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Unemployment Insurance

Unemployment Insurance

The Korean unemployement insurance (aka employment insurance) system was established in 1995. Technically, foreign nationals working in Korea may pay into the scheme and some are eligible to collect benefits under certain circumstances. However, given that for most foreign residents, their stay in Korea is based on their visa, which in turn is linked to their employement and that most must leave the country within 30 days of the termination of their employment, most will not be able to claim so they should not pay into the scheme.

In brief, employer's with more than one employee must enroll employees who work more than 15 hours a week. Some small enterprises may not be aware of this obligation, however and therefore, do not enroll their staff. Some employers may insist on enrolling a foreign national employee but the employee can refuse. In that case, you will want to contact the Ministry of Employment and Labor.

Employer/Employee Contributions:
Both the employer and employee pay into the scheme. The benefits fall into two general categories and are calculated using different rates.  The fist category is called Unemployment Benefits. Employees pay 0.65% of their monthly wage and employers pay 0.65% of an employee’s monthly wage. 
The second category is described as Employment Security/ Vocational Development and is paid by the employer only.  The amount paid by the employer ranges from 0.25% (for a company with less than 150 employees) to 0.85% (for companies with more than 1,000 employees) of an employee’s monthly wage. The amount is estimated, paid to the Bank of Korea (or an authorized agent) and then adjusted at year’s end, so if the original amount is over paid then the employer will receive a refund with their next year’s amount also being adjusted.

Obligation to Enroll:
Korean nationals: Participating in the unemployment insurance system is mandatory for all workers, except  those working for companies engaged in farming, forestry, fishery or housekeeping. Companies with less than 4 employees are also exempted. A person working less than 60 hours a month (less than 15 hours a week) as well as those with familiy ties to the employer are not eligible for unemployment insurance.

Foreign workers: Eligibility for the programme depends on the worker's visa statues.
- Foreign nationals holding any of the following: F2, F5, C4, E1, E2, E3, E4, E5, E6, E7, E8, E9, E10, H2, F4, D7, D8, or D9 may participate in the program.
- F2 or F5 Visa holders are required to contribute to the unemployment insurance scheme and are eligible to receive the same benefits as Korean employees. The employer must arrange for these visa categories to be covered. 
- C4, E1, E2, E3, E4, E5, E6, E7, E8, E9, E10, H2, or F4 Visa holders could have unemployment insurance but benefits may be limited, if they are still in the country and able to make a claim.
Unemployment benefits and parental leave benefits may be affected by the contract the worker may have signed with her/his employer. That said, foreign workers usually receive the same parental benefits as Korean citizens.
- The following visa categories are not eligible for unemployment insurance benefits: A-1, A-2, A-3, B-1, B-2, C-1, C-2, C-3, D-1, D-2, D-3, D-4, D-5, D-6, F-3, G-1, H-1.
- Foreign workers without a residence permit are also not eligible for Employment Insurance.  Foreign workers who are working illegally in Korea do not have a residence permit.  If you have an Alien Registration number then you have a residence permit.

Employment Insurance Reporting
Business owners must report to the Ministry of  Employment and Labor and establish their Employment Insurance Policy registration within 14 days of the registration of the business and must terminate their policy with the Ministry of Labor within 14 days after the termination of business operations. When a company registers a new employee, s/he must be registered with the Employment Security Office in their jurisdiction within 14 days of the first day of employment.  Likewise, an employer must report the termination of the employee to the Employment Security Office within 14 days of the last day of work of the employee.

Unemployment Benefits
Unemployment benefits include job-seeking benefits and early re-employment benefits.  The intent of the program is to assist the workers in finding a job and to provide a minimal living allowance during the process. To be eligible to apply for the program, an individual must have previously worked for more than 180 days in a company that also has employment insurance. People cannot apply for benefits if they left the company voluntarily or were laid off due to their own misbehavior. The amount paid daily is 50% of a person’s daily wage, which is calculated using the average wage over the last three months at work.  43,000 won per day is the daily cap for maximum benefit. The amount paid for all employees is the same; the duration of the insurance program is dependent upon the age of the worker and the length of the employment with the former employer.  The minimum benefit for all workers is 90 days of payments, while the maximum benefit is 180 days for people under the age of 30, 210 days for people from the age of 31 to 50, and 240 people for people who are over 50 or who are disabled.  Those who manage to find a job quickly receive 50% of the remaining benefit as a bonus for being re-employed quickly.  For example if they are entitled to 6 months of benefits and find a new job in the second month, they would have 4 months of benefits left, at which time they would receive 50% of that amount, or two months as a cash payment.

Ministry of Employment and Labor 
Labor Law Counselling: in Korea 1350 (ext.5)  / Overseas +82-52-702-5089 (ext.5) 
International Cooperation Bureau: +82-44-202-7137 ~ 8  /
Foreign Worker Division: +82-44-202-7156


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Last Updated on 2015-04-24

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