Korea Severance Pay Calculator
In Korea, employees who have worked for one year or more (averaging at least 15 hours per week) are legally entitled to severance pay (toejikgeum) when they leave a job. Under the Employee Retirement Benefit Security Act, the employer must pay at least 30 days' worth of the average wage for each year of continuous service. This calculator estimates your average daily wage and expected severance pay from your start date, end date, and pay over the final three months.
Examples
Monthly salary ₩3,000,000, 3 years of service
Three months of pay totals ₩9,000,000. Divided by about 91.25 days, the average daily wage is about ₩98,630. With 1,095 days of service, severance is 98,630 × 30 × (1,095 ÷ 365) ≈ ₩8.88 million.
With an annual bonus
If you earn ₩3,000,000 per month plus a ₩6,000,000 annual bonus, 3/12 of the bonus (₩1,500,000) is added to the three-month wage total. The average daily wage rises to about ₩115,068, increasing your severance for the same service period.
Less than one year of service
If your continuous service period is 11 months, you are not entitled to statutory severance pay. Severance accrues only once continuous service reaches one year.
FAQ
How long do I need to work to receive severance pay in Korea?
You must have at least one year of continuous service and have worked an average of 15 or more hours per week over each four-week period. This applies to contract workers and part-timers as well as regular employees. With less than one year of service, no statutory severance accrues.
What is the difference between the average wage and the ordinary wage?
The average wage is the total wages paid during the three months before your last day, divided by the number of days in that period; it includes a pro-rated share of bonuses and unused annual leave pay. The ordinary wage is the fixed, regularly paid base compensation. Severance is calculated using the average wage, but if the average wage is lower than the ordinary wage, the ordinary wage is used instead.
How do DB and DC retirement pension plans differ from severance pay?
Under a DB (defined benefit) plan, the payout is fixed in advance as 30 days' average wage per year of service, similar to this calculator's result. Under a DC (defined contribution) plan, the employer deposits at least 1/12 of your annual wages into your account each year, and the final amount depends on investment returns. Your actual payout depends on which plan your company operates.
Is severance pay taxed in Korea?
Yes. Severance pay is subject to retirement income tax. However, generous deductions based on years of service mean the effective tax burden is usually lower than on regular employment income. The employer withholds the tax before payment, so your net amount will be less than the pre-tax estimate shown here.
When must severance pay be paid?
The employer must pay severance within 14 days of the employee's departure. The deadline can be extended by mutual agreement, but without one, late payment accrues 20% annual interest and can be reported to the Ministry of Employment and Labor as wage arrears.
Korea's severance pay system
Severance pay (toejikgeum) is a statutory retirement benefit under Korea's Employee Retirement Benefit Security Act. Employers must pay at least 30 days' worth of the average wage for each year of continuous service to departing employees. The rule applies to workplaces of all sizes, including those with a single employee, and covers contract and part-time workers who meet the eligibility requirements.
Retirement benefits can take the form of a lump-sum severance payment at departure, or a retirement pension (DB, DC, or IRP) accumulated during employment. Whichever system a company operates, it must guarantee at least the statutory minimum of 30 days' average wage per year of service.
How the average wage is calculated
The average wage is a daily figure: the total wages paid during the three months before the last working day, divided by the number of calendar days in that period (89–92 days). The wage total includes base salary and allowances, plus 3/12 of annual bonuses and 3/12 of pay for unused annual leave.
For simplicity, this calculator computes the three-month wage total as monthly salary × 3 and approximates the period as 91.25 days. An actual calculation uses the real calendar days and wages for your specific departure date, so results may differ slightly. If the calculated average wage is lower than the ordinary wage, the ordinary wage is used as the basis instead.
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