Paid or Unpaid Sick Leave? Whether or not severance pay is included

we've analyzed the differences between the Labor Standards Act and actual company policies, from what constitutes unpaid sick leave to whether sick pay is included in severance pay calculations. Plus, find out what to look out for when using sick leave and practical tips.

we've all been there at some point in our careers. suddenly, you catch a bad cold, need dental work, or a medical examination reveals a need for a follow-up - and you're stuck. should I call in sick or use my precious annual leave, and more importantly, will it be paid or unpaid and will it cost me a paycheck?

the criteria for paid or unpaid sick leave is more complicated than you might think. different companies have different rules, and the Labor Standards Act doesn't make it clear, so it can be confusing. In fact, research shows that 4 out of 10 workers don't take sick days when they're sick. in this article, we'll cover everything you need to know about sick leave, from how it's defined to how it's paid, and whether it includes severance pay.

the truth about sick leave under the Labor Standards Act

there's a misconception that many workers have. they think that sick leave is paid time off that is guaranteed by law. The reality is different: sick leave is not defined by the Labor Standards Act. statutory paid leave includes annual paid leave, pre- and post-natal leave, spousal leave, paternity leave, parental leave, family care leave, and government holidays. sick leave is not on this list.

so what is sick leave? Sick leave is voluntary, scheduled time off that individual workplaces offer to workers in response to illness or injury. it's a company choice, not a legal obligation. the Ministry of Employment and Labor's administrative interpretation also states that companies are free to decide whether to introduce a sick leave system, the number of sick leave days, and whether it should be paid or unpaid.

how is paid sick leave determined?

sick leave is unpaid in principle. under the principle of no work, no pay, employers are not obligated to pay wages for periods when employees do not provide work for personal reasons. However, if a company's employment rules, collective agreements, or labor contracts stipulate that sick leave is paid, it is paid according to those rules.

in practice, sick leave policies vary from company to company. government employees are guaranteed 60 days of paid sick leave per year by law. If you take more than seven days off, you'll need to provide a doctor's note and receive 100 percent of your salary. Large companies with well-developed benefits often have a sliding scale of paid sick leave: 100 percent of base salary for the first 15 days of the year, 60 percent of base salary for the 16th to 90th days, and then unpaid sick leave.

small businesses are a different story: they often don't have a sick leave policy, and if they do, it's usually unpaid. in many cases, employees are required to exhaust their annual leave first. In particular, businesses with fewer than five employees are not required to write employment rules, so they may not even be entitled to annual leave, let alone sick leave.

how are sick leave and annual leave different?

it's important to clearly understand the legal difference between sick leave and annual leave. Annual leave is a statutory paid leave specified in Article 60 of the Labor Standards Act, which mandates 15 days of paid leave for employees who work at least 80 percent of the time in a year. Employees have the right to take it whenever they want.

sick leave is an uncommitted leave that is not stipulated in the Labor Standards Act and is at the discretion of the employer. its use is also limited to treatment for illness or injury and requires the employer's approval. while annual leave counts as attendance, sick leave is treated differently depending on your workplace rules for attendance or absence.

there are many reasons why many workers choose to use annual leave instead of sick leave. financial reasons are the most common. it's more profitable to use paid annual leave than unpaid sick leave, and it's less profitable to be absent without pay because you don't get paid for that week. If your company's rules require you to use your annual leave first when you take sick leave, you should follow them, but it's not against the law to require you to use accrued annual leave first.

sick leave pay standards and real-world examples

sick leave payout is highly dependent on company policy. the paid standard only applies if there is an explicit provision in the company's employment rules or collective agreement. if nothing is specified, unpaid is the default, based on the principle of no work, no pay.

there are some caveats to unpaid status if a period of unpaid sick leave falls on a public holiday, you are not obliged to pay wages for that day, as Supreme Court precedent views a period of sick leave as a period of suspension of the employment relationship. You also do not accrue weekly vacation pay for that week, and for employees with less than one year of experience, you do not accrue the next month's annual leave for absences due to sick leave.

the average wage calculation is also affected: sick leave periods due to non-work-related illnesses are deducted from the average wage calculation period and the total wage amount, respectively, according to Article 2 of the Enforcement Decree of the Labor Standards Act. severance pay is calculated based on the average wage for the three months prior to retirement, so using sick leave just before retirement may affect the calculation of severance pay.

whether sick leave periods are included in severance pay

as a general rule, sick leave periods are included in your continuous employment for severance pay calculations. sick leave taken with your authorization is considered a continuation of employment, as it is only a break in employment, not a break in service. even if your sick leave was unpaid, it counts toward your service for severance pay purposes.

there are exceptions. if your labor contract, employment rules, collective agreement, etc. have a special provision that excludes periods of leave due to personal circumstances from the length of service, you can exclude the period of sick leave from the severance pay calculation period according to the provision. the Ministry of Employment and Labor's administrative interpretation also recognizes this.

practical tips for using sick leave

you must follow the procedure for using sick leave exactly: you must apply for sick leave in advance and get approval from your supervisor or HR before you can use it. You can also apply for sick leave on the same day, but this is subject to company rules and may be treated as unauthorized absence.

it's also important to provide documentation. generally, a doctor's note is required for sick days longer than seven days. short-term sick leave can often be substituted with a medical certificate or a visitation certificate. In the case of hospitalization or surgery, you will need to submit an additional hospitalization certificate or surgery certificate. Government employees are required to submit a medical certificate for more than 7 days of sick leave in a year, while private companies usually require a medical certificate for 3 to 7 days, depending on the company.

sick leave cannot be used at any time, and requires an application and approval process in accordance with internal regulations. Using sick leave for other than its intended purpose may result in disciplinary action for breach of good faith. failure to provide a medical certificate may result in revocation of sick leave authorization or conversion to annual leave.

how do the four major insurance plans work during sick leave?

sick leave is not a reason to lose your status as a member of the four major insurances because you are not actually working for a certain period of time while maintaining your employment relationship. Your status as a member of the four major insurances will continue as long as your employment relationship is maintained.

in the case of National Pension, unpaid employees can apply for a temporary exemption from contributions, which will automatically resume when they return to work and no additional contributions are required. In the case of health insurance, you will continue to be covered as an employee during your leave of absence, and you can apply for a deferred payment notice, but you will be charged the same premium. employment insurance and workers' compensation insurance are automatically processed when you return to work, with no need to file a separate notice.

short-term sick leave is usually handled without a deferral. if your salary is less than the four major insurance premiums due to unpaid sick leave, you can pay the premiums separately or have them deducted from your salary after you return to work. for long-term sick leave, you may want to consider applying for a deferral or exemption.

how sick leave affects your career

legally, taking sick leave itself cannot be grounds for a demerit; penalizing you in a performance review for taking sick leave could constitute an adverse workplace action. in fact, there have been cases where the National Labor Relations Board has ruled that an evaluation for poor work attitude after two weeks of sick leave was unfairly penalized.

however, there are practical implications. evaluation scores are heavily weighted in personnel decisions such as promotions, merit pay, and salary increases, and depending on the company culture, there are indirect penalties for being noticed. Downgrades for lack of days worked, poor attendance, or a sharp drop in evaluation ratings without explanation after a sick leave can be challenged as having no objective basis.

if you're on extended sick leave, your work assignment or position may be affected upon your return. you may have a different view of your work as colleagues take over your duties, or organizational changes may make it difficult to return to your original position. there will be an adjustment period when you return, and you may want to consider a phased return to work.

frequently asked questions

Q1. Is sick leave paid or unpaid? It depends on your company's employment rules or collective bargaining agreement. unless otherwise specified, it is usually unpaid. public employees are guaranteed by law to be paid up to 60 days per year. in larger companies, it's often fully paid up to 15 days, then partially paid or unpaid.

Q2. Do I have to provide a medical certificate when using sick leave? It depends on the company's rules. generally, medical certificates are required for sick leave of three to seven days or more. for government employees, a medical certificate is required for more than 7 days in a calendar year, while short-term sick leave can often be substituted with a medical certificate or prescription.

Q3. Do I have to use my annual leave first when taking sick leave? If your company's employment rules specify that you must use your annual leave first when taking sick leave, you must follow them. however, it is a violation of the Labor Standards Act to require employees to take annual leave that has not yet been accrued. It is not a violation to require employees to use accrued annual leave first.

Q4. Are sick leave periods included in severance pay calculations? yes, sick leave periods taken with company approval are included in the continuous work period for severance pay calculation. however, it may be excluded if there is a separate provision in the employment rules that excludes leave of absence for personal reasons from the length of service.

Q5. Is there any disadvantage in personnel evaluation if I take sick leave? Taking sick leave itself is not a reason for deduction of points. However, it is often difficult to use sick leave because it is not noticeable. If your evaluation is unfairly lowered due to sick leave, you can ask for the evaluation sheet and file an appeal with the labor committee.

wrapping up

the criteria for unpaid sick leave ultimately depends on company regulations. the Labor Standards Act does not guarantee sick leave as a statutory paid vacation, but as long as it is used with the company's approval, it is generally included in the severance pay calculation period. unpaid sick leave does not affect your status as a member of the four major insurers and is only excluded when calculating your average wage.

the reality that 4 out of 10 workers are unable to take sick leave when they are sick is something that still needs to be improved. in the meantime, it's important to check your company's employment rules and make sure you're clear on sick leave policies.

understanding the difference between sick leave and annual leave, and knowing the criteria for sick leave pay and whether severance pay is included, can help minimize penalties. always get pre-approval for sick leave and have the necessary documentation. taking time off when you're sick will help you recover faster and benefit both your company and yourself in the long run.

if you have any questions about sick leave, let us know in the comments. We'd love to hear about your real-life experiences or anything else you'd like to know more about. If you found this article helpful, please subscribe and share. next time, we'll talk more about how to take advantage of annual leave and how to calculate severance pay.