Employee Retirement Benefit Security Act

Act No. 7379, Jan. 27, 2005

CHAPTER 1

General Provisions

Article 1 (Purpose)

The purpose of this Act is to contribute to securing workers' stable livelihood in their old age by stipulating matters needed to establish and operate a retirement benefit scheme for workers.

Article 2 (Definition)

The terms used in this Act are defined as follows :

1. "Worker" refers to a worker prescribed in Article 14 of the Labor Standards Act;

2. "Employer" refers to an employer prescribed in Article 15 of the Labor Standards Act;

3. "Wages" refer to wages prescribed in Article 18 of the Labor Standards Act;

4. "Average wages" refer to average wages prescribed in Article 19 of the Labor Standards Act;

5. "Benefits" refer to an annuity or a lump sum paid to workers under a retirement benefit scheme;

6. "Retirement benefit scheme" refers to a severance pay system prescribed in Chapter 2 and a retirement pension plan prescribed in Chapter 3;

7. "Defined benefit retirement pension plan" refers to a retirement pension plan under which the level of benefits a worker will receive is determined in advance;

8. "Defined contribution retirement pension plan" refers to a retirement pension plan under which the level of contributions an employer should make to pay benefits is determined in advance;

9 "Individual retirement account" refers to a savings account which those, etc. who have received lump-sum benefits under a retirement benefit scheme set up in a retirement pension trustee to deposit and operate the received benefits;

10 "Pension (account) holders" refer to workers who join a retirement pension plan or set up an individual retirement account;

11. "Reserve" refers to money accumulated in a fund to which employers or pension holders pay contributions in order to pay benefits when there is a reason to make that payment, such as the retirement of a pension holder;

12. "Retirement pension trustee" refers to those who register themselves pursuant to Article 14 to do the job of managing the operation of retirement pensions or individual retirement accounts and their assets.

Article 3 (Scope of Application)

This Act shall apply to all businesses or workplaces (hereinafter referred to as "businesses") employing workers : Provided, That this shall not apply to businesses employing only relatives living together and to domestic employees.

Article 4 (Establishment of Retirement Benefit Scheme)

(1) An employer shall set up one or more retirement benefit schemes in order to pay benefits to workers who retire : Provided, That this shall not apply to workers whose consecutive service period is less than one year and workers whose average weekly working hours over a four-week period is less than 15 hours.

(2) In setting up a retirement benefit scheme pursuant to paragraph (1), any differentiation shall not be made within the same business.

(3) If an employer intends to choose a type of retirement benefit scheme or change the chosen type into a different one, the employer shall, if there is a trade union composed of a majority of workers, obtain the consent of the trade union, and if there is no such trade union, obtain the consent of the majority of workers (hereinafter referred to as "a workers' representative").

(4) If an employer intends to change the contents of a retirement benefit scheme chosen or changed pursuant to paragraph (3), the employer shall hear opinions from a workers' representative : Provided, That if the employer intends to make a change unfavorable to workers, he/she shall obtain the consent of the workers' representative.

Article 5 (Measures In Case of Non-establishment of Retirement Benefit Scheme)

Notwithstanding the provisions of Article 4 (1), if an employer does not establish a retirement benefit scheme, he/she shall be considered having established a severance pay system under Article 8.

Article 6 (Retirement Pension Deliberation Committee)

(1) The Minister of Labor shall have the Retirement Pension Deliberation Committee (hereinafter referred to as "Committee") to deliberate major things concerning the operation and improvement of retirement pension plans.

(2) The Committee shall be composed of a chairman, members representing workers, members representing employers, members representing the public interest and government members.

(3) The Vice Minister of Labor shall assume the chairmanship of the Committee.

(4) Necessary matters concerning the composition and operation of the Committee shall be prescribed by the Presidential Decree.

Article 7 (Protection of Right to Receive Benefits)

The right to receive retirement pension benefits shall not be transferred to others or offered as collaterals : Provided, That in case reasons and conditions prescribed by the Presidential Decree, such as housing purchases, are met, the right may be offered as collaterals within the limits prescribed by the Ordinance of the Ministry of Labor.

CHAPTER 2

Severance Pay System

Article 8 (Establishment of Severance Pay System)

(1) An employer who intends to set up a severance pay system shall set up the system in a way that it can pay workers who retire 30 days or more of average wages for each year of their consecutive service as severance pay.

(2) Notwithstanding the provisions of paragraph (1), an employer may, in case a worker demands, pay the worker the amount of severance pay corresponding to his/her consecutive service period earlier than his/her retirement. In this case, the consecutive service period to be used for the calculation of the amount of severance pay accumulated thereafter shall be reckoned anew from the time when balances were settled.

Article 9 (Payment of Severance Pay)

If a worker retires, an employer shall pay severance pay to the worker within 14 days from the date on which there occurs a cause for the payment : Provided, That in special circumstances, the date of payment may be put off under the agreement between the parties concerned.

Article 10 (Extinctive Prescription of Severance Pay)

If the right to receive the severance pay under this Act is not exercised for three years, the period of extinctive prescription shall be completed.

Article 11 (Priority Payment of Severance Pay)

(1) Severance pay shall be paid in preference to taxes, public utility charges and other claims, except for claims secured by a right of pledge or mortgage on an employer's total properties : Provided, that this shall not apply to taxes and public utility charges taking precedence over a right of pledge or mortgage.

(2) Notwithstanding the provisions of paragraph (1), the severance pay for the final three years of service shall be paid in preference to claims secured by a right of pledge or mortgage on an employer's total properties, taxes, public utility charges and other claims.

(3) The amount of severance pay prescribed in paragraph (2) shall be 30-day average wages for each year of consecutive service.

CHAPTER 3

Establishment of Retirement Pension Plan

Article 12 (Establishment of Defined Benefit Retirement Pension Plan)

An employer who intends to set up a defined benefit retirement pension plan shall prepare defined benefit retirement pension rules containing the following matters with the consent of a workers' representative and report them to the Minister of Labor :

1. Matters concerning the selection of a retirement pension trustee;

2. Matters concerning pension holders;

3. Matters concerning the period of participation. In this case, the period of participation shall be the period of offering services to the business concerned since the establishment of a retirement pension plan. However, the period of offering services before the establishment of the retirement pension plan concerned may be included in the period of participation;

4. Matters concerning the level of benefits. In this case, the amount of lump-sum benefits calculated based on the retirement date of a pension holder shall be 30 days of average wages for each year of consecutive service or more;

5. Matters concerning securing financial soundness. In this case, it shall be clearly stated that the larger one of the following amounts shall be accumulated:

A. The amount calculated according to the method prescribed by the Ordinance of the Ministry of Labor using the estimated present value of expected expenses required to pay benefits and the estimated present value of expected revenues resulting from contributions as of the last day of every business year, and whose level is prescribed by the Presidential Decree;

B. The amount calculated according to the method prescribed by the Ordinance of the Ministry of Labor using expected expenses required to pay the amount of benefits corresponding to the participation period until the last day of the business year concerned of a person who is or was a pension holder, and whose level is prescribed by the Presidential Decree.

6. Matters concerning types of benefits and eligibility requirements for recipients. In this case, contents described in the following items shall be clearly stated :

A. Pensions shall be paid to a person aged 55 or above, who has participated in the pension for ten years or more. In this case, the duration of payment shall be five years or more;

B. Lump-sum benefits shall be paid to a pension holder who dose not meet eligibility requirements to receive annuities or wants to receive lump-sum benefits.

7. Matters concerning the signing and termination of a contract on carrying out operation management services under Article 15 and asset management services under Article 16 and the transfer of a contract due to its termination;

8. Matters concerning the current state of operation of defined benefit retirement pension plans. In this case, the amount of reserve, the ratio of investment profits, etc. shall be notified to pension holders once or more every year under the conditions prescribed by the Ordinance of the Ministry of Labor;

9. Matters concerning the occurrence of a cause for the payment of benefits, such as the retirement of  a pension holder, and procedures for the payment of benefits;

10. Matters concerning the abolishment and suspension of a retirement pension plan. In this case, reasons for abolishment and suspension, etc. shall be clearly stated; and

11. Other matters prescribed by the Presidential Decree to operate a defined benefit retirement pension plan.

Article 13 (Establishment of Defined Contribution Retirement Pension Plan)

An employer who intends to set up a defined contribution retirement pension plan shall prepare defined contribution retirement pension rules containing the following matters with the consent of a workers' representative and report them to the Minister of Labor :

1. Matters concerning contributions. In this case, the followings shall be clearly stated :

A. An employer shall contribute at least the amount equivalent to a twelfth of the total annual wages of a pension holder in cash;

B. A pension holder may contribute an additional amount in cash apart from the amount contributed by an employer under item A.

2. Matters concerning the payment of contributions. In this case, the followings shall be clearly stated :

A. An employer shall regularly pay contributions once or more every year;

B. If when a pension holder leaves a pension plan, his/her employer has contributions for the pension holder concerned in arrears, the employer shall pay the contributions in arrears within 14 days from the date on which the pension holder leaves.

3. Matters concerning the operation of a reserve fund. In this case, a pension holder shall be allowed to choose an operation method for him/herself and change the method of operation of a reserve fund once or more every half-year;

4. Matters concerning the methods of operation of a reserve fund, the provision of information, etc. In this case, the followings shall be clearly stated:

A. At least three operation methods with different risk and return structures from one another, shall be suggested once or more every half-year;

B. Information needed for a pension holder to choose a method of operating the reserve fund, such as information on the probability of making losses and profits by operation method, shall be provided.

5. Matters concerning early withdrawal. In this case, early withdrawal shall be permitted in case there are reasons prescribed by the Presidential Decree, such as housing purchase;

6. Matters relating to subparagraphs 1 through 3 and 6 through 10 of Article 12; and

7. Matters prescribed by the Presidential Decree to operate a defined contribution retirement pension plan.

CHAPTER 4

Retirement Pension Trustees and Their Services

Article 14 (Registration of Retirement Pension Trustee)

If a person falling under any of the following subparagraphs intends to be a retirement pension trustee, he/she shall register him/herself with the Minister of Labor after meeting the requirements prescribed by the Presidential Decree, such as financial soundness, personnel and physical requirements, etc. :

1. An asset management company under subparagraph 16 of Article 2 of the Indirect Investment Asset Management Business Act;

2. A insurance company under subparagraph 5 of Article 2 of the Insurance Business Act;

3. A financial institution under subparagraph 2 of Article 2 (1) of the Banking Act;

4. A joint-stock company permitted to do security business under Article 28 (1) of the Securities Exchange Act; and

5. Other persons similar to those under subparagraphs 1 through 4 and prescribed by the Presidential Decree.

Article 15 (Signing of Contract on Asset Management-related Business)

(1) An employer who sets up a retirement pension plan shall sign a contract with an retirement pension trustee on the implementation of the following services (hereinafter referred to as "asset management-related business") : Provided, That services prescribed in subparagraph 2 shall be limited to defined benefit retirement pension plans :

1. Providing an employer or a pension holder with methods of operation of the reserve fund and information on each operation method;

2. Designing a pension plan and conducting actuarial service;

3. Recording the current state of fund operation, keeping the record, and notifying it;

4. Informing a retirement pension trustee carrying out asset administration business pursuant to Article 16 (1) of the operation method chosen by an employer or a pension holder; and

5. Other services prescribed by the Presidential Decree to properly carry out asset management-related business.

(2) A retirement pension trustee carrying out asset management-related business pursuant to paragraph (1) may have a person who meets the requirements prescribed by the Presidential Decree, such as personnel and physical requirements, carry out part of the  services prescribed by the Presidential Decree.

Article 16 (Implementation of Asset Adminstration Business)

(1) An employer who sets up a retirement pension plan shall sign a contract with a retirement pension trustee on the implementation of the following services (hereinafter referred to as "asset administration business") :

1. Setting up and managing an account;

2. Receiving contributions;

3. Keeping and managing reserve money;

4. Implementing instructions related to the operation of the reserve fund which are given by a retirement pension trustee carrying out asset management-related business;

5. Paying benefits; and

6. Other services prescribed by the Presidential Decree to properly carry out asset administration business.

(2) If an employer intends to make a contract prescribed in paragraph (1), he/she shall make that contract with workers as the insured or beneficiaries in the way insurance contract or trust contract prescribed by the Presidential Decree, is made.

Article 17 (Implementation of Asset Management-related Business)

(1) A retirement pension trustee shall fulfill the duty of due care as a good manager.

(2) When a retirement pension trustee suggests methods of operating the fund, the operation methods shall meet the requirements described in the following subparagraphs:

1. It shall be easy to obtain and understand information on the operation methods;

2. It shall be easy to switch among the operation methods;

3. The methods of and procedures for evaluating the results of the fund operation shall be transparent;

4. In the case of defined contribution retirement pension plans and individual retirement accounts, at least one operation method prescribed by the Presidential Decree, which guarantees the repayment of principals and interests shall be included in the operation methods; and

5. They shall follow operation methods and standards prescribed by the Presidential Decree, such as diversified investment, to ensure the stable operation of the fund.

Article 18 (Cancelation of Registration of Retirement Pension Trustee and Transfer Order)

(1) If a retirement pension trustee falls under any of the following subparagraphs, the Minister of Labor may cancel its registration : Provided, That in the case of subparagraph 1 or 2, the registration shall be cancelled:

1. In case the retirement pension trustee is dissolved;

2. In case the retirement pension trustee makes the registration prescribed in Article 14 in false or other fraudulent ways;

3. In case the retirement pension trustee does not meet the requirements for registration prescribed in Article 14; or

4. In case the retirement pension trustee does not comply with an order issued by the Minister of Labor or the Financial Supervisory Commission pursuant to Article 23.

(2) If it is deemed necessary to protect workers' right to receive benefits when registration is cancelled pursuant to paragraph (1), the Minister of Labor may order a retirement pension trustee whose registration is cancelled to transfer all or part of its services to other retirement pension trustees. In this case, the Minister of Labor shall obtain the consent of the retirement pension trustee to whom all or part of the services are transferred.

CHAPTER 5

Duties and Supervision

Article 19 (Duties of Employers)

(1) An employer who sets up a retirement pension plan shall provide pension holders with education once or more every year about the matters prescribed by the Presidential Decree, such as the operating status of the retirement pension plan of the business concerned. In this case, the employer may entrust a retirement pension trustee to provide the education.

(2) An employer who sets up a retirement pension plan shall not commit any of the following acts :

1. An act of making a contract to carry out asset management-related business and asset administration business for the purpose of benefiting the employer him/herself or a third person; or

2. Other acts prescribed by the Presidential Decree, which undermine the proper operation of a retirement pension.

Article 20 (Duties of Retirement Pension Trustees)

(1) A retirement pension trustee shall observe this Act, orders under this Act and the provisions of contract prescribed in Articles 15 (1), 16 (1) and 25 (3) and carry out its services in good faith for the sake of pension holders.

(2) A retirement pension trustee shall not commit any of the following acts without justifiable reasons:

1. An act of refusing to make a contract on carrying out asset management-related business under Articles 15 (1) and 25 (3) ;

2. An act of refusing to make a contract on carrying out asset administration business under Articles 16 (1) and 25 (3);

3. An act of forcing a contract to be made with a particular retirement pension trustee; or

4. Other acts prescribed by the Presidential Decree, which are feared to infringe the interests of an employer or a pension holder.

(3) A retirement pension trustee that implements asset management-related business shall not commit any of the following acts :

1. An act of promising to bear all or part of the losses of a pension holder or an employer when a contract is made;

2. An act of promising to offer special benefits to a pension holder or an employer;

3. An act of using personal data such as the name, address, etc. of a pension holder beyond the extent necessary to perform jobs related to the operation of retirement pensions; or

4. An act of suggesting a particular operation method to a pension holder or an employer for the purpose of benefiting the retirement pension trustee itself or a third person.

(4) A retirement pension trustee that operates individual retirement accounts pursuant to Article 25 (1) shall provide pension holders with education once or more every year about the matters prescribed by the Presidential Decree, such as the operating status of the retirement pension plan of the business concerned.

(5) A retirement pension trustee shall submit the outcomes of its handling of retirement pensions and individual retirement accounts to an employer(only the outcomes of the handling of retirement pensions), the Ministry of Labor and the Financial Supervisory Commission within three months of the end of every business year under the conditions prescribed by the Ordinance of the Ministry of Labor.

Article 21 (Duties, etc. of the Government)

(1) The government shall devise support measures to promote retirement pension plans.

(2) The government may take necessary measures, such as supporting research projects jointly with workers' or employers' groups, and organizations and groups involved in retirement pension affairs, to ensure the sound establishment and development of retirement pension plans.

(3) The government shall make efforts to devise measures to protect workers' right to receive benefits, such as coming up with a device of guaranteeing the payment of retirement pensions.

Article 22 (Supervision over Employers)

(1) If an employer commits an act in violation of this Act or retirement pension rules on the establishment, operation, etc. of a retirement pension plan, the Minister of Labor may set a period and order the employer to correct the violation within that period.

(2) If an employer does not comply with a correction order within the period set under paragraph (1), the Minister of Labor may order the employer to stop the operation of the retirement pension plan.

Article 23 (Supervision over Retirement Pension Trustees)

(1) If a retirement pension trustee commits an act in violation of this Act, the Minister of Labor may set a period and order the retirement pension trustee to correct the violation within that period.

(2) If a retirement pension trustee does not comply with the correction order under paragraph (1), the Minister of Labor may order the services carried out under this Act to be transferred to other retirement pension trustees.

(3) The Minister of Labor may order a retirement pension trustee to submit materials or make a report concerning the services carried out under this Act.

(4) In order to ensure the stable operation of retirement pension plans and protect workers' right to receive benefits, the Financial Supervisory Commission may supervise retirement pension trustees over the services prescribed by the Presidential Decree, take measures prescribed by the Presidential Decree, such as setting a period and issuing a correction order if a retirement pension trustee violates the provisions of Article 20, and have the head of the Financial Supervisory Service scrutinize the services, properties, etc. of a retirement pension trustee.

Article 24 (Hearing)

The Minister of Labor shall hold a hearing, if he/she intends to cancel registration pursuant to Article 18 (1).

CHAPTER 6

Supplementary Provisions

Article 25 (Establishment, Operation, etc. of Individual Retirement Accounts)

(1) A retirement pension trustee may operate individual retirement accounts.

(2) A person falling under any of the following subparagraphs may set up an individual retirement account :

1. A person who has received lump-sum benefits under a retirement benefit scheme;

2. A person prescribed by the Presidential Decree, who needs to secure stable old-age incomes;

(3) The provisions of Articles 15 and 16 shall be applied mutatis mutandis in carrying out asset management-related business and asset administration business for individual retirement accounts. In this case, "an employer" shall be regarded as "an account holder".

(4) In operating a reserve, the followings shall be observed :

1. An account holder shall be allowed to choose a method of operating the reserve  and change the operation method once or more every half-year;

2. A retirement pension trustee shall suggest at least three operation methods with different risk and return structures from one another once or more every half-year; and

3. A retirement pension trustee shall provide information necessary for an account holder to choose a method of operating the reserve, such as information on the probability of making profits and losses by operation method.

(5) Matters concerning eligibility requirements for recipients by type of benefit of an individual retirement account and early withdrawal from individual retirement accounts shall be prescribed by the Presidential Decree.

Article 26 (Special Cases for Businesses with Less Than 10 Workers)

(1) In the case of businesses with less than 10 ordinarily employed workers, if an employer has all of his/her workers set up an individual retirement account under Article 25 after obtaining the consent of a workers' representative, he/she shall be considered to have set up a retirement benefit scheme notwithstanding the provisions of Article 4 (1).

(2) If an individual retirement account is set up as prescribed in paragraph (1), the followings shall be observed:

1. The consent of a workers' representative shall be obtained when a retirement pension trustee is selected;

2. An employer shall contribute at least a twelfth of the total annual wages of an account holder in cash;

3. An account holder shall be allowed to contribute additional amounts apart from those contributed by an employer;

4. An employer shall regularly pay contributions once or more every year;

5. If when an account holder withdraws, an employer has contributions for the account holder in arrears, the employer shall pay the contributions in arrears within 14 days from the date on which the account holder withdraws; and

6. Other matters prescribed by the Presidential Decree in order to protect workers' right to receive benefits.

Article 27 (Abolishment and Suspension of Retirement Pension Plans)

(1) In the case of the abolishment of a retirement pension plan or suspension of its operation, the severance pay system prescribed in Article 2 shall be applied after the abolishment or during the period of the suspension.

(2) If a pension holder is paid benefits due to the abolishment of a retirement pension plan or the suspension of its operation, he/she shall be considered to be paid benefits earlier than his/her retirement pursuant to Article 8 (2). In this case, the calculation of the period subject to the early payment shall be prescribed by the Presidential Decree.

Article 28 (Cooperation)

The Minister of Labor may, if necessary to implement this Act, request related organizations, such as the Financial Supervisory Commission, etc. to submit materials. In this case, an organization requested to submit materials shall not refuse this request without justifiable reasons.

Article 29 (Report and Investigation)

(1) The Minister of Labor may ask an employer to report the implementation status, etc. of a retirement pension plan or submit related documents or ask for the presence of a related person, within the extent necessary to implement this Act.

(2) The Minister of Labor may, if it is deemed necessary to implement this Act, has his/her officials visit a workplace implementing a retirement pension plan and ask questions to a related person or investigate documents such as accounting books, etc. In this case, the officials shall carry an identification document proving his/her status and show it to the related person.

Article 30 (Entrustment and Delegation of Authority)

(1) The Minister of Labor may entrust or delegate part of the authority prescribed in this Act to the Financial Supervisory Commission or the head of a regional labor office under the conditions prescribed by the Presidential Decree.

(2) The Financial Supervisory Commission may entrust part of the authority prescribed in this Act to the head of the Financial Supervisory Service under the conditions prescribed by the Presidential Decree.

CHAPTER 7

Penal Provisions

Article 31 (Penal Provisions)

A person who fails to pay severance pay in violation of Article 9 shall be punished by imprisonment of up to three years or a fine not exceeding 20 million won.

Article 32 (Penal Provisions)

A person who sets up differentiated retirement benefit schemes within the same business in violation of Article 4 (2) shall be punished by imprisonment of up to two years or a fine not exceeding 10 million won.

Article 33 (Penal Provisions)

A person falling under any of the following subparagraphs shall be punished by a fine not exceeding 5 million won :

1. A person who does not obtain the consent of a workers' representative in violation of Article 4 (3); and

2. A person who does not hear the opinions or obtain the consent of a workers' representative in violation of Article 4 (4).

Article 34 (Joint Penal Provisions)

If the representative of a corporation or an agent, an employee or other employees of a corporation or individual commits an offence prescribed in Articles 31 through 33 in connection with the business of the corporation or individual, not only shall the offender be punished, but also the corporation or individual shall be punished by a fine in accordance with the corresponding provisions.

Article 35 (Fine for Negligence)

(1) A person who violates the duties of employers or retirement pension trustees prescribed in Article 19 (1) or Article 20 (2) through (4) shall be punished by a fine for negligence not exceeding 10 million won.

(2) A person who violates the duties of employers or retirement pension trustees prescribed in Article 19 (2) or Article 20 (1) and (5) shall be punished by a fine for negligence not exceeding 5 million won.

(3) The fine for negligence under paragraphs (1) and (2) shall be imposed and collected by the Minister of Labor under the conditions prescribed by the Presidential Decree.

(4) A person who is dissatisfied with the imposition of a fine for negligence under paragraph (3) may raise an objection against the Minister of Labor within 30 days of the date of the notification of the imposition.

(5) If a person on whom a fine for negligence is imposed pursuant to paragraph (3) raises an objection under paragraph (4), the Minister of Labor shall notify a competent court of this without delay and the competent court notified of this shall try the case in accordance with the Non-contentious Case Litigation Procedure Act.

(6) If a person does not raise an objection within the period prescribed in paragraph (4) and fails to pay a fine for negligence, the fine for negligence shall be collected in accordance with the examples of the collection of national taxes in arrears.

Addenda < Act No. 7379, Jan. 27, 2005 >

Article 1 (Enforcement Date)

This Act shall enter into force on December 1, 2005 : Provided, That for businesses with four or less ordinarily employed workers, this Act shall enter into force on a date prescribed by the Presidential Decree, after the year 2008 but not beyond 2010.

Article 2 (Valid Period of Retirement Insurance, etc.)

(1) If an employer joins a retirement insurance or lump-sum retirement benefit trust (hereinafter referred to as "retirement insurance, etc.") with his/her workers as the insured or beneficiaries so that his/her workers can receive a lump sum or annuity when they retire, the employer shall be considered to have set up the severance pay system under Article 8 (1) : Provided, That the amount of lump-sum benefits under a retirement insurance, etc. shall not be less than the amount of severance pay under Article 8 (1).

(2) The provisions of paragraph (1) shall be effective only for those who are covered by retirement insurance, etc. at the time of implementation of this Act. The effective period shall be until December 31, 2010.

Article 3 (Special Cases concerning Benefits and Contributions for Businesses with Four or Less Ordinarily Employed Workers)

Notwithstanding the provisions of Article 8 (1), subparagraph 4 of Article 12, and subparagraph 1 A of Article 13, the amount of severance pay, the amount of benefits under defined benefit retirement pension plans, and the level of contributions borne by employers under defined contribution retirement pension plans applicable to businesses with four or less ordinarily employed workers may be increased in stages by 50/100 ~ 100/100 of the level prescribed by the same provisions under the conditions prescribed by the Presidential Decree.

Article 4 (Transitional Measures concerning Priority Payment of Severance Pay)

(1) Notwithstanding the provisions of Article 11 (2), in the case of workers who retired before December 24, 1997, the amount of severance pay corresponding to the period of consecutive service after March 29, 1989 shall be subject to priority payment of severance pay.

(2) Notwithstanding the provisions of Article 11 (2), in the case of workers who were hired before December 24, 1997 and are to retire after December 24, 1997, the amount calculated by adding the amount of severance pay for the final three years corresponding to the period of consecutive service after December 24, 1997 to the amount of severance pay corresponding to the period of consecutive service between March 29, 1989 and December 23, 1997 shall be subject to priority payment of severance pay.

(3) The amount of severance pay subject to priority payment of severance pay under paragraphs (1) and (2) shall be 30 days of average wages for each year of consecutive service.

(4) The amount of severance pay subject to priority payment of severance pay under paragraphs (1) and (2) shall not exceed 250 days of average wages.

Article 5 (Transitional Measures concerning Severance Pay System)

A severance pay system set up and severance pay paid pursuant to Article 34 (1) of the previous Labor Standards Act at the time of implementation of this Act shall be considered to have been set up or paid under this Act.

Article 6 (Revision of Other Laws)

(1) The Labor Standards Act shall be revised as follows :

Article 34 shall be revised as follows :

Article 34 (Retirement Benefit Scheme)

A retirement benefit scheme under which an employer pays benefits to workers who retire shall be subject to the conditions prescribed by the Employee Retirement Benefit Security Act.

"Wages, severance pay" in Article 37 (1) shall be changed into "wages".

Subparagraph 2 of Article 37 (2) shall be deleted.

“Retirement allowance, bonuses" in subparagraph 5 of Article 96 shall be changed into ”severance pay under Article 8 of the Employee Retirement Benefit Security Act and bonuses".

(2) The Wage Claim Guarantee Act shall be revised as follows :

Subparagraph 1 of Article 6 (2) shall be revised as follows :

1. Wages under subparagraph 1 of Article 37 (2) of the Labor Standards Act and severance pay under Article 8 (1) of the Employee Retirement Benefit Security Act; and

Subparagraph 2 of Article 9 shall be revised as follows :

2. Employers who join a retirement insurance, etc. under Article 2 (1) of the Addenda of the Employee Retirement Benefit Security Act and employers (including employers of businesses subject to special cases prescribed in Article 26 of the same Act) who set up a retirement pension plan under Chapter 3 of the same Act.

(3) The Insurance Business Act shall be revised as follows :

Subparagraph 2 of Article 108 (1) shall be revised as follows :

2. A retirement insurance contract under Article 2 (1) of the Addenda of the Employee Retirement Benefit Security Act and an insurance contract under Article 16 (2);

Article 7 (Relations with Other Laws)

If the severance pay system under Article 34 of the previous Labor Standards Act or its provisions are cited in other laws at the time of implementation of this Act and there are corresponding provisions in this Act, this Act or its corresponding provisions are considered to be cited in place of the previous provisions.