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Severance pay for notice of dismissal refers to the compensation in the nature of ordinary wages that an employer must pay instead when the statutory notice period is not observed when dismissing an employee.
1. Basic Principle of the Notice of Dismissal System
According to Article 26 of the Labor Standards Act, an employer must give notice of dismissal at least 30 days in advance. This is to prevent employees from suddenly losing their jobs and facing difficulties in making a living, and to give them the minimum necessary time to find another job.
- When notice is given 30 days in advance : There is no obligation to pay severance pay for notice of dismissal.
- When notice is not given 30 days in advance : Dismissal can be carried out immediately, but at least 30 days' worth of ordinary wages (severance pay for notice of dismissal) must be paid instead.
※ If dismissal is announced 10 days in advance, the principle is not to calculate and give only the 20 days' worth that is short of the 30-day standard, but to pay the entire 30 days' worth of ordinary wages.
2. Exceptions where the Notice of Dismissal Obligation Does Not Apply (Cases Where Payment Is Not Required)
Not all dismissals require severance pay for notice of dismissal. According to the Labor Standards Act, if an exception applies, dismissal can be carried out immediately without notice and without having to pay the allowance.
① When the employee's continuous period of employment is less than 3 months
For new employees who have not yet completed 3 months of service, the notice of dismissal obligation does not apply.
② When it is impossible to continue the business due to natural disasters, calamities, or other unavoidable reasons
It must not be a simple deterioration in business or loss, but an objective situation such as an earthquake or fire that destroys the business premises and makes further business impossible.
③ When an employee intentionally causes substantial interference to the business or causes property damage
This is the case where the employee's fault is clear and falls under the Grievance Labor Ministry Ordinance (e.g., kidnapping/embezzlement, leakage of confidential information, disruption of production due to long-term unauthorized absence, etc.).
3. Points to Note (Separate from the Legitimacy of Dismissal)
One of the most misunderstood points is that people think "giving severance pay for notice of dismissal makes dismissal automatically justified."
- Severance pay for notice of dismissal : It is only a monetary compensation for not fulfilling the 'procedural obligation' of dismissal.
- Legitimacy of dismissal : In a business with 5 or more regular employees, to dismiss an employee, there must be a 'just cause' regardless of notice, and the dismissal reason and timing must be notified 'in writing' for it to be effective.
Thus, even if severance pay for notice of dismissal is paid, if there is no legitimate cause for dismissal, the employee can file a 'unfair dismissal relief application' at the Labor Commission.