Foreign executives working in South Korea encounter a diverse range of opportunities and challenges.  Among the various aspects that require attention, understanding the intricacies of severance pay entitlement under Korean labor law is paramount.  One of the key questions that often arise is whether foreign executives are entitled to legally mandated severance pay in South Korea.  In this article, we will delve into the complexities surrounding severance pay for foreign executives, shedding light on the legal framework and crucial considerations.

Deciphering Severance Pay Entitlement

The belief propagated by many HR representatives in Korea that only employees—not executives—are entitled to severance pay demands closer scrutiny.  Contrary to a simplistic interpretation based solely on job titles, determining an employee’s legal status in Korea involves a multifaceted analysis, including: 

1. Commanding and Supervisory Relationship: The presence of a relationship involving direction and supervision within the workplace.
2. Hierarchical Structure: Understanding the structure of the organization and the hierarchical positions of the personnel at issue.
3. Delegation, Authority, and Responsibility: Evaluating the extent to which tasks and authority are delegated to the personnel and their level of responsibility.
4. Nature of Tasks: Considering the nature of the tasks performed by the personnel within the company.

Precedent Set by the Korean Supreme Court

The Korean Supreme Court has firmly established a precedent that challenges the notion of a categorical exclusion of executives from severance pay entitlement. 

According to the court’s position, an executive can qualify for severance pay if they handle tasks delegated by the company, perform specific work under the higher ’executive’s direction and supervision, and receive remuneration in return for their services.

Key Criteria for Executive’s Severance Pay Eligibility

Therefore, in accordance with this Korean legal standard and the court precedence, if a foreign executive possesses a regular employment contract, occupies a mid-level position within the company hierarchy, adheres to directives issued by higher-ranking executives, and conducts tasks under the company’s guidance, they are legally considered an employee under Korean labor law, and as a result, the company should be obligated to provide the legally mandated severance pay.

Conclusion

Navigating the intricacies of labor law as a foreign executive in South Korea requires a deep understanding of legal principles and precedents.  If you find yourself in a situation similar to the inquiry mentioned above, seeking counsel from legal experts well-versed in Korean labor law is essential for making informed decisions, and ensuring that the executive’s contributions are duly acknowledged and safeguarded in accordance with the law.