Separation certificates are due within 10 days of an employee's request

This guide is for HR and payroll staff, and foreign managers, at companies in Korea. When an employee leaves and asks for a separation certificate (이직확인서), the employer must issue it within 10 days. The reason code on it affects the employee's unemployment benefit (실업급여), so it needs care, especially after a recommended resignation (권고사직), where the employee resigns at the company's suggestion.

The loss report does not replace the separation certificate

The separation certificate is the document most often missed when someone leaves. Many companies think the job is done once they file the loss report for the four social insurances (4대보험 상실신고). The two are different forms:

The three forms are used at different times. The duty to issue the certificate arises when the employee requests it or when the job center (고용센터), the public employment office, asks for it. The company does not have to issue it unprompted. But after a recommended resignation, where the employee expects unemployment benefits, a request almost always comes. Prepare the data while you file the loss report.

The deadline is 10 days, counted from the day you receive the request. The legal bases are Article 42(3) of the Employment Insurance Act (고용보험법) and Article 82-2 of its Enforcement Rule, and the processing-period field on the front of the form also says 10 days. The certificate is handled through Work24 (고용24), the government's employment services website.

Nine loss reason codes

The back of the form carries the code table. Wording often drifts when people copy it, so here is the form's text, translated.

Codes 23 and 26 both include recommended resignation, but they point in opposite directions. Code 23 means the cause lies with the company. Code 26 means the cause is the employee's fault. The same words "recommended resignation" lead to different codes depending on the cause.

Rules for choosing the code:

• The code must match the code on the loss report. The form's instructions say to enter "the loss reason code written on the loss report".
• If the two documents show different codes, the job center will check the facts.
• You must also write a specific reason of at least 10 characters. A code alone is not enough.
• If the cause is on the company side, such as falling sales, a closed department or downsizing, use 23. For layoffs, see also the 50-day and 30-day rules for layoffs for business reasons.
• If the cause is the employee's work negligence or misconduct, use 26.
• Writing 26 when the real cause is the company's situation reverses the decision on the employee's eligibility for benefits.
• Writing 23 when the real cause is the employee's fault means the company has issued a document that contradicts the facts.
• Do not record a disciplinary dismissal as 32 (end of contract). The disciplinary record and the administrative record then disagree, which weakens the credibility of the company's case in an unfair dismissal dispute.

Filling in the 12 boxes

The front of the form (Form No. 75-4, revised August 28, 2020) has 12 numbered boxes. Items marked with a star are mandatory.

Box ③ causes the most mistakes. What goes in and what stays out:

• Exclude unpaid holidays.
• Exclude absences without pay.
• Include paid leave.
• Include paid holidays.

Box ⑦ has its own method for bonuses and annual leave allowance:

• Bonus: total paid in the 12 months before separation, times 3/12.
• Annual leave allowance: the same, times 3/12.
• If the employee worked less than 12 months, multiply the amount paid in that period by 3 and divide by the months worked. For 6 months of work, that is 3/6.

Box ⑫ has four reason codes: 1 illness or injury, 2 business suspension, 3 pregnancy, childbirth or childcare, and 4 other. Attach documents proving that pay was not received. Box ⑪ uses the contractual working hours in the employment contract, not the hours actually worked. The ordinary wage in box ⑧ follows Article 6 of the Enforcement Decree of the Labor Standards Act (근로기준법 시행령).

Fines and joint liability

The notes on the back of the form set out the sanctions. If the employee or the head of a job security agency (직업안정기관의 장) requests the certificate and the employer does not issue it, or issues a false one, the employer can be fined (과태료) up to ₩3,000,000. The basis is Article 118(1), items 2 and 3 of the Employment Insurance Act.

There is a second risk. If a falsely written certificate lets the former employee receive unemployment benefits wrongly, the employer can be held jointly liable. Changing the reason as a favor to the employee makes the company a co-responsible party in benefit fraud.

The way to limit the risk is simple: write the facts. If the company let the employee go for its own reasons, the code is 23. Any cost of that choice comes separately, on the employment subsidy (고용지원금) side. That is a different matter from bending the document. For foreign employees, see also employment insurance for foreign workers by visa.

Checklist

• The code in box ① matches the code on the loss report.
• The specific reason is at least 10 characters.
• Box ② runs backward from the month of separation.
• Unpaid absences are left out of box ③.
• Paid holidays are included in box ③.
• Box ④ equals the total of box ③.
• The last row of box ⑤ starts on the day after the separation day.
• Bonuses and annual leave allowance use 3/12.
• For service under 12 months, amounts are prorated by months worked.
• Box ⑧ is filled in for service under 3 months.
• A band is chosen in box ⑩.
• You are still within 10 days of receiving the request.