Korea Severance Pay Calculator

Korean severance pay is not a bonus an employer chooses to offer. It is a statutory entitlement under the Act on the Guarantee of Employees' Retirement Benefits, whose Article 4(1) requires every employer to set up a retirement benefit system and whose Article 8(1) fixes the minimum at 30 days of average wage for every year of continuous service. Two conditions gate the entitlement entirely: continuous service of at least one year, and, under Labor Standards Act Article 18(3), average weekly working hours of at least 15 over a 4-week period. Fall short of either and the law does not apply at all, because there is no partial or prorated severance below one year of service.

The formula itself is simple once those two gates are cleared: severance pay equals one day of average wage, multiplied by 30, multiplied by the ratio of days actually employed to 365. The complexity sits entirely in the phrase "average wage." Labor Standards Act Article 2, Paragraph 1, Item 6 defines it precisely: the total wages paid to the worker in the 3 months before the date the calculation becomes necessary, divided by the total number of calendar days in that same 3-month period, typically 89 to 92 days depending on which months fall inside the window. This calculator counts that period back from your resignation date and divides your entered wages by the exact day count, rather than assuming a flat 90 or 91.

Two categories of pay complicate the 3-month wage total, and both are handled automatically here. Bonuses paid on an annual or semi-annual cycle, and any allowance paid out for unused annual leave from the prior year, are not dropped into the 3-month window at face value. They are prorated. This calculator applies the same 3/12 ratio the Ministry of Employment and Labor's own official severance calculator demonstrates: take the full amount paid over the preceding 12 months and multiply by 3/12 before adding it to the 3-month wage total. Enter your bonus and leave allowance as full annual figures, since the proration happens automatically and you do not need to divide anything yourself.

Once the average wage is calculated, the law runs one more check. Labor Standards Act Article 2, Paragraph 2 states plainly that if the calculated average wage comes out lower than the worker's ordinary wage, meaning the fixed hourly, daily, or monthly rate set for regular contracted work, the ordinary wage is used instead. This exists specifically to stop average wage from ever working against the employee: a period with unusually little variable pay should never produce a smaller severance payment than a period of perfectly normal, steady pay would have. Because computing ordinary wage from a monthly salary requires knowing your exact contracted daily working hours, a detail this calculator does not ask for, you can instead enter a known daily ordinary wage figure directly from a pay stub, and the calculator compares it against the average wage for you and uses whichever is larger.

Nothing above depends on nationality. A worker on an E-7, E-9 or F-series visa who clears the same two thresholds is owed severance on the same terms as a Korean colleague. Workers admitted through the Employment Permit System on an E-9 visa also have a delivery mechanism written specifically for them. Article 13 of the Act on the Employment of Foreign Workers requires their employer to take out departure guarantee insurance naming the worker as beneficiary and to pay the premiums monthly, and taking out that policy is treated as having established the severance system required by Article 8(1). The payout is made within 14 days of the worker leaving the country, or within 14 days of the claim where the worker changed status of stay, died, or claimed after departure.

For readers coming from the United States, the striking part is not the amount but the trigger. The Fair Labor Standards Act imposes no severance requirement at all, so severance in the US is whatever an employment agreement or a separation package happens to provide, and quitting voluntarily usually means none of it. Korean statutory severance does not distinguish between resigning, being dismissed, or reaching retirement age. Complete the year, clear the 15-hour line, and the payment is owed either way.

This calculator treats the day count for the one-year eligibility threshold as a practical proxy: 365 calendar days of continuous service or more. The Act itself measures eligibility in calendar years, not a fixed day count, so a service period that spans a leap year can run to 366 days while still representing exactly one calendar year. That case is correctly treated as eligible here, since 366 already clears the 365-day bar. There is no scenario in the other direction where a period under one calendar year happens to reach 365 days, so the approximation does not create false positives.

The scope is deliberately narrow, and it is worth naming the edge rather than guessing past it. Article 2 of the Enforcement Decree of the Labor Standards Act excludes several kinds of periods and payments from the 3-month wage calculation entirely: the first 3 months of a probationary period, employer-caused business suspension, maternity leave, parental leave, industrial action periods, and a few others. This calculator cannot know whether any of those applied during your specific 3 months, so it assumes the wage figure you enter already reflects the correct period after such exclusions. If one of those situations applied to you, adjust your entered figure accordingly.

Once you have a number, the useful next step is comparing it against the settlement your employer proposes. Korean employers must pay severance within 14 days of the last day of employment, extendable only by mutual agreement, and the figure they calculate is the one that legally controls. If the settlement lands well below what this page shows, ask which wage components were used and whether any period was excluded from the 3-month window, because that is almost always where the gap comes from. Unpaid severance is treated as unpaid wages and can be raised with the local branch office of the Ministry of Employment and Labor, whose calculator is also the reference point most Korean HR teams work from.