Employment-related Insurances

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Information as of 21 Feb, 2017

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. Korea has adopted a number of 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 state of qualification of the insured

  • Agriculture, forestry, and fishery businesses that are family-owned businesses employing four or fewer employees.
  • 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 square meters
  • 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 becomes 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 the re-employment process.

Unemployment grant calculation

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

  • Maximum amount: 40,000 KRW 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.