Severance Pay in Korea (퇴직금): How Much You Get and When It Must Be Paid

Roughly one month's pay for every year you worked

Your last day is coming up and nobody at the company has mentioned severance. Start here: if you worked a year, there is money you are owed, and you can work out how much in one minute.

The legal floor for statutory severance pay is at least 30 days' average wage for every year of continuous service. If you worked one year, that means a figure close to one month's pay.

The Ministry of Employment and Labor publishes this formula: statutory severance pay = daily average wage × 30 days × (days of service ÷ 365). Thirty days is a floor, not a fixed amount — Article 8(1) of the Employee Retirement Benefit Security Act (근로자퇴직급여 보장법) says "or more" (이상). Two years of service returns 60 days' average wage, three years returns 90 days, and one year six months returns around 45 days.

So the only thing you still need is your own daily average wage. Here is that step worked through on a published figure — the 2026 monthly minimum wage of ₩2,156,880 — with all the arithmetic shown so you can redo it with your own wage. No government body publishes the amounts below; they are simply what the formula returns.

Take a worker paid only ₩2,156,880 a month, with no bonus or allowances. Three months of wages is ₩2,156,880 × 3 = ₩6,470,640. Average wage (평균임금) divides that total by the total calendar days in the three-month window, not by the days actually worked. If the total is 92 days, ₩6,470,640 ÷ 92 gives a daily average wage of ₩70,333. Thirty days of that is ₩2,109,991 for one year of service.

The divisor moves the answer more than people expect. If the total is 90 days, the same three months gives ₩6,470,640 ÷ 90 = ₩71,896 a day, and thirty days of that is ₩2,156,880 — exactly one month's wage and around ₩47,000 more than the 92-day calculation. You cannot choose the month in which you leave, so it is worth knowing this before the amount deposited into your account looks like a mistake.

Two conditions, and nationality is not one of them

Two things have to be true at the same time. You worked one year or more of continuous service, and your scheduled working hours averaged 15 or more a week over four weeks.

That is the whole test. Article 4(1) of the Employee Retirement Benefit Security Act imposes a duty on the employer to establish a retirement benefit scheme, then excludes exactly two cases: a worker with less than one year of continuous service, and a worker whose scheduled hours average under 15 a week over four weeks. Article 4 has not been amended since the 2011 full revision that took effect on 26 July 2012.

Nationality is not a third condition. The Ministry of Government Legislation (법제처), Korea's official legal information service, says directly that a foreign worker who has worked continuously at one company for one year or more can receive at least 30 days' average wage per year as statutory severance pay under Article 8(1) of the Employee Retirement Benefit Security Act. That page applies the statement to E-9 and H-2 visa holders.

Article 6 of the Labor Standards Act (근로기준법), on equal treatment, sits behind it. An employer must not discriminate against workers based on sex or discriminate in working conditions based on nationality, faith or social status.

Article 22 of the Act on the Employment of Foreign Workers (외국인고용법) separately prohibits an employer from treating a worker unfairly and discriminatorily for being a foreign worker. That article has no penalty provision, which is why Article 6 of the Labor Standards Act and the ordinary statutory-severance claim process provide stronger leverage in practice.

The employer can fulfil that duty in one of two ways. A statutory severance pay system (퇴직금제도) is a lump sum accrued inside the company. A retirement pension system (퇴직연금제도) is funded externally at a financial institution, so the entitlement survives the company's insolvency. The retirement pension comes in two employer-provided types: defined benefit (확정급여형) DB and defined contribution (확정기여형) DC. The statutory minimum is the same under either system: 30 days' average wage per year. Under a DC plan, the employer's contribution is at least 1/12 of total annual wages and is paid in cash into the worker's DC account under Article 20(1) of the Employee Retirement Benefit Security Act.

What counts as one year

Continuous service (계속근로기간) runs from the conclusion of your employment contract to its termination. It includes employer-approved leave, probation and internship periods during which the employment relationship of direction and control continued, justified gaps caused by seasonal factors, school vacations or standby, and periods carried over in a business transfer (영업양도).

It also includes the combined periods of renewed or repeated fixed-term contracts. If you are on the EPS, read that twice. Renewals add up; they do not restart the count from zero.

One exception cuts the other way. Leave taken for personal reasons may be excluded where a collective agreement (단체협약) or rules of employment (취업규칙) so provide.

Two dates determine your days of service (재직일수), and one of them is not the date you may expect. The Ministry of Employment and Labor calculator instructs you to enter the day after your last working day as the retirement date.

Where the daily average wage comes from

Average wage is the total wages paid over the three months immediately before the event that triggers the calculation, divided by the total calendar days in that period. It is divided by calendar days — around 89 to 92 — not by the days you actually worked. That is why the worked example divides by 92.

There is a floor. If the calculated average wage is lower than your ordinary wage (통상임금), the ordinary wage is used as the average wage under Article 2(2) of the Labor Standards Act.

The three-month total is not only your basic pay. The Ministry of Employment and Labor calculator adds the basic pay and other allowances actually paid in the period, the annual bonus × 3/12, and annual leave allowance × 3/12, then divides the total by the calendar days. The calculator's example adds ₩1,000,000 for an annual bonus of ₩4,000,000 because ₩4,000,000 × 3/12 = ₩1,000,000.

Some periods are excluded from the three-month calculation period rather than being allowed to drag down the average. Article 2(1) of the Enforcement Decree of the Labor Standards Act lists, among others, a probationary period within the first three months from the start of probation; a shutdown attributable to the employer; maternity leave or leave for miscarriage or stillbirth; a period of medical treatment for an occupational injury or disease; childcare leave; a period of lawful industrial action; employer-approved leave for a non-work-related injury or disease; and an unpaid period spent fulfilling military, reserve forces or civil defence obligations.

Korea's official severance calculator is at labor.moel.go.kr/cmmt/calRtrmnt.do. It asks for your employment start date and retirement date, days of service, three months of basic pay (기본급) and other allowances (기타수당), the annual bonus total and annual leave allowance, and any excluded periods.

Fourteen days to pay. After that, 20% a year.

Statutory severance pay is due within 14 days from the date the payment cause arises — normally the retirement date. The employer must pay it within 14 days from that date. The deadline can be extended only by agreement between the parties and only where special circumstances exist.

Miss the deadline and unpaid statutory severance pay carries delay interest of 20% a year, running from the day after the 14-day deadline to the day you are actually paid under Article 37 of the Labor Standards Act and Article 17 of its Enforcement Decree.

Interest does not run in a listed set of situations: natural disaster or force majeure; a court decision commencing rehabilitation or bankruptcy proceedings; government-recognised insolvency (도산등사실인정); a case in which it is appropriate for a court or labor commission to determine whether the obligation exists; constraints on securing funds under another statute; and other circumstances of comparable nature.

The destination of the money is also prescribed. Since 14 April 2022, statutory severance pay has generally had to be transferred into an individual retirement pension (개인형퇴직연금) account you designate. Article 9(2) of the Employee Retirement Benefit Security Act sets that rule, and Article 3-2 of its Enforcement Decree lists exceptions. Two matter here: a retirement benefit of ₩3,000,000 or less, and a worker with temporary sojourn status who departs Korea in connection with retirement. A returning E-9 worker therefore does not need to open a separate Korean IRP account.

One judgment, since the facts support it: do not let a casual "we'll sort it out later" stand in for payment. The 14-day deadline is the employer's obligation rather than a favour, and if you do agree to extend it, put that agreement in writing.

Departure guarantee insurance is not your severance — it is how the employer funds it

If you are on an E-9 or H-2 visa, Article 13(1) of the Act on the Employment of Foreign Workers requires your employer to enrol you in departure guarantee insurance (출국만기보험), or a trust, as both the insured person and beneficiary for the purpose of paying statutory severance. Article 13(2) of the Act deems enrolment to satisfy the duty to establish a retirement benefit scheme under Article 8(1) of the Employee Retirement Benefit Security Act. Enrolment is required only where you have at least one year remaining in your employment-activity period (취업활동기간) under Article 21(1)2 of the Enforcement Decree.

The employer pays the premium, not you. HRD Korea's official EPS guidance lists the employer as the party required to enrol and the rate as 8.3% of monthly ordinary wage, set aside every month. The 8.3% comes from a MOEL Notice (고용노동부 고시); the Enforcement Decree itself says only that the amount is prescribed and announced by the Minister of Employment and Labor.

Now the part to memorise. Under Article 21(3) of the Enforcement Decree of the Act on the Employment of Foreign Workers, where the departure guarantee insurance lump sum is less than the statutory severance pay calculated under Article 8(1) of the Employee Retirement Benefit Security Act, the employer must pay the worker the full difference. This duty arises when the employment relationship ends or the worker's sojourn status changes — not on departure.

That difference runs on the statutory-severance timetable, not the insurance timetable. Ministry of Employment and Labor administrative interpretation Worker Welfare Division-3281 (근로복지과-3281), dated 21 September 2012, treats it as a severance difference (퇴직금차액) governed by Article 9 of the Employee Retirement Benefit Security Act. Without a written agreement extending the deadline, it must be paid within 14 days of the retirement date.

The lump sum itself is paid within 14 days from the day the worker departs Korea. If the worker applies after the departure date, or applies following a change of sojourn status or a death, it is paid within 14 days from the application date under Article 13(3) of the Act. It is paid to a worker who departs after at least one year of continuous service. Where the period of service is less than one year, the employer receives the lump sum.

The Constitutional Court upheld the departure-linked payment method in 2016 in Constitutional Court case 2014Hun-Ma367, decided 31 March 2016 and dismissed. The Court accepted that the departure guarantee insurance benefit has the character of statutory severance pay that protects a retiree's livelihood, but held that tying the time of payment to departure was permissible in view of problems caused by unlawful overstay. Justices Lee Jung-mi (이정미), Kim Yi-Su (김이수) and Seo Kiseog (서기석) dissented.

The claim to the insurance benefit expires three years from the date the payment event arose under Article 13(4) of the Act. The money does not disappear. The insurer transfers the expired amount to HRD Korea (한국산업인력공단) within one month, and the worker can still receive it from HRD Korea afterwards.

If the money does not arrive

File a petition (진정) or a criminal complaint (고소) with the local employment and labor office (지방고용노동관서) that has jurisdiction over your workplace. You can file online through the Labor Portal civil-petition application service (노동포털 민원신청) or visit the office's customer support desk (고객지원실) in person. A labor inspector investigates both sides. The standard processing period is 25 days, excluding Saturdays and public holidays, and it may be extended twice.

Failure to pay in violation of Article 9(1) is punishable by up to three years' imprisonment or a criminal fine of up to ₩30,000,000 under subparagraph 1 of Article 44 of the Employee Retirement Benefit Security Act, as amended by Act No. 21135 (법률 제21135호), promulgated and effective on 11 November 2025. It is an offense for which prosecution cannot proceed against the victim's expressly stated wishes (반의사불벌죄). That protection does not apply where an employer whose name has been published under Article 43-2 of the Labor Standards Act violates the rule again during the publication period.

The Korea Legal Aid Corporation (대한법률구조공단) provides free litigation aid to workers whose average monthly wage over the final three months is under ₩4,000,000. Its website is www.klac.or.kr, electronic filing is at support.klac.or.kr, and its telephone number is the local area code followed by 132.

If the employer cannot or will not pay, the state makes a substitute payment (대지급금) on the employer's behalf, administered by the Korea Workers' Compensation and Welfare Service (근로복지공단; COMWEL). There are two schemes, and they are not interchangeable. Which one applies depends on whether the business has been formally declared insolvent.

Who to call, in your own language

The Foreign Workforce Counseling Center (외국인력상담센터; HUG KOREA), operated under HRD Korea, is the first contact for an EPS worker. Call 1577-0071 from 09:00 to 18:00 for counseling in 18 languages, including Vietnamese, Indonesian, Tagalog, Nepali and Thai. Its office is on the 3rd Floor of the Emerald Building, 16 Gojan 2-gil, Danwon-gu, Ansan-si, Gyeonggi-do, and its website is hugkorea.or.kr.

The Ministry of Employment and Labor Customer Counseling Center (고용노동부 고객상담센터) is available on 1350 without an area code from 09:00 to 18:00 on weekdays, and online at 1350.moel.go.kr. Its service is primarily in Korean, so contact HUG KOREA first if you need another language.

You have three years, and leaving Korea does not end it

The right to claim statutory severance pay expires if it is not exercised for three years after it arises, counted from the retirement date, under Article 10 of the Employee Retirement Benefit Security Act. Nothing in that provision requires the worker to remain in Korea.

A departure guarantee insurance claim runs on its own three-year clock from the date its payment event arose. After that period, the money remains with HRD Korea rather than returning to the insurer.

If what you really want to check is whether your monthly pay was correct in the first place, that is the other half of this issue. Our guide to Korea's 2026 minimum wage covers what a payslip must show and what may legally be deducted.