When Are You Entitled to Severance Pay?

Severance pay is one of the most frequently asked-about topics in employment law. For the entitlement to arise, both a minimum length-of-service requirement and a qualifying type of termination must be satisfied together.

The Basic Requirement: At Least One Year of Service

To be entitled to severance pay, an employee must have worked for the same employer for at least one year. This period may, in cases set out by law, be treated as continuous even where the workplace or employer changes.

In Which Types of Termination Is Severance Paid?

Once the one-year requirement is met, severance pay is due in the following cases:

• Termination by the employer without just cause,
• Resignation by the employee for just cause (for example, non-payment of wages),
• Separation due to military service,
• Completion of the insurance period and premium days required for retirement,
• Resignation by a female employee due to marriage (a right that must be exercised within a set period from the date of marriage).

By contrast, no entitlement to severance pay arises where the employee resigns voluntarily without showing just cause.

How Is Severance Pay Calculated?

Severance pay is calculated on the basis of the employee's final gross wage for each full year of service, with periods of less than a year calculated pro rata. The calculation takes into account not only base pay but also regularly paid benefits with a measurable monetary value, such as bonuses, and transport or meal allowances.

Practical Tips

Before signing a termination notice or any release document when your employment ends, review it carefully; a release must expressly and separately waive severance pay, or it may be deemed invalid. If you are unsure whether the calculation is correct, consulting a lawyer before accepting payment can prevent loss of rights.

This article is provided for informational purposes only and does not constitute legal advice. Please contact our team regarding your specific situation.