Korea Severance Pay Calculator

The formula, step by step

Korea severance pay (toejikgeum, 퇴직금) follows the Guarantee of Workers' Retirement Benefits Act, Article 8: 30 days' average wages for each year of continuous service. There is no cap. The steps are:

Step 1 — Average daily wage. Take the total wages of the 3 calendar months before leaving, add 3/12 of the annual bonus and 3/12 of unused annual-leave pay, then divide by the number of calendar days in that 3-month window (89 to 92 days, depending on the months).

Step 2 — Multiply by 30. That gives 30 days of average wages, roughly one month of pay.

Step 3 — Multiply by years of service. Service is counted in days divided by 365, so part-years count proportionally: 548 days is 1.50137 years, not 1 or 2.

Severance = average daily wage x 30 x (service days / 365). One common shortcut, "one month per year", is close but wrong whenever the 3-month window is not 90 days or bonuses apply — see worked example 2, where the real figure is about 608,000 KRW higher than the shortcut.

The ordinary-wage floor

There is a second, lower-bound calculation that many calculators omit. Under Labor Standards Act Article 2(2), if the average daily wage is lower than the ordinary daily wage, the ordinary wage applies instead. The ordinary daily wage is:

Ordinary daily wage = monthly ordinary wage / 209 x 8.

The tool checks this automatically and uses whichever daily wage is higher. The floor matters most when recent months included unpaid leave or reduced hours that drag the 3-month average down. On the boundary of what counts as ordinary wage: regular bonuses count after the Supreme Court en banc rulings of 19 December 2024 and the MOEL guidelines of 5 February 2025, which dropped the old "fixed" requirement. Purely discretionary bonuses with no payment obligation may not count — Samsung TAI bonuses were included because their criteria were in the employment rules, while SK Hynix bonuses were excluded.

Who qualifies

Two tests decide eligibility, and nothing else does:

• At least 1 year with the same employer. 364 days gives nothing; 365 days gives a full year's worth. This cliff is the single most expensive day in the whole calculation.
• An average of at least 15 hours per week over 4 weeks. Part-time workers who clear 15 hours qualify on the same formula.

Nationality and visa type are not in the test: foreign workers qualify on the same terms, and Labor Standards Act Article 6 bars nationality discrimination in working conditions. The reason for leaving does not matter either — voluntary resignation, dismissal and contract end all qualify. What does matter is employee status: a genuine independent contractor is not covered, while a worker labelled a contractor who in reality works like an employee may still be.

DB vs DC vs IRP — read this before trusting the number

Korea has three ways severance can be held, and only two of them use the formula on this page:

• DB (defined benefit). The employer bears the investment risk and the payout follows the same 30-days-per-year formula as lump-sum severance.
• DC (defined contribution). The employer contributes at least 1/12 of annual wages per year into an individual account. The payout is the contributions plus investment returns — never the formula. If you are on DC, do not use the number above.
• IRP (individual retirement pension). Since 14 April 2022, severance is in principle transferred to the employee's IRP account rather than paid in cash. Exceptions include retirement after age 55, amounts of 3,000,000 KRW or less, death, and foreign workers departing Korea. Retirement pension coverage becomes mandatory for all workplaces by 2030.

When and how it is paid

Severance must be paid within 14 days of leaving. The deadline can only be extended by agreement with the employee. If the employer misses it, delay interest of 20% per year applies. You have 3 years to claim unpaid severance, and the MOEL helpline 1350 offers help in English. The result on this page is pre-tax: severance is taxed as retirement income, with deductions that grow with years of service, plus local income tax. A separate retirement-income tax calculation is not part of this tool.

Worked examples

Example 1: 9,000,000 KRW over 92 days, 3 years

Average daily wage = 9,000,000 / 92 = 97,826.09 KRW. Times 30 = 2,934,782.61 KRW. Times (1,095 / 365 = 3) = 8,804,348 KRW (about 8,804,000 KRW rounded).

Example 2: bonus case, 3,500,000 KRW per month, 5 years

Three months' wages are 10,500,000 KRW. Add 3/12 of the 2,400,000 KRW annual bonus = 600,000 KRW, giving 11,100,000 KRW. Divide by the 92-day window = 120,652.17 KRW per day. Times 30 = 3,619,565.10 KRW. Service of 1,826 days is 5.00274 years, so severance = 18,107,742 KRW. The "one month per year" shortcut would give only 17,500,000 KRW — about 608,000 KRW less.

Example 3: ordinary-wage floor case, 2,000,000 KRW per month, 1 year

The average method gives 6,000,000 / 90 x 30 = 2,000,000 KRW. The ordinary method gives 2,000,000 / 209 = 9,569.38 KRW per hour, x 8 = 76,555.02 KRW per day, x 30 = about 2,296,650 KRW. The floor applies, so the worker gets 296,650 KRW more than the average method alone. (The calculator rounds to the nearest won and may show 2,296,651 KRW.)

Example 4: part-year case, 10,500,000 KRW over 92 days, 548 days

Average daily wage = 10,500,000 / 92 = 114,130.43 KRW. Times 30 = 3,423,913.04 KRW. Times (548 / 365 = 1.50137) = 5,140,560 KRW.

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