Korea severance pay calculator (퇴직금)
Anyone employed in Korea for a year or more is owed severance. This uses the statutory method: average daily wage over the last three months, times 30 days per year of service.
How it works
Severance = average daily wage × 30 × (days of service ÷ 365). The average daily wage is total pay over the three months before leaving, divided by the days in that period (about 92).
Bonuses and annual-leave pay received over the previous year are added at 3/12 of their annual amount, exactly as the law prescribes.
If your average wage is lower than your ordinary wage (for example after unpaid leave), the law uses the ordinary wage instead, so your real figure may be higher.
Assumptions
- Three-month period counted as 92 days
- Under one year of service returns zero (statutory rule)
- Retirement income tax uses the 2026 service-year deduction, annualized-pay deduction and basic rates; local tax 10%
- DC-plan investment returns and IRP pension-withdrawal tax savings not modeled
FAQ
When must severance be paid?
Within 14 days of leaving, unless both parties agree to extend.
Does this apply to foreign workers?
Yes. Any employee with a year or more of service is covered regardless of nationality, including E-9 and E-7 visa holders.
How much tax is taken from severance in Korea?
Very little. Severance is taxed as retirement income with large deductions for years of service; KRW 50M after 10 years is taxed about KRW 748k including local tax (1.5%). The calculator shows your exact figure.
Do I have to take severance into an IRP account?
Since April 2022 severance is normally paid into an IRP retirement account. Exceptions: you are 55 or older, the amount is KRW 3M or less, or you are a foreign worker leaving Korea — then it can be paid to your bank account directly.
Can I get severance if I quit or am fired?
Yes. The reason for leaving does not matter — resignation, dismissal or contract end all qualify once you have worked at least one year and 15+ hours a week.
Worked examples (no bonus, 2026 tax rules)
Rule of thumb: severance is roughly one month's pay per year worked, and the tax on it is tiny — 1–3% for most employees — because it is taxed as retirement income, not as salary.
| Monthly wage | Service | Severance before tax | Retirement tax + local | After tax |
|---|---|---|---|---|
| KRW 3,000,000 | 2 years | 5,869,565 | 66,957 (1.1%) | 5,802,609 |
| KRW 3,500,000 | 1 year | 3,423,913 | 46,391 (1.4%) | 3,377,522 |
| KRW 4,000,000 | 5 years | 19,565,217 | 296,522 (1.5%) | 19,268,696 |
| KRW 6,000,000 | 10 years | 58,695,652 | 1,288,913 (2.2%) | 57,406,739 |
Who qualifies
- At least 1 year of continuous service with the same employer.
- At least 15 hours a week on average (part-timers who meet this qualify).
- Any reason for leaving: resignation, dismissal, contract expiry, retirement.
- Any nationality and visa — E-7, E-9, F-2, F-4, F-5, F-6, D-10 interns on payroll all qualify. Foreign E-9/H-2 workers are paid through departure-guarantee insurance (출국만기보험) the employer has been funding.
How the tax is calculated
Retirement income tax spreads the severance over your years of service so it is not taxed like one big salary month. Steps: subtract the service-year deduction (KRW 1M per year up to 5 years, rising to 3M per year beyond 20); annualise the rest (÷ years × 12); subtract the annualised-pay deduction (100% of the first 8M, 60% up to 70M, then 55%, 45%, 35%); apply the normal 6–45% income tax rates; divide by 12 and multiply by years of service. Local income tax adds 10% of that.
Published checks: KRW 50M after 10 years → about KRW 748k total tax; KRW 100M after 20 years → about KRW 1.23M. The calculator reproduces both.
Foreign workers: getting paid when you leave Korea
- Since April 2022 severance must normally go into an IRP retirement account, but foreign workers leaving Korea are exempt — ask your employer to pay it to your bank account directly and give your departure date.
- Severance must be paid within 14 days of leaving. If it is late, the employer owes 20% annual delay interest; report non-payment to the Ministry of Employment and Labor (1350, interpreters available).
- Severance is separate from the national pension lump-sum refund. Nationals of countries with a social-security agreement or reciprocity (US, Canada, Australia, China, Germany and others) can also claim their pension contributions back on permanent departure — two different payments.
- Keep your 원천징수영수증 (withholding receipt) for the severance; your home country may ask for it when you file taxes there.
Common reasons the real figure differs
Bonuses and unused-leave pay raise the average wage — enter them in the calculator. Unpaid leave or sick leave in the last 3 months is excluded from the averaging period by law, so the real figure can be higher than a naive estimate. If your company runs a DC pension plan, your payout is whatever has accumulated in the account, not this formula; DB plans and companies without a plan follow the formula above.