Unpaid Severance Pay Hits 822.9 Billion Won... Government Aims to Ease Worries by Moving Funds Outside Companies

[Anchor]

The government has announced that by 2030, all companies will be required to deposit severance pay into external financial institutions. The measure aims to securely guarantee severance pay for workers regardless of corporate financial conditions.

Here is a report from reporter Yoo Soo-Hwan.

[Reporter]

Mr. A resigned from a manufacturing company in Bucheon, Gyeonggi Province, last year.

He quit after his salary started to fall behind, but even a year later, he has yet to receive his severance pay.

[Mr. A / Victim of Unpaid Severance Pay: About 13 million won in severance pay was overdue, and they just kept telling me to 'wait,' saying, 'We don't have the money.' When I called, they would say, 'Wait just one more month, wait two more months'... It makes me wonder if I won't even get the rest if the company goes under.]

Failing to receive severance pay on time is not unique to Mr. A.

In last year alone, 822.9 billion won in severance pay that should have been paid was delayed or unpaid.

Consequently, the government has decided to strengthen the system.

The core of the plan is to prevent companies from keeping severance pay internally and instead require them to accumulate it in external financial institutions such as banks.

The goal is to ensure these funds remain untouched even if a company faces financial distress.

Currently, this system is primarily adopted by workplaces with 300 or more employees. However, starting in 2028, it will become mandatory for workplaces with 100 or more employees; in 2029, for 10 or more; and by 2030, for all workplaces.

[Lee Hyung-il / Deputy Prime Minister and Minister of Economy and Finance: We will prevent unpaid severance pay by phasing in mandatory external accumulation of severance benefits, starting with workplaces with 100 or more employees in 2028.]

However, severance pay accrued before the implementation of the system is excluded, and the rule applies only to severance pay generated after the adoption.

Additionally, employees can independently choose and manage savings accounts or funds for the severance pay transferred to these financial institutions.

Authorities stated that they will tighten supervision by imposing fines of up to 10 million won on companies that fail to transfer funds to external financial institutions.

(Photo: Lee Sang-hak, Photo: Kim Ho-jin, VJ: Jung Han-wook)
※ Please note: This article was translated by AI and may contain errors.