The retirement benefits system refers to a system in which employers set aside retirement benefits for their employees during their tenure, which can be received by employees as a pension or lump sum payment after retirement. The purpose of this system is to ensure the income security of workers in their old age. Previously, only employees working for companies with five or more employees were eligible for retirement benefits. However, currently, employees working in companies with fewer than five employees are also eligible.
Retirement benefits can be received by employees who have worked for one year or more with an average working time of 15 hours or more per week, regardless of the size of the workplace. The retirement benefit is calculated by multiplying the length of service by the daily average wage, which is calculated by averaging the total wages earned during the three months prior to retirement. Therefore, accurate calculation of the average wage is important since even a small difference in the average wage can result in a significant difference in the total amount received due to the multiplication factor. The basic salary, performance-based bonuses, and all allowances related to job duties are included in the average wage calculation. Even if the welfare benefits are paid to all employees in a fixed amount, they are included in the average wage calculation, and overtime pay is also included.
When calculating retirement benefits, it is recommended to first check the company's regulations or how they calculate the average wage in practice. It is also a good idea to request a retirement benefits calculation statement from the company. Using an online "retirement benefits calculator" can provide a simple way to calculate retirement benefits. By entering the date of employment and retirement, the length of service and the last three months of service can be calculated. Then, by entering the daily average wage, annual bonus, and vacation allowance, the retirement benefits can be calculated.


■ Calculation of Retirement Allowance Based on Continuous Service Period
According to the Labor Standards Act, employers must establish a system in which retirement allowances, equivalent to 30 days or more of the average wage, are paid to retiring employees based on their continuous service period of at least one year. The continuous service period refers to the period from the date of the employment contract to its termination, even if the employee was not actually providing labor during that time. Therefore, if the employer-employee relationship is maintained during a period of absence due to the employee's reasons, such as personal leave, the period should be included in the calculation of the continuous service period for the retirement allowance, unless there are special circumstances.

■ Average Wage Calculation for Retirement Pension
First, the average wage for retirement pension calculation refers to the amount obtained by dividing the total amount of wages paid during the three months prior to the retirement date by the total number of days in that period. If the average wage thus calculated is lower than the regular wage of the worker in question, the regular wage is used as the basis for the average wage calculation. However, if the worker was unable to provide labor during the period used as the basis for the average wage calculation due to reasons such as absence, the period in question should be included in the calculation of the average wage.
Second, including the bonus paid over the course of one year in the calculation of the average wage is another method. Although there are no separate regulations on the payment of bonuses under labor laws, if the conditions, amount, and payment date are specified in employment rules or if it is customary to pay bonuses to all workers, creating the expectation that the worker will receive such payment, it is considered a wage subject to labor laws. In the case where the bonus is paid on an annual basis and in units exceeding one month, the entire amount should not be included in the average wage calculation as a lump sum but should be calculated by dividing the total bonus paid during the 12 months prior to the day the reason for the calculation of the average wage occurred by the number of months worked in that period, i.e., 3/12 of the total wage amount is included in the calculation of the average wage. If the retirement pension regulation is effectively changed in the middle of the worker's period of employment, the retirement pension should be calculated based on the regulation that was valid at the time of retirement for the entire period of employment, and the period before and after the change in the regulation should not be divided to apply the regulation before the change. Supreme Court 95DA15414



■ Payment Methods for Retirement Benefits
Firstly, the employer's obligation to pay retirement benefits arises when the employment contract is terminated. However, if requested by the employee, the employer may calculate and pay the retirement benefits for the period of continuous employment before the employee retires.
Secondly, regarding the possibility of a collective agreement for mid-term calculation of retirement benefits, if requested by the employee, the employer may calculate and pay the retirement benefits for the period of continuous employment before the employee retires. In this case, the period of continuous employment for calculating retirement benefits after mid-term calculation is newly established at the time of calculation. Such mid-term calculations of retirement benefits can only be implemented upon specific requests from individual employees, even when the collective agreement or employment regulations establish grounds or criteria for mid-term calculations of retirement benefits. Therefore, it cannot be considered legally valid to have met the requirements for mid-term calculation of retirement benefits with the consent of only 50% or more of all employees. Wage 68200-111, (2002.02.20.).

Thirdly, even if retirement benefits are paid under the guise of a monetary amount named "retirement benefits" in the monthly salary during the continuous employment period, it does not have the effect of aretirement benefit payment. Supreme Court 2005do467
Retirement benefits, as defined in the Labor Standards Act, are payable only upon termination of the employment relationship through retirement. Therefore, there is no obligation to pay retirement benefits during the existence of the employment contract. Therefore, even if the employer has agreed to pay a certain amount under the name of retirement benefits in the monthly salary paid to the employee, it cannot be regarded as having the effect a of retirement benefit payment under Article 34, Paragraph 1 of the Labor Standards Act.
Fourthly, a sub-agreement that waives the right to claim retirement benefits or does not initiate civil litigation regarding retirement benefits is in violation of the Labor Standards Act and is therefore void. Supreme Court 2001da41568
Retirement benefits are a post-payment wage paid to employees who have worked continuously for a certain period and retire. Therefore, the right to claim retirement benefits arises only upon retirement, which marks the end of the period of continuous employment. Therefore, a sub-agreement that waives the right to claim retirement benefits or does not initiate civil litigation regarding retirement benefits before the final retirement is in violation of the Labor Standards Act and is therefore void. 171)

■ Criteria for Payment of Retirement Allowance
❍ Payment of retirement allowance for employees who have been appointed as executives during their employment
When an employee is appointed as an executive without a break in the period of employment and is relocated due to the job, the legal relationship regarding the payment of retirement allowances must be determined as follows. If the director is delegated with the company's business representative authority or execution authority under the Commercial Act and the Civil Act and receives compensation and is not considered a worker under the Labor Standards Act, the right to claim for retirement allowance arises from the day of appointment as an executive (the day the employment relationship under the Labor Standards Act is terminated), and the statute of limitations also begins to run from that day. If the person is still in fact considered a worker under the Labor Standards Act, despite the title of director and maintaining an employment dependent relationship, the right to claim for retirement allowance arises from the day of retirement as a director, and the statute of limitations begins to run from that day.

❍ Calculation method for retirement allowance for employees who were converted from temporary workers to regular workers
To determine the continuous employment period for the calculation of retirement allowance for a worker who was employed as a temporary worker and then appointed as a regular worker and continued working at the same workplace, the specific factual circumstances must be considered comprehensively. If the worker voluntarily expressed the intention to resign from the temporary position and the employer completed the resignation process before proceeding with the appointment process for the regular position, regardless of whether the worker was appointed as a regular worker or not, the employment relationship for the previous temporary position can be considered effectively terminated. However, if the worker is still in a temporary employment relationship and is only appointed as a regular worker, the employment relationship cannot be considered effectively terminated.

❍ Failure to pay retirement allowance when rehiring retired workers is a violation of mandatory regulations and therefore invalid
If a retired worker is rehired, and the continuous employment period from the time of rehiring exceeds one year, the employer must pay retirement allowances. Therefore, even if the parties have agreed not to pay retirement allowances, the agreement is invalid as a violation of mandatory regulations.

❍ Whether a retirement allowance can be received by a retired full-time instructor in a comprehensive class of a private educational institution
If a full-time instructor in a comprehensive class of a private educational institution registered as an individual business owner has provided labor to the Employer in a substantial dependent relationship, the instructor can receive a retirement allowance upon retirement. Whether the instructor is a worker under the Labor Standards Act should be determined based on whether the instructor has provided labor to the Employer in a dependent relationship for the purpose of receiving wages, regardless of the contract form. For example, in the case of the plaintiffs, compared to other part-time instructors or instructors in single subject classes, they worked every day (6 days a week) and received a fixed monthly salary, and there were duty regulations and personnel regulations for instructors at the educational institution. Based on these factors, the plaintiffs are considered to have provided labor in a dependent relationship as a worker.

❍ Application of Labor Standards Act to the continued employment relationship of formal day laborers
Even if an employee is formally classified as a day laborer, if the day labor relationship continues without interruption, the employee should be considered a regular employee. It is not necessary for a worker to work for an average of 25 days per month in order to recognize the continuity of the employment relationship. As the plaintiffs worked for the defendant company as day laborers for at least 4 or 5 days every month without fail, it can be recognized that there was a continuous employment relationship, and therefore the Labor Standards Act should apply to the plaintiffs.

❍ Application of retirement allowance provisions under the Labor Standards Act to illegal immigrants
According to Article 2 of the Labor Standards Act, a worker is defined as "a person who provides labor for wages in a business or workplace, regardless of the type of job." In addition, Article 6 of the same Act stipulates that employers cannot discriminate against workers based on nationality, so unless there are special circumstances, the Labor Standards Act should apply to foreign workers, including illegal immigrants. Therefore, the retirement allowance provisions under the Labor Standards Act also apply to illegal immigrant workers.