Unfair Dismissal Compensation in Korea: How Much Can You Receive? Relief Procedures & Calculation Guide

What Is Unfair Dismissal Compensation?

"Unfair dismissal compensation" (부당해고 수당) is not a formal legal term but a commonly used expression in practice. It refers specifically to back pay (임금 상당액) paid during the unfair dismissal (부당해고) relief process or compensation awarded under a monetary compensation order (금전보상명령). The legal basis is Articles 28 through 30 of the Labor Standards Act (근로기준법 제28조~제30조).

Requirements for Unfair Dismissal

Article 23 of the Labor Standards Act (근로기준법 제23조) requires that an employer have just cause to dismiss a worker. A dismissal may constitute unfair dismissal in cases such as: dismissal without just cause, dismissal without written notice (in violation of Article 27 / 제27조), or dismissal without advance notice (in violation of Article 26 / 제26조). Note that Article 23 (just cause requirement) does not apply to workplaces with fewer than 5 employees.

Note for foreign workers: Your employment contract may specify additional procedures, but the statutory minimums above apply regardless of contract terms.

Two Methods of Relief

1. Filing a Relief Application with the Labor Relations Commission

A relief application must be filed with the Regional Labor Relations Commission (지방노동위원회) within 3 months of the date of dismissal (Article 28 of the Labor Standards Act / 근로기준법 제28조). As a rule, applications filed after this deadline are not accepted, so prompt action is critical.

If the Labor Relations Commission recognizes the dismissal as unfair, it will issue an order for reinstatement to the original position along with an order to pay the full amount of wages the worker would have received had they continued working during the dismissal period (back pay / 임금 상당액). This back pay is the core of what is commonly called "unfair dismissal compensation."

2. Monetary Compensation Order System

If a worker does not wish to be reinstated, they may apply to the Labor Relations Commission for a monetary compensation order (금전보상명령) under Article 30, Paragraph 3 of the Labor Standards Act (근로기준법 제30조 제3항). In this case, the Commission may order the employer to pay an amount equal to or greater than the back pay for the dismissal period; in practice, this is typically determined as back pay + additional consolation money.

How to Calculate Back Pay

Back pay is calculated based on the wages the worker should have received from the day after the dismissal date through the date of reinstatement (or the date of the ruling).

Back Pay = Monthly ordinary wage (통상임금) or average wage (평균임금) × Number of months of the dismissal period

However, if the worker earned income from another job during the dismissal period, that amount may be deducted (consistent with multiple Supreme Court precedents). Severance pay (퇴직금) may be claimed separately, and a severance pay claim may be pursued concurrently with an unfair dismissal relief application.

Difference from Court Litigation

In addition to filing a relief application with the Labor Relations Commission, a civil lawsuit (action to confirm dismissal invalidity / 해고무효확인 소송) is also available. The statute of limitations for litigation is 3 years (wage claims), which is longer, but the procedure is more complex and time-consuming. By contrast, the Labor Relations Commission has the advantage of issuing a first-instance ruling within an average of 60 to 90 days. Pursuing both procedures simultaneously is also legally permitted.

Practical Checklist

• [ ] Confirm whether the dismissal notice was received in writing (verbal dismissal constitutes a procedural violation)
• [ ] Confirm the 3-month deadline for filing a relief application from the date of dismissal
• [ ] Confirm whether 30 days' advance notice was given before dismissal, or whether advance notice pay (해고예고수당) equivalent to 30 days' ordinary wages was paid
• [ ] Confirm whether disciplinary procedures under the rules of employment (취업규칙) or collective agreement (단체협약) were followed
• [ ] Keep a record of any other income earned during the dismissal period

Check Your Amounts on Bylaw

If you want to know how much back pay or severance pay (퇴직금) you may be owed for the period of unfair dismissal, use the Bylaw (workbylaw.com) severance pay calculator to get an estimated figure first. You can also use the AI search feature to quickly understand the relief procedures applicable to your situation and get help drafting a complaint or relief application all in one place.

This article is for informational purposes only and does not constitute legal advice. For specific cases, consult a certified labor attorney (노무사) or lawyer.