Legal information

Severance pay is 30 days of your average wage for every full year you worked, with partial years counted in proportion. The average wage comes from the three months just before you quit: all pay received in that window, spread over the days it covers. Overtime and night premiums raise it; a fixed monthly salary without extras does not. Many foreign workers accept whatever figure the employer or the insurance company shows them. With a calculator and your last three payslips, you can check the number in about ten minutes.

Who is entitled to it?

Two conditions, both required:

• you worked one year or more for the same employer without a break
• your scheduled hours were 15 hours or more per week, averaged over four weeks

It does not matter how many people work at the company, what visa you hold, or whether your contract was renewed several times. Renewed contracts with the same employer are normally added together as one period of service. A gap of a few days between contracts does not by itself reset the count, but a real break, with the employer settling everything and you leaving, can.

What goes into the average wage (평균임금)?

Start from the three calendar months before your leaving date and sum everything paid to you for that stretch: base pay, overtime, premiums for night and holiday work, weekly holiday pay, regular allowances, and the part of any bonus that belongs to those months. Then divide by how many days that stretch contains, which is 89 to 92 depending on the months. The result is one day of average wage.

Two details protect you:

• If those final months were unusually thin, for example because of reduced hours, the law will not let the average fall below your ordinary wage (통상임금), the fixed pay for your normal schedule.
• Money that is not wages, such as reimbursed travel costs or a one-time gift, is not counted, but also not deducted.

Meals and housing deducted from your pay are a separate question, covered in another article.

The formula, step by step

1. Add up all wages paid for the final 3 months. 2. Divide by the day count of that 3-month window. 3. Multiply by 30. This is your 30-day average wage. 4. Count your total days of service, divide by 365. 5. Multiply step 3 by step 4.

A worked example (invented numbers)

These wages are made up for the example. Suppose you started on 1 January 2024 and your last working day was 30 June 2026.

Notice what the overtime did: without the 500,000 won of extras, the result would be roughly 410,000 won lower. That is why the final quarter before leaving carries so much weight.

When does the employer have to pay?

The deadline is two weeks from your leaving date, unless you agree in writing to a later date. Since 2022 the general rule is that severance goes into a personal retirement account (개인형퇴직연금, IRP) in your name rather than your bank account. Workers who are leaving Korea for good are usually handled as an exception and paid directly, but confirm with the employer how and where the money will arrive before your last day.

If you work on an E-9 or H-2 visa, part or all of this amount comes from the departure guarantee insurance (출국만기보험) instead of the employer directly. How the two are matched up is explained in a separate article.

What if the number is wrong or nothing is paid?

The right to severance lasts three years, counted from your leaving date. An unpaid or underpaid amount is handled like missing wages: a complaint to the labor office (지방고용노동청) is open to you, and the substitute payment scheme (대지급금) can step in for part of it if the employer has nothing.

Common mistakes to look for on the employer's calculation sheet (퇴직금 정산서):

• only base salary used, overtime left out
• service counted from the latest contract renewal, not from the first day
• a lower wage from an earlier contract used instead of the final quarter
• allowance for unused annual leave paid in the past year left out

Next step

Put your three most recent payslips and your first contract date into the severance calculator and compare the result with what you were offered. If the difference is more than a rounding error, ask the employer for their calculation in writing before you sign anything. Consultations are paid; when you contact us, a staff member will call you back and explain the fee.

법무법인 대한중앙
1533-7377

Rules applied

Employee Retirement Benefit Security Act (근로자퇴직급여 보장법) Article 4(1) (one year of service and 15 hours a week), Article 8(1) (30 days of average wage per year), Article 9(1) and (2) (payment within 14 days, transfer to an IRP account), Article 10 (3-year limit). Labor Standards Act (근로기준법) Article 2(1)6 (average wage: last 3 months divided by total days), Article 2(2) (ordinary wage as the floor).

This is general information, not legal advice. Every case is different.