Settlement of Payments
When an employee dies or retires, the employer shall pay wages, compensation, and other money or valuables within 14 days after the day on which the cause of such payment occurred.
Issuance of Certificates of Employment
Whenever an employer is requested by an employee to issue a certificate specifying the term of employment, the kind of work performed, positions taken, wages received, or other necessary information, the employer shall immediately prepare and deliver a certificate based on facts, even after the retirement of the employee.
Retirement Benefits System
Retirement benefits refers to an annuity or lump sum paid to employees who have provided consecutive service during a substantial number of years. There are two types of retirement pension reserves: severance pay and retirement pension plans.
Severance Pay System
The severance pay system refers to the system through which employers pay retiring workers pro-rata amounts equivalent to more than the average wages earned for 30 days for each year of their continuous service in lump sum payments.
Retirement Pension Plans
The retirement pension plan is a system in which users may reserve funds of retirement benefits to an outside financial institution which then pays the reserve amount as pension or a lump sum upon retirement of the user. The system allows for three types of plans: defined benefit plans (DB), defined contribution plans (DC), and individual retirement pension plans (IRP). Any employee who subscribes to a retirement pension can safely receive severance pay without fear of defaulting after retirement and the users can reduce their tax burdens as paid reserves are recognized as deductible expenses under the Corporate Tax Act.
- Defined Benefit Plan (DB) : Retirement benefits must be an amount equivalent to more than the average wage earned for 30 days per year multiplied by the employment period (continuous years of service). The level of retirement benefits given to employees will be determined in advance.
- Defined Contribution Plan (DC) : A twelfth of a subscriber’s annual wages or more shall be paid as contribution to the subscriber’s pension account. The level of contribution of the employer will be determined in advance.
- Individual Retirement Pension Plan (IRP) : This is a retirement pension plan established to accumulate and operate a lump sum paid by a subscriber or the contributions paid by an employer or a subscriber according to the choice of the subscriber. The level of the benefits or contributions is not predetermined.