Leaving a job in Korea? If you worked for the same employer for at least one year, Korean law entitles you to severance pay (퇴직금) — and that applies to foreign workers on E-7, E-9, F-series and teaching visas exactly as it applies to Korean nationals.
1. What comes out. The formula is average daily wage × 30 × (days of service ÷ 365). On ₩3.2M a month over 5 years 4 months that lands around ₩17 million — roughly a month's pay for each year served. Nationality, visa type and whether you quit or were let go make no difference.
2. What it misses. This calculator assumes the same monthly salary across the final three months. If your pay changed just before leaving, or overtime varies a lot month to month, the result comes out low — overtime, night and holiday premiums all count towards the average wage. The reference period itself runs 89 to 92 days.
3. How to use it. Treat it as a five-second sanity check. For an actual negotiation or complaint, take three payslips to the Ministry of Employment and Labor's own calculator. Payment is due within 14 days of leaving, and the claim period is three years.
| Average daily wage | 0 |
| 30 days of wages | 0 |
| Bonus added ×3/12 | 0 |
| Leave pay added ×3/12 | 0 |
| Averaging period last 3 months | 0 |
Less than 1 year of continuous service does not qualify for statutory severance.
Calculates automatically. This is an estimate — actual severance varies with pay structure, excluded periods, and legal interpretation.
A worked example — ₩3.2M a month, 5 years 4 months
Formulas are hard to feel. So here is one common case run through the calculator above: started 2 March 2021, last working day 30 June 2026, gross monthly salary ₩3,200,000, bonuses of ₩3,000,000 over the last 12 months, and ₩800,000 of unused annual leave paid out. This is the screen it produces.
Line by line, here is how those numbers connect.
| Step | Calculation | Result |
|---|---|---|
| Wages over 3 months | 3.2M × 3 months | ₩9,600,000 |
| Bonus added | 3.0M × 3/12 | ₩750,000 |
| Leave pay added | 0.8M × 3/12 | ₩200,000 |
| Base for average wage | sum of the three above | ₩10,550,000 |
| Days in the averaging period | 2026-03-30 to 06-30 | 92 days |
| Average daily wage | 10,550,000 ÷ 92 | ₩114,674 |
| 30 days of wages | 114,674 × 30 | ₩3,440,217 |
| Days of service | 2021-03-02 to 2026-06-30 | 1,946 days |
| Severance | 3,440,217 × 1,946 ÷ 365 | ₩18,341,543 |
This is where most people are surprised. The salary is ₩3.2M a month, so why is one month's worth ₩3.44M? Because bonuses and unused leave pay are folded into the average wage. In this case those two items added roughly ₩1.65M to the final severance. Leave them out and you will underestimate what you are owed.
What formula does the law set
Korea's statutory severance formula is not a rule of thumb. It comes from Article 8(1) of the Employee Retirement Benefit Security Act, which requires an employer to pay at least 30 days of average wages for each year of continuous service.
Severance = average daily wage × 30 days × (days of service ÷ 365)
The figure that does the work is the average daily wage. Article 2(1)6 of the Labor Standards Act defines it as total wages paid over the three months before the triggering date, divided by the total number of days in that period. Note the divisor: it is calendar days, not working days. That is why the example above divides by 92 and not by the number of days actually worked — a point that trips up almost everyone the first time.
- Average daily wage = (wages over the last 3 months) ÷ (calendar days in that period)
- Bonuses — 3/12 of the last 12 months' bonuses is added to the base. This is the method used in the Ministry of Employment and Labor's own worked examples.
- Unused leave pay — likewise, 3/12 is added.
Lay the four steps out in a row and it is clear where each multiplication happens.
The provisions behind each rule
| Rule | Legal basis |
|---|---|
| 30+ days of average wages per year of service | Employee Retirement Benefit Security Act, Art. 8(1) |
| Under 1 year, or under 15 hours a week, is excluded | Same Act, Art. 4(1) proviso |
| Payment within 14 days of leaving (extendable by agreement) | Same Act, Art. 9 |
| Definition of average wage | Labor Standards Act, Art. 2(1)6 |
| If average wage < ordinary wage, ordinary wage applies | Labor Standards Act, Art. 2(2) |
| 3-year limitation period on wage claims | Labor Standards Act, Art. 49 |
The usual gap is the bonus and the unused-leave payment. Here is what including them is worth, by years of service.
Why it can differ from the official calculator
This tool assumes your salary was steady across the final three months and simply multiplies your monthly figure by three. The Ministry of Employment and Labor's official severance calculator asks for each of the three months separately. So the two will disagree in these situations:
- Your pay changed shortly before leaving — a promotion, a raise, or unpaid leave means you should enter the actual three months of pay.
- Your overtime varies a lot month to month — overtime, night and holiday premiums all count toward average wages. Entering base salary alone understates the result. The shutdown-allowance calculator uses the same average wage at 70% — and lifts it to the ordinary wage where the average is lower (art. 2(2)).
- Your last day is mid-month — a pro-rated final paycheck shrinks the three-month total.
- The averaging window length — depending on which months it spans, it runs anywhere from 89 to 92 days, and the daily average moves with it.
Treat this calculator as a five-second sanity check on the order of magnitude. Before a negotiation or a formal complaint, pull out three payslips and run the official calculator once more.
Do I qualify
| Situation | Severance? | Why |
|---|---|---|
| Full-time, resigned after 3 years | Yes | 1+ year of continuous service |
| Fixed-term contract ended after 14 months | Yes | Contract type is irrelevant |
| Part-time, 20 hours a week for 2 years | Yes | 15+ hours a week qualifies |
| Part-time, 12 hours a week for 2 years | No | Under 15 hours a week on a 4-week average |
| Left after 11 months | No | Under 1 year of continuous service |
| Resigned voluntarily | Yes | The reason for leaving does not matter |
| Dismissed for cause | Yes | Dismissal and severance are separate questions |
Those last two rows cause the most confusion. Severance accrues regardless of why you left, as long as the service requirement is met. What resigning voluntarily costs you is unemployment benefits, not severance.
Things worth knowing
- If your average wage comes out below your ordinary wage, the ordinary wage is used instead — Article 2(2) of the Labor Standards Act requires whichever is more favorable to the worker. This protects you when unpaid leave or absence has dragged down your last three months of pay.
- If your company runs a retirement pension scheme, the maths changes. A DB plan is effectively the formula above; under a DC plan your benefit is whatever the employer contributed each year plus investment returns. The difference is set out in DB vs DC retirement pensions.
- Retirement income tax applies separately. The service-year deduction keeps the effective rate low, but the figure above is pre-tax. For tax on regular salary, see the Korean income tax calculator.
- Parental leave and work injury periods may be excluded from the averaging window, which changes the result.
- If you are staying in Korea after leaving the job, the jump in health insurance premiums can be softened — see voluntary continued coverage. If the severance is meant to carry you for a while, what retirement actually costs in Korea is a useful companion read.
Questions that remain
When does my employer have to pay?
Within 14 days of your last day, as a rule (Employee Retirement Benefit Security Act, Art. 9). The deadline can be extended if both parties agree. If 14 days pass with no payment and no agreement, you can file a complaint with your regional labor office. Foreign workers can file the same complaint as Korean nationals; interpretation support is available at many offices.
I left Korea a while ago. Is it too late to claim?
Wage claims are subject to a three-year limitation period (Labor Standards Act, Art. 49). If fewer than three years have passed since your last day, the claim is still live — and you do not have to be in Korea to file it.
What if I leave a few days short of one year?
You lose the entitlement entirely. One day short of 12 months of continuous service means no statutory severance. If you have any say over your leaving date, check this first.
My contract says severance is included in my monthly salary. Is that valid?
Such “split severance” agreements are generally treated as void by the Korean courts. Even if you received the money monthly, you can often still claim severance when you leave. If your contract is written this way, it is worth getting labor advice.
My salary is ₩3.2M a month, so why is 30 days of average wage ₩3.44M?
Because bonuses and unused leave pay are folded into the average wage. In this example 3/12 of the ₩3M annual bonus (₩750,000) and 3/12 of the ₩800,000 unused leave pay (₩200,000) are added to three months of salary, giving ₩10,550,000. Divided by the 92 calendar days in the window, that is a daily average wage of ₩114,674, and 30 days of it is ₩3,440,217. Leave those two items out and the severance comes in low — by about ₩1.65M in this case.
This calculator folds in bonuses and unused leave pay to get closer to the real figure. But if your salary varied month to month, check against your payslips before relying on it.
Where to check further
- Your actual wage total for the final three months. This calculator uses monthly salary × 3; the official one takes each month separately — run three payslips through the Ministry of Employment and Labor severance calculator for the exact figure.
- Which bonuses and leave allowances count towards the average wage. That turns on your employment rules and payment practice — the labor helpline (1350) will read your payslips and decide.
- If you want part of it settled before you leave. Only for the reasons in Decree art. 3 - buying a first home, six months of medical care, a wage-peak scheme and so on - and even then the employer "may" - see the interim-settlement checker.
- If you are enrolled in a retirement pension (DB or DC). This formula is the statutory severance basis; DC plans are computed differently — your plan provider and payroll department hold the reserve-based figure.
Sources
- Employee Retirement Benefit Security Act (Arts. 4, 8, 9) — Korea Law Information Center
- Eligibility and continuous service — Easy Law, Ministry of Government Legislation
- Severance payment standards — Easy Law, Ministry of Government Legislation
- Official severance calculator — Ministry of Employment and Labor Labor Portal
The worked example above was calculated directly from the provisions listed here, using the Ministry's averaging method, as of July 2026. Figures may change if the law is amended.
For an exact figure, run the official calculator with your payslips in hand or ask your payroll department. This is general information, not legal advice.
