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 Takehome Korea’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

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 worked example states the average daily wage and stops there. The final ₩7,868,434 is what Takehome Korea’s calculator returns for the same inputs, rounded to the nearest won as the ministry’s calculator does.

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.
• Takehome Korea counts the last three months the way the ministry’s calculator does: from the same calendar day three months earlier, from the last day of that month if that day does not exist, and from 1 March when that month is February (leaving on 31 May 2026 gives 91 days from 1 March 2026).

Sources

Opened and checked on 10 October 2026. The pages are in Korean.

• Act on the Guarantee of Employees’ Retirement Benefits, Article 8
• Act on the Guarantee of Employees’ Retirement Benefits, Article 4
• Act on the Guarantee of Employees’ Retirement Benefits, Article 9
• Labor Standards Act, Article 2
• Ministry of Employment and Labor: severance pay calculator