Living in Korea · Pay & benefits
Severance Pay in Korea (퇴직금)
If you work in Korea for a year or more, you are legally owed severance pay when you leave — roughly one month of salary for every year of service. It applies to foreigners too, and to both resignations and dismissals. Here is how it works, and why employers should budget for it from day one.
Who qualifies
Under the Labor Standards Act, severance pay is due to any employee who has:
- worked continuously for at least one year for the same employer, and
- averaged 15 or more hours a week.
Nationality does not matter. You receive it whether you quit, your contract ends, or you are let go.
How it is calculated
The statutory minimum is about 30 days of your average wage per year of service. "Average wage" (평균임금) is your total pay — including regular allowances and a proportion of bonuses — over your final three months, divided by the days in that period. Because the calculation uses your most recent pay, a raise or bonus shortly before leaving can increase the amount.
For a rough sense of the salary figures involved, see Salary in Korea 2026 and estimate net pay with the salary calculator.
When it is paid
Severance must be paid within 14 days of your last day, unless you and the employer agree in writing to a later date. Delayed payment can accrue statutory interest.
Lump sum vs Retirement Pension (퇴직연금)
Instead of paying a lump sum at the end, many companies run a Retirement Pension scheme:
- Defined Benefit (DB): you receive a set amount comparable to statutory severance; the employer bears the investment risk.
- Defined Contribution (DC): the employer deposits a fixed share of your annual salary into your retirement account, which you manage — the final value depends on returns.
For employers
Severance is a real, accruing liability from an employee's first year — on top of the four major insurances. Budget it into total headcount cost and consider a Retirement Pension plan for predictability. See our market-entry guide for the full picture of hiring in Korea.
This is general guidance, not legal advice. Confirm current rules with the Ministry of Employment and Labor (고용노동부) or a labor attorney for your specific situation.
Frequently asked questions
Who is entitled to severance pay in Korea?▾
Any employee who has worked continuously for at least one year and averages 15 or more hours a week is legally entitled to severance pay (퇴직금) when they leave — regardless of nationality, and whether they resign or are dismissed.
How is severance pay calculated?▾
The statutory minimum is roughly 30 days of your average wage for each year of continuous service. "Average wage" is based on your total pay over the last three months, so bonuses and allowances in that period can raise it.
When must severance be paid?▾
Within 14 days of leaving, unless both sides agree in writing to extend. Late payment can incur interest.
What is the difference between DB and DC plans?▾
Many employers now run a Retirement Pension (퇴직연금) instead of paying a lump sum directly. A Defined Benefit (DB) plan pays a set amount similar to statutory severance; a Defined Contribution (DC) plan has the employer pay a fixed percentage into your account each year, which you invest.