compensation & Welfare Service (www.comwel.or.kr).

3.4 Criminal Punishment (Up to 3 Years in Prison)

Criminal punishment of employers for wage arrears has been strengthened as follows:

  • Basic penalty: up to 3 years in prison or a fine of up to 30 million won (Article 109 of the Labor Standards Act).
  • Aggravated penalty for habitual non-payment: following the 2025 amendment to the Labor Standards Act, habitual-violator employers are additionally subject to sanctions such as overseas travel bans, credit sanctions (restrictions on financial transactions), exclusion from government support programs, and exclusion from public procurement bidding.
  • Public disclosure of names: the Ministry of Employment and Labor publicly discloses the names of habitual offender employers who have been convicted twice or more within a 3-year period.
  • Additional damages system: workers can claim additional damages of up to 100% of the unpaid wages before the court (newly established in 2025).

4. Real-World Cases and Pitfalls

Knowing the law alone is not enough to protect your rights in real situations. Below are common traps and cases encountered in practice.

4.1 Criteria for Dismissal During Probation

"Dismissal is free during probation" is either a misunderstanding or a pretext used by employers. Supreme Court precedents (2007Du17017) have consistently held that dismissal of probationary workers also requires justifiable cause.

  • Misunderstanding about free dismissal: dismissal during probation requires justifiable grounds just like dismissal of regular workers, although the standards are relatively relaxed.
  • Judgment of legitimacy: it is recognized when there are reasonable grounds to refuse regular employment based on objective and rational evaluation of the probationary worker's aptitude, ability, attitude, and so on.
  • Dismissal pre-notice applies: probationary workers who have worked for 3 months or more are subject to dismissal pre-notice (30 days in advance) or dismissal pre-notice allowance (30 days of ordinary wages).
  • Remedy application possible: probationary workers can also file for unfair dismissal remedy.

4.2 Risks of Signing a Recommended Resignation Agreement

The most common scenario in which workers end up at a disadvantage is a recommended resignation agreement. Employers often steer workers toward recommended resignation to avoid the legal burden of dismissal.

  • Effect of waiving remedy rights: signing a resignation letter generally makes an unfair dismissal remedy application impossible.
  • Impact on unemployment benefits: if the reason for leaving is recorded as "voluntary resignation," your eligibility for unemployment benefits may be restricted. You should request that it be recorded as recommended resignation and processed under an involuntary separation code (such as code 23, "managerial necessity").
  • Resignation under coercion: if it can be proven that there was effectively no choice - for example, "If you don't write a resignation letter, you will be dismissed," or "I will publicly humiliate you in front of all staff" - the declaration of resignation itself may be invalidated.
  • Practical advice: when pressured to sign a resignation letter, avoid answering on the spot; say "Let me think about it for a day," and then be sure to consult a labor attorney (gongin-nomusa) or lawyer.

4.3 Gathering Evidence for Labor Office Investigations

Whether at the Labor Relations Commission or the Ministry of Employment and Labor, claims without evidence are empty words. It is important to systematically secure the following evidence on an ongoing basis.

  • Employment contract: you must receive a written contract when you join, and failure to provide it subjects the employer to a fine of up to 5 million won (Article 114 of the Labor Standards Act).
  • Pay slips: written issuance has been mandatory since November 2021. Base pay, various allowances, and deductions must be clearly stated.
  • Attendance records: save KakaoTalk work instructions, company messenger chats, access-card logs, GPS records, etc. by date.
  • Dismissal notice evidence: text messages, KakaoTalk, emails, recordings (legal when you are a party to the conversation), etc.
  • Bank deposit records: the most definitive objective evidence that wages were not paid.
  • Four major insurance enrollment history: can be viewed and printed from the websites of the National Pension Service, the National Health Insurance Service, and the Korea Workers' Compensation & Welfare Service.

Conclusion: Five Things to Do Right Now If Your Rights Are Violated

Workers' rights are strongly protected by law, but they are rights that only those who know them can enjoy. Unfair dismissal, unpaid severance, and wage arrears can arrive out of the blue, and failing to respond properly at that moment can lead to financial and career losses that may never be fully recovered. Statutory limitation periods (3 years for wage claims, 3 months for dismissal remedies) will not wait for you, so you must act the moment you realize your rights have been infringed.

If you are currently facing - or may soon face - unfair dismissal, unpaid severance, or wage arrears, take the following 5 actions today:

  1. Preserve all evidence immediately: back up your employment contract, pay slips, bank records, work-related KakaoTalk messages, dismissal notification texts/emails, recordings, and more to a cloud service (Google Drive, Naver MYBOX, etc.). Access to company PCs and messengers can be cut off at any time.
  2. Start by checking the deadlines: unfair dismissal remedy applications must be filed within 3 months from the dismissal date; non-payment of severance or wages can be reported once 14 days have passed since separation; the statute of limitations for wage claims is 3 years.
  3. Use free consultations: the Ministry of Employment and Labor Counseling Center (call 1350, no area code needed), the Korea Legal Aid Corporation (132), and workers' support centers run by local governments all provide free expert consultations.
  4. Re-confirm before signing any resignation letter: if the employer asks you to sign a recommended resignation agreement or resignation letter, do not answer immediately - request at least one day to review. A single signature can cost you both your right to a remedy application and your unemployment benefits.
  5. Make full use of online filing: the Ministry of Employment and Labor's Labor Portal (labor.moel.go.kr), the Korea Workers' Compensation & Welfare Service (comwel.or.kr), and the National Labor Relations Commission (nlrc.go.kr) all offer online applications, and there are no fees. Don't face this alone - actively use the systems the state provides.

Rights do not come to those who stay silent. I sincerely hope that every reader of this article will stand up for their rights, receive the fair compensation they are owed, and move on to a better workplace.