Severance Pay in Korea: Who Gets It, How Much, and When It Must Be Paid

Who is eligible

• You worked for the same employer for at least one continuous year.
• You averaged at least 15 hours a week (over 4-week periods).
• You were an employee — even if your contract says "freelancer", you may count as an employee if you worked under the company's direction.

The formula

Severance = average daily wage × 30 × (days of service ÷ 365)

The average daily wage is the total pay of the last three months divided by the number of days in those months (89–92). Overtime and allowances count. One twelfth of the year's bonuses and of any paid-out unused leave is added for each of those three months.

Your leaving date is the day after your last working day.

Example

₩3,000,000 a month, 3 years (October 21, 2023 – October 20, 2026):

Tax on severance

Severance is taxed as retirement income, which has generous deductions for each year of service, so the tax is usually small. Local income tax adds 10% of that tax.

How and when it is paid

• Deadline: within 14 days of leaving, unless you both agree to a later date.
• IRP account: severance is normally paid into an individual retirement pension account (IRP) in your name. You can close the IRP to take the money out.
• Late payment: you can claim 20% yearly interest after the 14 days.

E-9 workers

Employers of workers on the Employment Permit System (E-9) must take out departure guarantee insurance (출국만기보험), which pays out as severance when you leave. If it is less than your full legal severance, the employer owes the difference.

If you are not paid

File a complaint with the Ministry of Employment and Labor (call 1350; interpretation is available). Keep your contract, pay slips, bank records and messages as evidence. Wage claims expire after 3 years.

FAQ