Mitra KoreaSeverance Pay (퇴직금): How to Calculate It and How to Get It
If you work for 1 year or more, you get severance pay. This guide shows how to calculate it, and how to claim the difference when your 출국만기보험 (Departure Guarantee Insurance) pays less.
Quick summary
- You get 퇴직금 (severance pay) if you worked for one company for 1 year or more without a break, and you worked at least 15 hours per week on average over 4 weeks.
- The formula is daily average wage × 30 days × (days worked ÷ 365).
- The company must pay you within 14 days from the day you leave the job.
- If you worked on an E-9 visa, the money first comes from the 출국만기보험 (Departure Guarantee Insurance) that your employer paid for. If the insurance pays less than the severance pay the law requires, you can ask your employer for the difference.
- Company size does not matter. Companies with fewer than 5 workers must also pay severance pay.
Who can get it
You get severance pay if you meet all three conditions.
- You worked continuously for 1 year or more
- Your contracted working hours (소정근로시간, the hours written in your contract) were 15 hours or more per week, on average over 4 weeks
- You leave the job (the reason does not matter)
You get severance pay if you quit, if your contract ends, if you are fired, or if you change workplaces. Your nationality and visa type do not matter.
"Continuous work period" means the whole time your job actually continued. Maybe you signed a new 근로계약서 (employment contract) several times. If there was no break and you kept working at the same workplace, all of that time is added together.
How to calculate
Step 1 — Daily average wage
Daily average wage = total wages you received in the 3 months before leaving ÷ total number of days in those 3 months
- "Total number of days" means calendar days, not only the days you worked. It is usually 89 to 92 days.
- Total wages include base pay, all allowances, and overtime, night work and holiday work pay.
- If you get a regular bonus, add 3/12 of the total bonus you received in the 1 year before leaving.
- If you received pay for unused annual leave from the previous year, add 3/12 of that amount.
- If the average wage calculated this way is lower than your ordinary wage (통상임금, your regular fixed pay), your ordinary wage is used as the average wage.
Step 2 — Severance pay
Severance pay = daily average wage × 30 × (days worked ÷ 365)
Example 1 — Monthly pay 2,500,000원, worked 3 years
- Total wages in the 3 months before leaving: 2,500,000원 × 3 = 7,500,000원
- Total days in those 3 months: 92 days
- Daily average wage: 7,500,000 ÷ 92 = 81,521원
- Days worked: 1,095 days (3 years)
- Severance pay: 81,521 × 30 × (1,095 ÷ 365) = 81,521 × 30 × 3 = about 7,336,000원
Example 2 — Monthly pay 2,200,000원, worked 2 years and 6 months
- Total wages in the 3 months before leaving: 6,600,000원
- Total days in those 3 months: 92 days
- Daily average wage: 6,600,000 ÷ 92 = 71,739원
- Days worked: 913 days
- Severance pay: 71,739 × 30 × (913 ÷ 365) = about 5,383,000원
To get the exact amount, use the severance pay calculator on the 고용노동부 (Ministry of Employment and Labor) website (moel.go.kr/retirementpayCal.do). Enter your start date, end date, 3 months of wages, bonus and annual leave pay. The amount is calculated automatically.
Steps
- Fix your leaving date. Your leaving date is the day after the last day you worked.
- The company pays within 14 days. If there is a special reason, the company and you can agree to a later date. If there is no agreement, the payment is unpaid wages (체불, wage arrears) from the day after the 14 days end.
- If you are on E-9, apply for the 출국만기보험 payment. Report your planned departure to the 고용센터 (Employment Center) 1 month before you leave Korea. Then apply to the insurance company for payment at least 7 days before you leave. For the full steps, see the guide "How to Get Departure Guarantee Insurance and Return Cost Insurance".
- Calculate the difference. Compare the legal severance pay (from the formula above) with the 출국만기보험 money you actually received.
- If there is a difference, ask your employer for it. Ask by text message or email, so there is a record.
- If the employer does not pay, file a complaint (진정). You can file online on the Labor Portal (labor.moel.go.kr), or visit the regional labor office (지방고용노동관서) in charge of your workplace area.
What to prepare
- 근로계약서 (employment contract) (all of them, if you renewed it several times)
- 급여명세서 (pay slips) for the last 3 months and bank deposit records
- Records of your work hours, or papers that show how long you worked
- 외국인등록증 (residence card), passport
- 출국만기보험 payment record (if you received it)
Be careful
- If you are a few days short of 1 year, you get nothing. When your contract end date is near, check your exact start date and end date. If your boss tries to end the contract just before 1 year, it is a good idea to contact a counseling center.
- Adding severance pay into your monthly pay in advance ("monthly pay including severance pay") is not valid in principle. Even if your 근로계약서 says this, in many cases you can still claim severance pay separately. Take your contract and get counseling.
- The 출국만기보험 money is not always your full severance pay. The insurance builds up at 8.3% of your monthly ordinary wage. If your pay went up or you did a lot of overtime, the legal severance pay is bigger. Your employer must pay this difference.
- If you leave Korea after working less than 1 year, the employer takes the 출국만기보험 money. In this case, you also do not get legal severance pay.
- The time limit is 3 years. After 3 years from your leaving date, you cannot claim. Even if you already went home, you can still apply within 3 years.
- If your workplace has a retirement pension (퇴직연금, DB or DC type), you get the retirement pension instead of severance pay. In this case, you receive it from the financial company (bank or insurance company).
Frequently asked questions
Q. I changed workplaces. What happens to severance pay from my old company? A. Each company is calculated separately. If you worked 1 year or more at your old company, claim severance pay from that company. When you move to a new workplace, your work period at the old company does not carry over to the new company.
Q. The company does not pay my severance pay and avoids my calls. A. File a complaint (진정). If the company has no money, you can get up to 7,000,000원 for severance pay from the 근로복지공단 (Korea Workers' Compensation and Welfare Service) through the 간이대지급금 (simplified substitute payment, money the government pays instead of the employer) (the total limit together with wages is 10,000,000원). To get the 간이대지급금, you must file a complaint within 1 year from the day after you left the job. Then you must claim from 근로복지공단 within 6 months from the day the 노동청 (labor office) first issues the '체불 임금등·사업주 확인서' (confirmation of unpaid wages and employer). This 1 year is the deadline for the 간이대지급금 only. You can claim the severance pay itself within the 3-year time limit. The limit amounts can change, so check by calling 1350 or 1588-0075.
Q. I already left Korea. Can I still get the severance pay difference? A. Yes. You can claim within the 3-year time limit. But you may need to appear in person during the complaint process, so it is much easier to settle it before you leave. Always calculate the amount before you leave Korea.
Q. I worked only 3 days a week. Do I get severance pay? A. You get it if your contracted working hours are 15 hours or more per week, on average over 4 weeks. Even with 3 days a week, if you work 8 hours a day, that is 24 hours a week, so you qualify.
Q. Is tax taken from severance pay? A. Yes, retirement income tax (퇴직소득세) is taken out. The longer you worked, the lower the tax. For the exact amount, ask your company or a tax staff person.
Where to get help
| Organization | Phone | What they help with |
|---|---|---|
| 외국인종합안내센터 (Immigration Contact Center) | 1345 | Counseling in 20 languages, 3-way interpretation when you call public offices. Weekdays 09:00~22:00 (Nepali until 18:00) |
| 외국인력상담센터 (Foreign Workforce Counseling Center) | 1577-0071 | Labor counseling in many languages, including Nepali. 365 days, 09:00~18:00 |
| 고용노동부 Customer Counseling Center | 1350 | Severance pay counseling |
| 근로복지공단 | 1588-0075 | Substitute payment (대지급금), retirement pension |
| 고용노동부 severance pay calculator | moel.go.kr/retirementpayCal.do | Calculates the amount automatically |