Termination of Employment; Severance Pay; Special Severance Pay
Termination of the contract of employment
When an employment is defined a period of termination, a contract of employment must expire
upon the completion of the period specified in the contract without the need to give advance
notice.
When an employment is not defined a period, an employer can terminate an employment of an
employee or an employee can resign a job by giving advance notice in writing to the other party
before the next date of a wage payment falls due.
Dismissal
Dismissal means
- any act that an employer refuses an employee to work and refuses to pay wages because of an
expiry of employment contract or any other cause;
- when an employee does not work and receives no wages because an employer can not
continue the business.
Severance pay
Severance pay must be paid to an employee who his/her employment is terminated as follows:
- an employee who has worked for an uninterrupted period of 120 days but less than 1 year
must receive payment of not less than his/her last rate of wages for 30 days, or of not less than
his/her wages for the last 30 days for an employee who receives wages on a piece rate basis;
- an employee who has worked for an uninterrupted period of 1 year but less than 3 years must
receive payment of not less than his/her last rate of wages for 90 days, or of not less than
his/her wages for the last 90 days for an employee who receives wages on a piece rate basis;
- an employee who has worked for an uninterrupted period of 3 years but less than 6 years must
receive payment of not less than his/her last rate of wages for 180 days or of not less than
his/her wages for the last 180 days for an employee who receives wages on a piece rate basis;
- an employee who has worked for an uninterrupted period of 6 years but less than 10 years
must receive payment of not less than his/her last rate of wages for 240 days, or of not less
than his/her wages for the last 240 days for an employee who receives wages on a piece rate
basis; or
- an employee who has worked for an uninterrupted period of 10 years or more must receive
payment of not less than his/her last rate of wages for 300 days, or of not less than his/her
wages for the last 300 days for an employee who receives wages on a piece rate basis.
Exception to severance pay
Severance pay must not be paid when
1. a contract of employment -which is specified a definite period and the employment is
terminated at the end of that period- is made for employment in a specific project. Such
project must not be the normal business or normal trade of the employer; and must specify a
definite date to commence and end the work; or must be a casual work with a definite ending
or completion; or must be a seasonal work that is made during the season. The mentioned
work must be completed within 2 years.
2. an employment is terminated under any of the following conditions:
(1) performing his/her duty dishonestly or intentionally committing a criminal offence
against an employer;
(2) intentionally causing damage to an employer;
(3) causing serious damage to an employer as a result of negligence;
(4) violating the lawful and just work rules or regulations or orders of an employer, and
after receiving written warning of an employer. In this regard, such written warning must be valid
of not more than 1 year. Except in a serious case, an employer is no need to give warning.
(5) leaving his/her duty without justifiable reason for 3 consecutive working days
regardless of there is holiday in between or not; or
(6) being imprisoned by a final judgment, except there is the penalty for offense arising
out of negligence or for petty offense.
Special severance pay
1. In case for an employer relocates the place of business and it significantly affects to the
normal living of an employee or his/her family, the employer must inform the employee in
advance of not less than 30 days before relocation.
In case for an employer does not inform an employee in advance or inform in advance less
than 30 days, the employer must pay special severance pay in stead of advance notice at a
rate equal to an employee’s last wage rate for 30 days or equal to the wages of the last 30
days for an employee who is paid on a piece rate basis.
When an employee wants to quit a job, he/she has the right to terminate the contract of
employment with entitlement to special severance pay of not less than 50 per cent of the rate
of severance pay that he/she entitled to.
2. In case for the termination of employment as a result of the reorganization of an undertaking,
production line, sale or service due to the adoption of machinery or the change of machinery
or technology which causes a reduction of the number of employees, an employer must
inform a labour inspector and the employees in advance of not less than 60 days before
termination about the date of the termination, the reasons for termination and a name list of
the employees contemplated to be dismiss.
In case for an employer does not inform in advance an employee contemplated to be
dismissed, or informs such employee in advance less than 60 days, apart from the severance
pay to be paid, an employer must also pay special severance pay in stead of advance notice
equal to an employee’s last rate of wages for 60 days, or equal to an employee’s wages for
the last 60 days to an employee who is paid on a piece rate basis.
In case for an employee who has worked for uninterrupted period of 6 years or more, an
employer must pay special severance pay in addition to severance pay for each year of
employment of not less than the employee’s last rate of wages for 15 days or for each year of
employment or of not less than an employee’s wages for the last 15 days for an employee who
is paid on a piece rate basis. Such special severance pay in total does not excess the last rate of
wages for 360 days, or of not excess his/her wages for the last 360 days for an employee who
receives wages on a piece rate basis
In case of a period of employment is less than 1 year, a fraction of such period of more than
180 days must be counted as 1 year of employment.