[Yongsan Legal Consultation Favorable Judgment Case] A Client Who Won Through Daeryun's Yongsan Legal Consultation Recovers All of His Retirement Pay

• Retirement Pay

Retirement pay refers to the lump sum paid by the company side when a worker retires. The retirement pay provisions apply to a workplace with fewer than five regular workers, and a workplace falling under this must establish provisions for calculating the retirement pay to be paid to a retiring worker.

• Employee Retirement Benefit Security Act, Article 8 (Establishment of a Retirement Pay System, etc.)

① An employer who intends to establish a retirement pay system shall establish a system under which retirement pay equal to 30 days' or more of average wages for each year of continuous service can be paid to a retiring worker.

② Notwithstanding paragraph (1), where a worker so requests for a reason prescribed by Presidential Decree, such as the purchase of housing, the employer may settle and pay the retirement pay in advance for the worker's period of continuous service before the worker retires. In this case, the period of continuous service for calculating the retirement pay after the advance settlement and payment is calculated anew from the time of settlement.

• Formula for Calculating Retirement Pay

Retirement pay = average daily wage X 30 days X (days of service ÷ 365)

• Employee Retirement Benefit Security Act, Article 9 (Payment of Retirement Pay, etc.)

① Where a worker retires, the employer shall pay the retirement pay within 14 days from the date the cause for payment arises. However, where there are special circumstances, the payment date may be extended by agreement between the parties.

② The retirement pay under paragraph (1) shall be paid by transferring it to the account of the individual retirement pension system designated by the worker or to the account under Article 23-8 (hereinafter referred to as "the account, etc. of the individual retirement pension system"). However, this does not apply where there is a reason prescribed by Presidential Decree, such as where the worker retires after the age of 55 and receives the benefit.

③ Where a worker does not designate the account, etc. of the individual retirement pension system under paragraph (2), it shall be transferred to the account of the individual retirement pension system in the worker's name.

• Labor Standards Act, Article 37 (Delay Interest on Unpaid Wages)

① Where an employer fails to pay all or part of the wages payable under Article 36 and the benefit (limited to the lump sum) under "the Employee Retirement Benefit Security Act" Article 2, Subparagraph 5 within 14 days from the date the cause for payment arises, the employer shall pay delay interest for the number of days of delay from the following day to the date of payment, at a rate prescribed by Presidential Decree within the range of up to 40 percent per annum, taking into account economic conditions such as the overdue interest rate applied by banks under "the Banking Act".

② Paragraph (1) does not apply, for the period during which the cause continues, where the employer delays the payment of wages due to a natural disaster, an incident, or another reason prescribed by Presidential Decree.

• Employee Retirement Benefit Security Act, Article 10 (Prescription of Retirement Pay)

The right to receive retirement pay under this Act lapses by prescription if it is not exercised for three years.