Korean Severance Pay Guide for Foreign Workers
Last verified: 2026-08-06
퇴직금 (severance pay) is a statutory lump-sum payment required under Korea's Employee Retirement Benefit Security Act for employees with at least one year of continuous service who work at least 15 hours per week on average. Foreign employees are covered on the same basis as Korean nationals — 근로기준법 제6조 prohibits nationality-based discrimination in working conditions. Use the Severance Pay Calculator to estimate your own amount.
How it's calculated
The formula (근로자퇴직급여보장법 제8조) is: severance = average daily wage × 30 × (continuous service days ÷ 365). Average wage (평균임금) is your total wages in the 3 calendar months immediately before your last day of employment, divided by the number of calendar days in that period. It includes your base wage and regular allowances, plus a 3/12 share of bonuses and unused-leave allowance paid in the preceding 12 months. If your ordinary wage (통상임금 — wages regularly and uniformly paid for contracted work) is higher than this average, the ordinary wage is used instead.
Who is entitled
Any employee — regardless of nationality — who completes at least one year of continuous service while working an average of at least 15 hours per week. This includes E-series and other work-visa holders. It generally does not include truly independent contractors, though misclassification disputes do happen — if your actual working relationship looks like standard employment, you may still be entitled regardless of your contract's label.
E-9 and H-2 visa holders: under the Employment Permit System, severance-equivalent amounts are typically paid through 출국만기보험 (Departure Guarantee Insurance) — funded by the employer at roughly 8.3% of monthly wages — and paid out when you leave Korea, rather than through your employer's standard severance process. The calculator estimates the standard 근로기준법 formula and does not separately model this insurance payout.
What the calculator doesn't include
Retirement income tax (퇴직소득세) is withheld from severance pay but is not deducted from the calculator's estimate — your net payment will be lower. The estimate also doesn't model excluded periods, disputed employment classification, or company severance plans that pay more than the statutory minimum.
Limitations
- This is an estimate based on the standard statutory formula, not a legal determination of what your employer owes you.
- Ordinary wage requires a separate fact-specific determination that the calculator cannot fully automate.
- Confirm your specific case with your employer, payroll department, or the Ministry of Employment and Labor.
Official sources
- 근로자퇴직급여보장법 (Employee Retirement Benefit Security Act), Article 8
- 근로기준법 (Labor Standards Act) 제2조, 제6조; 근로기준법 시행령 제2조
- Ministry of Employment and Labor: moel.go.kr
Last verified: 2026-08-06.