Confusion about “Severance Pay” and “Renewal Bonus”
I’ve been asked a couple of times recently about how much money a renewing teacher should end up with. Since even individual schools seem to be confused about the issue I’ve posted the correct information here. Keep in mind this applies to EPIK contracts. Other contracts may be different (but the information about severance is the same).
Renewal Bonus
When I first got here, my EPIK contract stated that I would be reimbursed for a one-way flight there and a one-way flight after my year contract. After a year, if I decided to renew they would pay for round-trip airfare to my home country so that I could take a two-week home leave. Any time a teacher renewed their contract they would be entitled to this round-trip airfare. I believe GEPIK still does this. Once the teacher decides to not renew and go home permanently they are then entitled to a one-way flight back home.
In 2009, EPIK changed their contract. Instead of offering to reimburse airfare they simply pay a 1.3 million won entrance (to cover your ticket to Korean) and a 1.3 million won exit (to cover your ticket back home after your contract). If you renew, instead of reimbursing your round-trip airfare they give you 2.0 million won. I think they did this in order to better estimate how much money they’d have to budget for airfare. With teachers in different parts of the world and fluctuating flight prices and exchange rates it’s easier to just give everyone the same amount of money.
So, if you don’t renew you get 1.3 million won. If you renew, you get 2.0 million won. Both of these amounts must be paid right after the end date of your previous contract. (I received mine lumped with my first paycheque the next month.)
Severance Pay
This is mandated by the government and is equal to approximately one month’s salary before bonuses and after taxes. You are entitled this after each completed contract, regardless of whether you renew or not. However, your POE can choose to pay this after each contract or in a lump sum after all of your contracts are completed. Either way, the amount is the same but it’s their choice whether to pay each year or at the end.
There are some stipulations. You must complete your full contract. If you leave a day early you are not entitled to severance pay. Severance is also pro-rated. So if you don’t get paid your severance for your first contract and quit during your second contract, you get your first severance plus partial severance for the months worked during your second contract. However, if you got paid severance for your first contract and then left during your second contract, you wouldn’t get any additional severance.
Many schools confuse severance pay with renewal bonus because the amounts are very similar. However, they are totally separate and you are entitled to both of these directly after your contract is finished.
Summary
If you want to skip all the explanation and go directly to the meat of this post, if you renew, you get 2.0 million renewal bonus AND severance pay (equal to approx. one month salary). If you don’t renew, you get 1.3 million exit AND severance pay.
If there’s any confusion, show your school your EPIK contract and point them to the relevant sections: 제10조3 (Section 10, Article 3: renewal bonus) and 제13조7 (Section 13, Article 7: severance).
I’ve copy and pasted the relevant articles here for easy reference:
제10조 ③ 재계약 체결시 고용자는 피고용자에게 재계약 보상비(200만원)를 재계약 개시 후 지급한다.
Article 10 ③ Employer shall provide Employee with contract renewal allowance of 2,000,000 Korean Won (KRW) after the commencement of the renewed term.
제13조 ⑦ 피고용자가 1년 이상의 고용계약을 성실히 마치면 약 1개월의 보수에 해당하는 퇴직금을 임무 만료 후 받을 수 있다.
Article 13 ⑦ Employee shall be entitled to severance pay (equivalent to approximate one month’s salary), upon successful completion of his/her duties.