Severance pay in Korea: who qualifies and how it is calculated
Severance pay (퇴직금) in Korea is at least 30 days of average wages for every year of continuous service. In practice: average daily wage × 30 × days of service ÷ 365. The Ministry of Employment and Labor’s own sample case gives an average daily wage of ₩88,641.31, and this site’s calculator turns the same inputs into ₩7,868,434.
Who qualifies
The Act on the Guarantee of Employees’ Retirement Benefits requires employers to pay it to workers who leave, with two exclusions written into Article 4 (Act on the Guarantee of Employees’ Retirement Benefits, Article 4):
- workers with less than one year of continuous service, and
- workers whose contractual hours average under 15 a week over four weeks.
Whether your own case falls inside is for your employer or the ministry’s 1350 counselling line to confirm. This guide and the calculator only do the arithmetic.
The formula
severance pay = average daily wage × 30 days × (days of service ÷ 365)
average daily wage = (A + B + C) ÷ days in the last three months
- A is the wages paid in the three months before leaving.
- B is 3/12 of the bonuses paid over the last year.
- C is 3/12 of the unused-leave pay for the year.
The average wage (평균임금) is defined in the Labor Standards Act as the wages paid in the three months before the event divided by the total days in that period (Labor Standards Act, Article 2). The same article says that if it comes out lower than the worker’s ordinary wage (통상임금), the ordinary wage is used.
The ministry’s sample case, step by step
| Input | Value |
|---|---|
| Start date | 2 October 2014 |
| Leaving date | 16 September 2017 |
| Days of service | 1,080 |
| Base pay a month | ₩2,000,000 |
| Other allowances a month | ₩360,000 |
| Bonus for the year | ₩4,000,000 |
| Unused-leave pay | ₩60,000 × 5 days |
The leaving date is the day after the last working day. The three months before 16 September 2017 run from 16 June 2017 to 15 September 2017, which is 92 days. Depending on the months involved it is between 89 and 92.
A: (₩2,000,000 + ₩360,000) × 3 = ₩7,080,000
B: ₩4,000,000 × 3/12 = ₩1,000,000
C: ₩60,000 × 5 × 3/12 = ₩75,000
A + B + C = ₩8,155,000
₩8,155,000 ÷ 92 = ₩88,641.31 a day
₩88,641.31 × 30 × 1,080 ÷ 365 = ₩7,868,434
The ministry’s page states the average daily wage and stops there. The final ₩7,868,434 is what this site’s calculator returns for the same inputs, with won fractions dropped.
Things to know
- The result is before tax. Retirement income tax is calculated separately and is not covered here.
- Severance pay must be paid within 14 days of leaving, unless both sides agree to extend (Act on the Guarantee of Employees’ Retirement Benefits, Article 9).
- Company rules can make the actual amount differ, as the ministry’s calculator itself notes.
- This site counts the last three months from the same calendar day three months earlier, or from the last day of that month if that day does not exist. An employer or labor office may count one day differently.
Sources
Opened and checked on 10 October 2026. The pages are in Korean.
Enter your own dates and wages.
Severance pay calculator