Employment-related Insurances

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Definition

The national pension plan is part of the social security system which is designed to provide a degree of stability in people’s everyday life and welfare. Under the national pension plan, the following pension is paid: the pension for the elderly, which is designed to make up for the loss of earned income due to old age; the pension for the bereaved, which is designed to make up for the loss of income due to the death of the main income earner; the disability pension, which is designed to make up for the loss of income due to the loss of ability to work due to disease or disability.

Social security agreements

This is a system designed to provide citizens of the relevant countries with benefits, such as exemption from dual insurance subscription, adding up of the subscription period, equal treatment, guaranteeing of wage remittance out of the county, through the adjustment of differences between them. Social security agreements are divided into a totalization agreement and a contributions only agreement, depending on the scope of application.  

Countries that have signed social security agreements with South Korea: Canada, the United Kingdom, the United States, Germany, China, the Netherlands, Japan, Italy, Uzbekistan, Mongolia, Hungary, France, Australia, the Czech Republic, Ireland, and Belgium (16 countries).

Lump-sum refund

Foreigners meeting the relevant requirements can receive the pension for the elderly, the pension for the bereaved, and the disability pension, as Koreans do under the National Pension Act. Effective from May 11, 2007, the country pays a lump-sum refund for foreigners returning home after subscribing to the National Pension Program as holders of E-8/Training employment, E-9/Non-professional employment, and H-2/Working visit.

※ Effective from August 29, 2007, a lump-sum refund is paid to foreigners leaving the country upon request. (The relevant application can be submitted a month before departure from the country by submitting a document verifying the plan for departure, including an air ticket.)

  • Confirmation of conversion possible
  • Visit the National Pension Corporation branch office in your local area and apply for a rebate
  • Required documents : Wage payment request, passport, personal bank account information, plane ticket (or another document verifying a plan for departure from Korea within one month)
  • Domestic bank account within one week and overseas bank account within one month
  • Rebate calculation method : National pension (employee + employer portion) + rate of interest
  • Confirmation process at branch office

※ The foregoing request may be made through an agent or by mail. Requests made through an agent or by mail should follow a separate procedure for identification.

Definition

Applying for health insurance in Korea is optional. However, once insured, it is not possible for a foreign national to cancel his/her health insurance for as long as he/she is employed.

If a foreign national leaves Korea for more than one month, the National Health Insurance Corporation will have their health insurance automatically canceled upon notification by the Immigration Office.

Insurance fee

 Average monthly income (month) × Insurance fee rate (5.08%) The employee and employer will pay an equal (50% each) contribution towards the total calculated amount.

Health insurance coverage

  • Medical treatment : Illness, prevention of injury, diagnosis, treatment, rehabilitation, birth, death, etc.
  • Medical checks : To prevent illness and maintain good health, medical checks are provided once every two years. People in non-office jobs (laborers) are offered medical checks on a yearly basis.

Definition

Employment insurance is part of social security insurance. Its purpose is to encourage stable employment and provide an insurance premium to people who lose their job. The country has adopted closely-linked labor market policies, such as employment stability programs and vocational skills enhancement programs.

Eligibility and application

Employers with at least one employee since October 1, 1998 must apply for unemployment insurance.

Exemptions

The following sectors are excluded from the scope of employment insurance, as it is very difficult to manage their workplaces and the insured in consideration of their characteristics.

  • Agriculture, forestry, and fishery businesses that are not company-run, but family-owned, and businesses employing four or fewer people.
  • Construction companies paying a construction fee less than the annual minimum amount stated by the Minister of Labor (2004: 20 million won) and whose total ground area is less than 200 m2
  • Household service businesses

Foreign workers eligible for unemployment insurance

Those eligible for employment in Korea, including short-term employees, professors, foreign industry trainees, foreign workers with residence status.

Foreign workers not mentioned above are classified as foreign workers who are ineligible for unemployment insurance.

Unemployment grant

When a worker is unemployed a grant is provided to help ease their financial difficulties and facilitate their transition to another job. Included in the unemployment grant are a job-seeking allowance and an allowance intended to accelerate their re-employment.

Unemployment grant calculation

Unemployment grant calculations: Unemployment grant total = 50% of avg. income X daily earnings

  • Maximum amount: 40,000 won per day
  • Minimum amount: the minimum hourly wage under The Minimum Wage Act

90% of minimum wage X daily working hours (8 hours) (The minimum wage is subject to change on a yearly basis; therefore, the minimum amount granted under unemployment insurance is also subject to yearly change.)

Grant period

According to one’s age at the time of unemployment and the period insured, one can receive an unemployment grant from a minimum of 90 days to a maximum of 240 days.

Unemployment grant process

In order to receive unemployment insurance, one needs to visit an employment support center with an identification card immediately upon becoming unemployed. Once at the employment support center, it is necessary to fill out and submit an employment seeker application form and a revenue and expenditure qualification application form. Once a person’s eligibility for an unemployment grant has been recognized, he/she should visit the employment support center every week and submit a report on positive efforts made for reemployment in order to continue receiving the unemployment grant. The grant will cease once the 12-month period expires. Once the unemployed individual gains employment or gains a source of income; he/she must report it immediately.

Definition

Industrial accident compensation insurance is a statutory insurance designed to guarantee the income of an injured worker and his/her family. Under the Labor Standards Act, the State collects insurance premiums from employers and pays compensation to injured workers on behalf of their employers.. The coverage now includes new industrial diseases, work-related exhaustion and stress. Although prevention is the best policy, compensation is provided to workers who are injured or to family members of deceased workers. 

Eligibility and application process

Employers with at least one employee since July 1, 2000 must apply for industrial accident compensation insurance.

Exemptions

  • Agriculture, forestry (except for logging businesses), fishery and hunting businesses with five or fewer employees. (The said insurance applies naturally to a business performed by a corporation with fewer than five employees.)
  • Contractual work for a building whose total floor space comes to less than 330 square meters as the work for erection or substantial repair of a building undertaken by a person without a construction business license.
  • Household service industries

Eligibility of foreign workers

  • Foreign workers under contract with a Korean company or employer and who are paid a regular income after providing the employer with a service are recognized as any other Korean worker. Furthermore, if an employer of a foreign national has employees covered under industrial accident compensation insurance, the foreign national is automatically covered.
  • Foreign nationals working in Korea illegally, without the proper visa, are considered workers who, regardless of their standing with the Immigration Office, can apply for the grant.

Industrial accident application process

  • In order to be classified as an industrial accident compensation case, an accident victim must apply to the Korea Workers’ Compensation & Welfare Service. The application covers details about the applicant as well as an eye witness account of the accident. The application form should be submitted along with the employer’s confirmation letter and doctor’s opinion.
  • Once the Korea Workers’ Compensation & Welfare Service receives the application form, a detailed investigation is carried out regarding the individual, eye witness, and employer for verification purposes. Further documents and application forms may be given out by officials from the Korea Workers’ Compensation & Welfare Service. Once a thorough investigation and the necessary paperwork have been completed, the officials will determine whether the individual can in fact be classified as an industrial accident victim.
  • In the event of death, the family may apply for compensation and funeral costs.