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When a company cannot pay wages or severance pay due to lack of funds, the government pays on behalf of the company first. There are two main types.
1. Simplified Advance Payment (Quick payment for small amounts)
This is the most commonly applied type, with a maximum limit of 10 million KRW.
- Monthly Salary: Up to 7 million KRW
- Severance Pay: Up to 7 million KRW
- Total: Combined, only up to 10 million KRW can be received.
- Example: Even if 8 million KRW in monthly salary and 8 million KRW in severance pay are overdue, the government pays only a total of 10 million KRW.
2. Insolvency Advance Payment (When the company has completely gone bankrupt)
Apply when the company has gone bankrupt or closed down.
- Amount: The maximum receivable amount varies by age. (Higher limit for older ages.)
- Scope: Calculated based on unpaid wages for the last 3 months and severance pay for the last 3 years.
Important Points to Remember
- Eligibility: Not all overdue amounts are covered; calculated only within the recent 3 months of wages and recent 3 years of severance pay.
- Application: Must first obtain a 'Wage Non-Payment Confirmation' from the Labor Office to apply.