“Business suspension allowance” refers to the allowance that the employer must pay to the worker in case the business is closed for reasons attributable to the employer.
What is “business suspension allowance"?
- When a business shuts down due to a cause attributable to the employer, he or she shall pay the employees “business suspension allowances“ of not less than 70/100 of their average wages during the period of shutdown. (Main text of Article 46(1), 「Labor Standards Act」)
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usiness suspension allowance is paid at 70% of the average wage, and if there is an unavoidable reason for the employer, it will be reduced. Payment of business suspension allowance
- A employer shall pay the employees allowances of not less than 70/100 of their average wages during the period of shutdown. (Main text of Article 46(1), 「Labor Standards Act」)
※ Provided, that if the amount equivalent to 70/100 of their average wages exceeds that of their ordinary wages, their ordinary wages may be paid as their shutdown allowances. (Proviso to Article 46(1),「Labor Standards Act」)
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Interim income deduction when working for another job after dismissal
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Q: How much is the interim income deduction if the worker has been fired for reasons attributable to the employer and worked at another job before being reinstated? A: According to precedent, a worker who has been dismissed for reasons attributable to the employer may claim wages from the employer for that period in accordance with the main text of Article 538(1), 「Civil Act」, even if he/she fails to provide labor during that period,and in this case, if the worker has a profit obtained by avoiding his/her debt, he/she is obliged to repay it to the employer pursuant to Article 538(2), 「Civil Act」. However, since the income earned by the worker while engaged in another job during the period of dismissal will be referred to as the profit (interim income) obtained by avoiding the duty to provide work, the employer may deduct the interim income when paying wages to workers during the period of dismissal. (Supreme Court Decision 90Da18999 on 1991.12.13.) In addition, according to the precedent, as above, even if the worker has income (interim income) earned by working at another workplace during the dismissal period and the interim income must be deducted, only the amount in excess of the amount corresponding to the business suspension allowance (if the amount equivalent to 70/100 of the average wage or 70/100 of the average wage exceeds the ordinary wage, the ordinary wage, hereinafter the same shall apply) may be subject to interim income deduction. (Supreme Court Decision 90Da18999 on 1991.12.13.)
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How to calculate business suspension allowance if part of wages is paid
- Where an employee has received a part of wages during a period of suspension due to any ground attributable to the employer, the employer shall pay him or her an allowance equivalent to at least 70/100 of the difference calculated by subtracting that part of wages already paid to the said employee from the average wages. (Main text of Article 26, 「Enforcement decree of the Labor Standards Act」)
- However, if the amount equivalent to 70/100 of the average wage exceeds the ordinary wage and the ordinary wage is paid as a business suspension allowance, the amount obtained by subtracting the wage paid during the period of suspension from the ordinary wage shall be paid. (Proviso to Article 26, 「Enforcement decree of the Labor Standards Act」)
If it is possible to pay a business suspension allowance that is below the standard
- The employer who is unable to continue to carry on the business for any unavoidable reason may, with the approval of the labor relations commission concerned, pay the employees shutdown allowances lower than the standard of 70/100 (Article 46(2), 「Labor Standards Act」)
- The employer who intends to request the authorization for payment of shutdown allowances lower than the standard shall submit to the local labor relations commission the 『Application form for business suspension allowance that is below the standard』. (Article 8 and Annex 4, 「Enforcement Rule of Labor Standards Act」)
Penalty for violation (no punishment against will)
- A person who violates and does not pay shutdown allowancesshall be punished by imprisonment with labor for not more than 3 years or by a fine not exceeding 30 million won.(Article 109(1), 「Labor Standards Act」)
- A public prosecution against a person who violatesmay not be raised against the clearly expressed will of the person who has suffered the loss concerned.(Article 109(2), 「Labor Standards Act」)