Hagwon English Teachers & Severance Pay

Korean parents are very passionate about their children's English education, and there are many English academies and native English teachers in Korea.

However, many academies do not give severance pay to native English teachers when they retire. They argue that English teachers cannot receive severance pay because English teachers are sole proprietors and are not employees under the Labor Standards Act. Also, some academies claim that they have already paid severance pay through the inclusive wage system.

Then, can't hagwon English teachers get severance pay?

The answer is yes but unfortunately not all teachers can get severance pay. According to the Supreme Court, whether a worker is an employee under the Labor Standards Act is determined not by the form of a contract, but by whether the worker provided work to the employer in a subordinate relationship for wages(Supreme Court of Korea, Decision of 18 October 2019, 2018Da239110).

Whether there is a subordinate relationship shall be determined by combining various economic and social conditions, such as ① whether the employer determines the details of the work; ② whether the teachers are subject to rules of employment; ③ whether the employer designates working hours and workplaces and the employee is bound by them; ④ whether the teachers can operate a business independently by his/her own calculation, such as owning equipment, raw materials, work tools, or hiring a third party to perform his/her duties; ⑤ whether the teachers take risk of profit-making and loss; ⑥ whether the remuneration is due to the provision of work; ⑦ whether the basic or fixed salary is set; ⑧ whether earned income tax is withheld; ⑨ continuity of the labor provision relationship and exclusivity and so on.

Since the criteria for judgment is ambiguous, professional help is needed to claim legal rights. If an employee who had worked for more than one year retires, the employer must pay the severance pay to him/her(Article 4 of Act On The Guarantee Of Employees' Retirement Benefits). In addition, the right to claim severance pay occurs at the time of retirement and cannot be paid in the form of the inclusive wage system before retirement.

However, many non-Korean hakwon teachers who are not familiar with Korean law are deceived by academies and leave Korea without receiving severance pay.

For further information please contact InterLEX. We are ready to assist you in various regards for you deserved severance pay, unused annual or monthly leave and so on.