Dr. A is a dermatologist with 30 employees, including nurses, nurse’s aides, and counselors, etc. One of Dr. A’s employees, skin care specialist B, who is planning to resign in order to continue her education, requested a meeting with Dr. A., during which B asked Dr. A to designate ‘involuntary termination’ as the reason for her severance from employment, so she could be eligible for job-seeking benefits and receive some financial support while she studies.
Dr. A is considering B’s request since B has been an employee from the day Dr. A. opened his clinic and has a good work record. However, Dr. A is concerned about possible disadvantage for his clinic in case of involuntary employment termination.
There are instances where employees who resign voluntarily ask their employers to stipulate that it is an involuntary employment termination so the employees can apply for job-seeking benefits. Small workplaces like Dr. A’s Clinic are tempted to make a false report, as, under the job-seeking benefit system, he or she is paid at least 90% of the minimum wage per month. Thus, there is little difference between the job-seeking benefit and the normal wage, especially in small workplaces which pay minimum wage. This makes the employment benefit very attractive to workers who would have difficulty making ends meet after resigning their position. This puts employers in a difficult situation, as they realize that an improper designation can make quite a difference to an employee who has worked hard, explains his/her situation, and asks for assistance.
Misconceptions and the truth about job-seeking benefits
It is easy for employers and employees to consider job-seeking benefit as a return for their employment insurance premium. However, job-seeking benefits are not paid in return for employment insurance premiums, nor are they compensation for unemployment. The benefit aims to help an unemployed worker while he or she is looking for a new job. Thus, to be eligible for the benefit, an insured worker must have worked at least 6 months during the 18-month period prior to becoming unemployed, and the insured worker should be actively seeking a new job during the benefit period. Most importantly, it must be determined that the worker did not have any choice in the termination. In other words, skin care specialist B in Dr. A’s clinic is not eligible for job-seeking benefits since she is voluntarily resigning for personal reasons.
Nonetheless, there are exceptional cases for job-seeking benefits concerning voluntary termination of employment. Even if an insured worker voluntarily leaves the workplace, he or she is eligible for job-seeking benefits if the worker is recognized as having had a valid reason for resigning, such as continuous late payment of wages, assignment to another workplace at a distance where commuting is impractical, etc.
On the other hand, does a worker is always eligible for job-seeking benefits if the worker is involuntarily terminated? What if a worker is advised to resign because of property damage he/she caused during an illegal strike? Does the worker is still eligible for job-seeking benefits just because the resignation was not voluntary?
In a situation such as this, the law states that an insured worker is ineligible for benefits if the worker is dismissed as a result of his or her own actions, such as gross misconduct that causes serious damage to the employer’s business or property.
[Table] Instances of Gross Misconduct that can cause Serious Damage to an Employer’s Business or Property(Enforcement Regulation of the Employment Insurance Act)
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1. An employee in a manufacturing company is provided money & valuables and/or rewards from suppliers in return for inferior goods, resulting in a loss in production;
2. An employee discloses business secrets or other information to rival businesses;
3. An employee commits gross misconduct causing serious damage to the employer’s business or property by fabricating and spreading false information or instigating illegal collective actions;
4. An employee embezzles or misappropriates company funds by using his or her position or breaches his or her duty;
5. An employee steals or illicitly distributes goods or base materials;
6. An employee responsible for HR/bookkeeping/accounting commits gross misconduct causing serious damage to the employer’s business or property by manipulating workers’ service records or preparing false documents;
7. An employee commits gross misconduct causing serious damage to the employer’s business or property through vandalism;
8. An employee is responsible for an accident by allowing a third party to drive a company vehicle without the business owner’s consent.
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Therefore, if it is recognized that an insured worker caused serious damage to a company, like a trade union official who led an illegal strike, the dismissed worker would not be eligible for job-seeking benefits. Participation in strikes does not always mean disqualification for job-seeking benefits, but there is a precedent ruling that a trade union official who led an illegal strike at a Job Center run by the Ministry of Employment and Labor (MOEL) and Korea Employment Information Service, was not eligible for job-seeking benefits.
Points to consider before approving involuntary termination of employment
As described above, job-seeking benefits aims to provide financial assistance to insured workers who lose their employment through no fault of their own, while they search for new work. Therefore, if a person receives job-seeking benefits, it means the company dismissed a worker who was willing to work. Such dismissal may result in disadvantages to companies, such as a reduction in or no subsidies.
One of the applicable subsidies is the Employment Promotion Allowances. Employment Insurance has a system whereby it subsidizes some of the labor costs of a company if that company hires certain categories of workers, such as workers who are registered in WORKNET, the employment portal run by MOEL. The allowances are provided under the condition that companies do not make redundancies. Thus, Dr. A would not be able to receive the Employment Promotion Allowances after hiring a worker from WORKNET if he stipulates involuntary termination of employment as B requests. Even though the employment benefit is paid to B, it is considered insurance fraud by Dr. A since the benefit payment is issued based on a fraudulent document. Although payment is made to the worker, a fine up to US $3,000 can be levied on the employer, depending on the employer’s intention or lack of circumspection. The increased penalties are necessitated by the increasing frequency of insurance fraud.
Employers and employees can easily have the misconception that the employment benefit is easy money. This is not true. Job-seeking benefits are funded by employment insurance premiums, which are borne equally by both the companies and the workers, and the easy benefit of the moment can lead to an increase in insurance premiums for everybody.
Can involuntary termination of employment be used repeatedly?
It is commonly said today that jobs are the best form of welfare. Some even say that one of the most important social responsibilities for companies is job creation. In this regard, wrongly stating ‘involuntary termination’ on a document can easily create a negative impression of the company on the part of others. Some consider job-seeking benefits to be easy money, and receive the benefits like pin money after they resign. Due to the increasing number of insurance fraud cases, the Job Center is implementing fraud detection teams and increasing the severity of penalties. Therefore, employers are advised to comply with the employment termination regulations in order to prevent any disadvantages coming from insurance fraud.