[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-seo-280031-105":3,"detail-sidebar-cat-1-en-105":81,"doc-detail-280031-en":126},{"code":4,"msg":5,"data":6},0,"ok",{"site_id":7,"language":8,"slug":9,"title":10,"keywords":11,"description":12,"schema_data":13,"social_meta":74,"head_meta":76,"extra_data":78,"updated_unix":80},105,"en","legal-effect-of-a-retention-bonus-signing-bonus-article-review","Legal Effect of a Retention Bonus (Signing Bonus) - Article Review","","Legal analysis of retention bonuses (signing bonuses) in employment relationships, focusing on enforceability and compliance under Korea’s Labor Standards Act. The document contrasts retention incentives with non-compete clauses, explaining why signing bonuses are often favored and how courts treat arrangements that excessively restrict freedom of occupation. It examines whether special bonuses qualify as “wages,” reviews risks under forced-labor and predetermination-of-nonobservance prohibitions, and evaluates criteria for determining the legal effect of signing bonuses.",{"@graph":14,"@context":73},[15,34,56],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/template/","Template",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/template/letters/","Letters",3,{"item":32,"name":10,"@type":21,"position":33},"https://docshare.wps.com/template/legal-effect-of-a-retention-bonus-signing-bonus-article-review/280031/",4,{"url":32,"name":10,"@type":35,"image":36,"author":41,"headline":10,"publisher":44,"fileFormat":47,"inLanguage":8,"description":12,"dateModified":48,"datePublished":49,"encodingFormat":47,"isAccessibleForFree":50,"interactionStatistic":51},"DigitalDocument",{"url":37,"@type":38,"width":39,"height":40},"https://docshare.wps.com/thumbnails/legal-effect-of-a-retention-bonus-signing-bonus-article-review/280031.png","ImageObject",442,249,{"name":42,"@type":43},"4398046744996","Person",{"url":19,"name":45,"@type":46},"DocShare","Organization","application/pdf","2026-10-27","2026-09-16",true,{"@type":52,"interactionType":53,"userInteractionCount":55},"InteractionCounter",{"@type":54},"ViewAction",12,{"@type":57,"mainEntity":58},"FAQPage",[59,65,69],{"name":60,"@type":61,"acceptedAnswer":62},"Why are signing bonuses often preferred over non-compete clauses for retaining skilled workers?","Question",{"text":63,"@type":64},"Non-compete clauses can be difficult to validate because they restrict a worker’s freedom of occupation. Signing bonuses directly reduce turnover by providing financial incentives, making them a practical alternative.","Answer",{"name":66,"@type":61,"acceptedAnswer":67},"Under what conditions can a special bonus be recognized as wages under the Labor Standards Act?",{"text":68,"@type":64},"A bonus may be regarded as wages when payment conditions and timing are set in collective agreements or employment rules and the payment is customary for all employees.",{"name":70,"@type":61,"acceptedAnswer":71},"Which Labor Standards Act prohibition is more relevant when evaluating retention/signing bonuses tied to tenure?",{"text":72,"@type":64},"The document explains that Article 20 (prohibition of predetermination of nonobservance) is more appropriate than Article 7 (prohibition of forced labor) because Article 20 addresses employee voluntary intentions reflected in the arrangement.","https://schema.org",{"og:url":32,"og:type":75,"og:title":10,"og:site_name":45,"og:description":12},"article",{"robots":77,"canonical":32},"index,follow",{"doc_id":79,"site_id":7},280031,1790073093,{"code":4,"msg":82,"data":83},"success",[84,89,93,98,103,108,113,117,122],{"id":85,"doc_module":22,"doc_module_name":25,"category_name":86,"show_sort_weight":87,"slug":88},11,"Presentations",90,"presentations",{"id":55,"doc_module":22,"doc_module_name":25,"category_name":90,"show_sort_weight":91,"slug":92},"Resumes",80,"resumes",{"id":94,"doc_module":22,"doc_module_name":25,"category_name":95,"show_sort_weight":96,"slug":97},14,"Invoices",70,"invoices",{"id":99,"doc_module":22,"doc_module_name":25,"category_name":100,"show_sort_weight":101,"slug":102},15,"Posters",60,"posters",{"id":104,"doc_module":22,"doc_module_name":25,"category_name":105,"show_sort_weight":106,"slug":107},16,"Social Media",50,"social-media",{"id":109,"doc_module":22,"doc_module_name":25,"category_name":110,"show_sort_weight":111,"slug":112},17,"Forms",40,"forms",{"id":114,"doc_module":22,"doc_module_name":25,"category_name":29,"show_sort_weight":115,"slug":116},18,30,"letters",{"id":118,"doc_module":22,"doc_module_name":25,"category_name":119,"show_sort_weight":120,"slug":121},21,"Paper Templates",5,"papers-templates",{"id":123,"doc_module":22,"doc_module_name":25,"category_name":124,"show_sort_weight":4,"slug":125},158,"General","general-158",{"code":4,"msg":82,"data":127},{"doc_id":79,"user_id":128,"nickname":42,"user_avatar":11,"doc_module":22,"category_id":114,"category_name":29,"doc_title":10,"doc_description":12,"doc_content":129,"file_id":130,"file_url":131,"file_type":132,"file_size":133,"view_count":55,"is_deleted":4,"is_public":22,"is_downloadable":22,"audit_status":22,"page_count":120,"language":134,"language_code":8,"site_id":7,"html_lang":8,"table_of_contents":135,"faqs":136,"seo_title":137,"seo_description":12,"update_tm":138,"read_time":26},4398046744996,"TEL: +82-(0)2-539-0098  \nFAX: +82-(0)2-539-4167  \nA-1501 406, Teheran-ro, Gangnam-gu, Seoul, 06192, Republic of Korea [http://www.k-labor.com](http://www.k-labor.com)  \nLegal Effect of a Retention Bonus (Signing Bonus)  \nI. Introduction  \nA company can use several methods to retain highly-skilled workers for a long time, with two representative examples. One is through a non-compete clause 1 in the employment contract or rules of employment, whereby the employer prevents capable workers from transferring to competitive companies, and the other is through a signing bonus,2 where the employer tries to restrict the transfer of workers through financial means. A non-compete clause is hard to validate as it restricts the freedom of a worker’s occupation. The Supreme Court has argued that \"even if there is a non-compete agreement between the employer and the employee, if such an arrangement excessively restricts the constitutionally-guaranteed freedom of occupation, or the right to work or free competition, an action contrary to good social order, such as good customs as set forth in Article 103 of the Civil Law, should belong to invalidity.”3 For this reason, many companies prefer signing bonuses, which have a direct effect on the reduction of turnover by good manpower.  \nI recently received an inquiry from a company about the effectiveness of a retention bonus clause4. For this company, 30% of the annual salary is set as bonus, with 50% paid with the 1st year's salary in January, and the remaining 50% paid in January of the following year. In return, the worker must work for three years. The employer wants to include the following clause: \"If the employee resigns prior to the agreed three years, the retention bonus shall be returned. \"The company asked for a legal review of the validity of this. In this case, I concluded that for the retention bonus to be set for three years would be no problem, considering related matters such as the nature of the related wage, the prohibition of forced labor, the Prohibition of Predetermination of Nonobservance, etc.  \nIn this article, I would like to deal with this issue in more depth, reviewing (ii) the characteristics of a special bonus and violation of the Labor Standards Act; (iii) the legal effect of a signing bonus; and (iv) the criteria for a signing bonus.  \nII. The Characteristics of a Special Bonus and Determining Whether it Violates the Labor Standards Act  \n1 A non-compete clause means that the employee promises not to transfer to a competitor company, and if the employee subsequently violates the clause, the company violated may claim compensation from the employee.  \n2 A signing bonus is a special bonus, in that a company pays a lump sum to an employee when signing an employment contract, in an effort to recruit talented people.  \n3 Supreme Court ruling on March 11, 2010: case number 2009da82244 .  \n4 If an employee fails to work for the mandatory tenure, the employee will return some or all ofthe amount paid in advance, which is called a signing bonus or a retention bonus.  \nUnless otherwise indicated, it contains information that is confidential, privileged and/or exempt from disclosure under applicable law.  \nPage 1 of 5  \n\n| | TEL: +82-(0)2-539-0098\u003Cbr>FAX: +82-(0)2-539-4167\u003Cbr>A-1501 406, Teheran-ro, Gangnam-gu, Seoul, 06192, Republic of Korea [http://www.k-labor.com](http://www.k-labor.com) |\n| --- | --- |\n| 1. The Characteristics of a Special Bonus\u003Cbr>The term \"wages\" as defined in Article 2 of the Labor Standards Act refers to “wages, salaries and any other money and valuable goods an employer pays to a worker for his/her work, regardless of how such payments are termed.\" Regarding the wage status of bonuses, such bonus can be regarded as wage if payment conditions and payment timing are set in a collective agreement or employment rules, etc. and if the payment of such bonus is customary for all employees. If the above conditions are satisfied, such special bonus can be re","cbCaihJUe8XzJ2N1","https://ap.wps.com/l/cbCaihJUe8XzJ2N1","pdf",112245,"English","# Introduction\n## Non-compete clauses vs. signing bonuses\n# Characteristics of a Special Bonus and Labor Standards Act Compliance\n## Wages status of bonuses\n## Forced labor and predetermination of nonobservance\n# Legal Effect of a Signing Bonus\n## Criteria for a signing bonus","[{\"question\":\"Why are signing bonuses often preferred over non-compete clauses for retaining skilled workers?\",\"answer\":\"Non-compete clauses can be difficult to validate because they restrict a worker’s freedom of occupation. Signing bonuses directly reduce turnover by providing financial incentives, making them a practical alternative.\"},{\"question\":\"Under what conditions can a special bonus be recognized as wages under the Labor Standards Act?\",\"answer\":\"A bonus may be regarded as wages when payment conditions and timing are set in collective agreements or employment rules and the payment is customary for all employees.\"},{\"question\":\"Which Labor Standards Act prohibition is more relevant when evaluating retention/signing bonuses tied to tenure?\",\"answer\":\"The document explains that Article 20 (prohibition of predetermination of nonobservance) is more appropriate than Article 7 (prohibition of forced labor) because Article 20 addresses employee voluntary intentions reflected in the arrangement.\"}]","Legal Effect of a Retention Bonus (Signing Bonus) - Article Review | PDF",1789532233]