Effective as of January 1, 2013, employers of a workplace with four or less employees are required also to pay severance benefit, in the amount equal to or greater than the statutory minimum to employees who retire following their continuous employment of 1 or more years.
The Employee Retirement Benefit Security Act helps employees to prepare for their retirement and unemployment by requiring employers to pay a minimum of not less than 30 days’ average wages for each year of service to employees who have been employed for at least one year, regardless of the cause of retirement.
Such severance benefit had been applicable only to workplaces with five or more employees. In case of workplaces having 4 or less employees, the severance benefit requirement only started to become applicable from 12/1/2010, and such small-size companies are not required to pay severance benefit to their employees for the employment period preceding 12/1/2010. Also, in order to alleviate financial impact that may result from the introduction of the severance benefit requirement to workplaces having 4 or less employees, the amount of statutory minimum severance payment covering the employment period from 12/1/2010 until 12/31/2012 was 50% of statutory minimum.
That being said, effective as of January 1, 2013, the full statutory minimum is required for all workplaces, which means that employees of a workplace with four or less employees, as well as the employees of a workplace with five or more employees, will receive the statutory minimum equal to not less than 30 days’ average wages for each year of service.