Korean Severance Pay Guide (2025)
In Korea, all employers must provide severance pay (or a retirement pension) to employees who have worked for at least one year.
Severance Pay Formula
Severance = (Average Daily Wage x 30 x Total Service Days) / 365Average Daily Wage = Total wages for last 3 months / Total days in last 3 months
Examples by Service Years
Based on monthly salary of 3M KRW (with 400% annual bonus):
| Service Years | Severance Pay |
|---|
| 1 year | ~3.96M KRW |
|---|---|
| 3 years | ~11.87M KRW |
| 5 years | ~19.78M KRW |
| 10 years | ~39.56M KRW |
| 20 years | ~79.12M KRW |
What's Included in the Calculation
Included: Base salary, fixed allowances, bonuses (annual / 12 x 3), unused leave pay Excluded: Reimbursements, discretionary gifts, certain meal allowancesTax on Severance Pay
Severance income tax is calculated with deductions that increase with service years:
| Service Years | Deduction |
|---|
| Up to 5 | 1M KRW x years |
|---|---|
| Up to 10 | 5M + 2M x (years - 5) |
| Up to 20 | 15M + 2.5M x (years - 10) |
| Over 20 | 40M + 3M x (years - 20) |
FAQs
Can I receive severance if I worked less than 1 year? No, minimum 1 year is required. Do contract workers get severance? Yes, if they worked 1+ years. When must it be paid? Within 14 days of leaving. Late payment incurs 20% annual interest.Use our severance pay calculator for exact figures.