Coupang did not pay severance pay, and it even went to trial — what happened?

A CEO is going to trial for not paying severance pay?

On April 6, 2026, a somewhat unusual trial was held at the Seoul Central District Court. Former and current CEOs of Coupang Fulfillment Service (CFS) sat in the defendant seats. The charge was that they 'did not pay severance pay.'

You might think, 'A trial just because severance pay was not paid?' But this is not a simple unpaid wage case. Coupang secretly changed company rules and completely did not pay Dasan Call Center (Seoul)M KRW in severance pay that should have gone to 40 daily workers.

What is even more interesting is this: the labor office said 'indict them,' but the prosecution covered it up with a 'no charges' decision, and in the end the standing special counsel stepped in and indicted the CEOs. Suspicions also came out that top prosecution officials buried the case, so 2 prosecutors were also indicted together.

When you live in Korea and watch the news, one question leads to another, right? What exactly is severance pay? Can a company change its rules however it wants? Can the prosecution overturn what the labor office approved? I will explain one by one.

Wait, what is severance pay? Can I get it too?

Simply put, severance pay is a lump-sum payment you get when you leave a company. In Korea, it is guaranteed by a law called the Act on the Guarantee of Workers' Retirement Benefits, so if you meet the conditions, the company must pay it. If they do not? Up to 3 years in prison or a fine of up to 30M KRW. You really could go to jail.

There are only 2 conditions. (1) You must have worked for at least 1 year, (2) your average weekly working hours must be at least 15 hours. If you meet these 2 things, you can get severance pay whether you are a regular worker, non-regular worker, or even a daily worker.

It is calculated like this: 1 day of the average wage from the last 3 months × 30 × (number of working days ÷ 365). In simple words, if you work for 1 year, you get about 1 month of salary as severance pay. If your monthly salary is 2.5M KRW, your severance pay is also about 2.5M KRW.

And this is important here — it applies the same to foreigners too. No matter what visa you have, if you worked in Korea for more than 1 year and at least 15 hours a week, you have the right to get severance pay. In the case of the Non-professional Worker (Non-professional Worker) visa, there is a system called 'departure guarantee insurance,' but this does not replace severance pay — it adds to it. If the insurance money is less than the severance pay, the company must pay the difference.

Take one day off and severance pay becomes 0 KRW? — what the 'reset rule' really is

Now, this is the key point of this trial. What exactly did Coupang CFS change that made it go all the way to court?

The original CFS rule was like this: "Even daily workers get severance pay if they work for more than 1 year. But periods with less than 15 hours a week are excluded from the calculation." This is a method that matches the law. If someone works 12 months and only 1 month in the middle is under 15 hours, then only that 1 month is excluded and it is counted as 11 months.

But in May 2023, CFS changed it to this: "Severance pay is given only if the worker has worked for more than 1 year and has 15 hours or more per week during that period." At first glance, it looks similar, right? But there is one critical difference.

Under the changed rule, if even one week in the middle drops below 15 hours, the continuous service period is reset to 0. Even if you worked a full 16 months, if you took one day off and one week became less than 15 hours, your severance pay becomes 0 KRW. So people call this the 'severance reset rule'.

Real cases are even more shocking. A worker who worked 15–20 days every month for 16 months got 0 KRW severance pay because of just one missing day, and another worker who worked 22 months also got 0 KRW after being treated as 'disconnected.' At least 40 people were harmed like this.

And the internal documents secured by the special counsel had something shocking too. Before changing this rule, CFS made a cost estimate report saying it would save several billion KRW. So from the start, they changed the rule to save money on workers' severance pay.

An even bigger problem is the process of this change. Under Korean law (Labor Standards Act Article 94), if work rules are changed in a way that is unfavorable to workers, the company must get consent from a majority of workers. Not just 'hearing opinions,' but 'consent.' But according to the CFS union, there were no handouts, recording and filming were banned, and workers signed without even knowing what they were agreeing to.

In May 2023, the Supreme Court said in an en banc ruling that an unfavorable change without consent is invalid in principle. Before, there was a loophole that said 'if it is socially reasonable, it is OK even without consent,' but that was blocked too. So in the end, there is a very high chance that the CFS rule change is legally invalid.

Same case, three judgments — Labor Office, prosecution, special counsel

This is the most interesting part of this case. It is the same case, but each agency judged it differently.

First, let’s fact-check what Coupang claimed in court. Coupang said "the Labor Office consistently decided there was no legal violation". But this is not true. In fact, the Bucheon branch of the Ministry of Employment and Labor sent this case to the prosecution with an 'opinion for indictment'. The Labor Office clearly saw it as a 'violation'.

The one that said 'no violation' was the prosecution (Incheon District Prosecutors' Office, Bucheon Branch). In 2025 April, the prosecution gave a non-indictment decision, saying 'daily workers are not eligible for severance pay'. But then something shocking happened in this process.

At the 2025 October parliamentary audit, chief prosecutor Moon Ji-seok broke down in tears and revealed it. He said branch chief Eom Hee-jun and deputy chief prosecutor Kim Dong-hee pressured him to end the case with no indictment. There was even an order saying, 'do not let them know the facts reported to the Supreme Prosecutors' Office.' Suspicion came out that the prosecution leadership had taken Coupang’s side.

So a standing special counsel was brought in. Since the prosecution itself became the target of the investigation, an independent special prosecutor stepped in. The special counsel indicted the CFS executives and also indicted 2 prosecutors on abuse of authority charges.

The civil lawsuit also reached a conclusion. On 2026 April 3, the Incheon District Court recognized CFS daily workers as de facto regular workers and ruled that there was an obligation to pay severance pay. This is the complete opposite of what the prosecution said when it claimed they were 'not eligible for severance pay'.

A report sent to the Supreme Prosecutors' Office also had this line: "Generous severance pay for many daily workers will inevitably be passed on to consumers as a higher delivery fee burden…" They called workers’ legal rights 'generous', while putting the company’s logic first.

This is not the first time — the history of Coupang labor controversy

Coupang’s labor problems did not start with this severance pay trial. Actually, this is just the most recent episode of a very old and very deep problem.

From 2020 to 2026 March, at least more than 20 workers died at Coupang logistics centers and delivery sites. Death from overwork, industrial accidents, and accidents during dawn delivery. In 2025 alone, 8 people died, and already 2 more have lost their lives in 2026.

In 2021, there was a major fire at the Icheon logistics center, and 1 firefighter died in the line of duty. Later, it was revealed that the fire alarm rang 6 times, but it was deliberately turned off every time. In 2020, there was also a COVID-19 mass infection at the Bucheon logistics center, which became the trigger for spread in the local community.

There are structural reasons why this keeps happening. If you look at Coupang’s subsidiary structure — Coupang (parent company) → CFS (logistics center) → CLS (delivery) → agency → Quick Flexer (individual business owner). When the stages are divided like this, employer responsibility gets diluted at each stage. 95~97% of workers at CFS logistics centers are non-regular workers. It is a structure made to avoid severance pay, reduce responsibility for industrial accidents, and maximize hiring flexibility.

In 2025 December, an even more shocking fact came out. According to an SBS report, signs appeared that the Coupang CEO ordered the concealment of evidence of death from overwork. There was even an internal manual called 'industrial accident response document'. When an industrial accident happened, instead of admitting it and compensating for it, they had already decided in advance how to cover it up.

So, is my severance pay safe?

While reading this article, some people may think, 'Maybe me too?' Especially if you are a foreigner working as a daily worker or contract worker.

The meaning of this trial is clear. Even if it is a big company, if it breaks labor law, the representative goes to trial. And even if the prosecutors support the company, there is a system where an independent counsel or the court can fix it.

But even if there is a system, you are not protected automatically. You need to know your rights and know how to report when there is a problem. The Incheon District Court ruling in April 2026 clearly said that 'daily workers can also be recognized as regular workers,' so the situation is much better than before.

The next hearing is on May 22. The result of this trial will be an important example for all non-regular workers in Korea, especially foreign workers.