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Understanding the Validity of Waiving Severance Pay: Insights from Supreme Court Case 2018다21821



In a significant ruling, the Supreme Court (case numbers 2018다21821 and 2018다25502) clarified the legal position on waiving the right to claim severance pay. This judgment, delivered on July 12, 2018, has far-reaching implications on labor laws and employee rights, particularly in situations involving retirement and termination of employment contracts.


Severance pay, essentially deferred wages, is a reward given to employees who have served a company for a certain period. The right to claim severance pay arises upon retirement, marking the end of an employment relationship. The Supreme Court ruled that it is invalid to waive this right in advance as it violates mandatory laws such as the Labor Standards Act and the Employee Retirement Benefit Security Act.


However, the court held that it is permissible for an employee to waive the right to claim severance pay after retirement, when they are no longer bound by an employment contract. Such an agreement does not violate mandatory laws.


The court's interpretation of legal acts aims to determine the meaning that parties attribute to their expressive acts. If the meaning is not clear from the words expressed by the parties, the content of the words, motives, circumstances of the legal act, purpose, true intent that parties want to achieve through the legal act, and customs of transactions should be considered and interpreted according to logic and experience laws, common sense, and societal conventions.


In this case, the plaintiff had been employed by the defendant for about 10 years. Upon retirement, he received 11.8 million won over about 10 months for delayed wages and severance pay. He wrote a pledge stating that he had settled all his back wages (including severance pay) with the company and promised not to demand any additional amount. The court ruled this as waiving his right to claim additional severance pay after retirement.


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**FAQs**


**Q1**: What is the significance of Supreme Court cases 2018다21821 and 2018다25502?

**A1**: These cases clarified the legal position on waiving the right to claim severance pay. It was ruled invalid to waive this right in advance but permissible after retirement.


**Q2**: Can an employee waive their right to claim severance pay in advance?

**A2**: According to these Supreme Court cases, it is invalid to waive the right to claim severance pay in advance as it violates mandatory laws such as the Labor Standards Act and Employee Retirement Benefit Security Act.


**Q3**: Can an employee waive their right to claim severance pay after retirement?

**A3**: Yes, after retirement, when they are no longer bound by an employment contract, an employee can legally waive their right to claim severance pay.


**Keywords**: Severance Pay, Supreme Court, Waiving Rights, Retirement, Labor Laws, Employee Rights, Employment Contracts, Legal Interpretation, Deferred Wages, Mandatory Laws.


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