Korean severance pay (퇴직금, toejikgeum) is generally due when an employee has at least one year of continuous service and, over each relevant four-week period, averages at least 15 contractual working hours per week. The basic statutory level is 30 days of average wage for each year of continuous service.
Nationality is not one of those two basic tests. A foreign employee can qualify, and a workplace with fewer than five employees is not generally exempt from severance. The difficult questions are often whether the person is legally an “employee,” which periods count as continuous service, what belongs in average wage, and how the payment must be made.
Checked: September 3, 2026. This is general information, not a decision on an individual employment dispute. For a calculation or contested worker status, contact the Ministry of Employment and Labor (MOEL) at 1350 or the labor office responsible for the workplace.
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| Summary illustration. Severance eligibility and payment depend on the worker’s actual service record, hours, wages, and legal status. |
Who usually qualifies?
| Question | General rule |
|---|---|
| How long did you work? | At least one year of continuous service for the same employment relationship |
| How many hours? | At least 15 contractual hours per week on average over a four-week period |
| Full-time only? | No. Part-time and fixed-term employees can qualify if they meet the service and hours tests. |
| Five or more employees? | Not required. The Retirement Benefits Act applies to businesses or workplaces that employ workers. |
| Must the employer have created a plan? | No. If an employer has not established another retirement-benefit system, the law treats the statutory severance-pay system as established. |
Resignation, contract completion, dismissal, or retirement can all end the employment relationship and trigger payment. The ordinary severance test does not require the employee to prove that the employer caused the departure.
Visa type and nationality
A visa label by itself does not calculate severance. The law asks whether the person was an employee and met the service and hours requirements. Immigration permission to perform the work is a separate issue, so a worker with a visa or status problem should obtain individual labor and immigration advice instead of assuming that one issue automatically decides the other.
Do not rely on statements such as “E-2 workers receive severance but F-visa workers do not,” or the reverse. The job's real legal relationship matters more than a list of visa codes.
Employee or freelancer?
A contract headed “freelancer,” a 3.3% tax deduction, or the absence of four social-insurance registrations does not settle worker status by itself. The Supreme Court says the substance of the relationship matters more than the contract's name.
Relevant facts include who set the work, hours, and location; how closely the company directed and supervised the work; whether the person could hire a replacement; who supplied tools; whether the person carried business risk; how the pay was structured; and how continuous and exclusive the relationship was.
If the employer calls you a contractor but set your timetable, workplace, classes or tasks, reporting line, leave, and pay, keep the documents that show those facts. A labor inspector or court may need to decide the issue; a blog cannot.
Does a new contract reset the one-year clock?
Not automatically. A school, academy, or company may issue a new contract every semester or year while the same employment continues. Contract paperwork, a changed job title, or a short administrative gap does not by itself answer whether service was legally continuous.
Keep every contract, renewal message, work schedule, pay statement, social-insurance record, and proof of any gap. The purpose and length of a break, whether work was expected to resume, and whether the same employer continued directing the work can matter.
For irregular part-time work, the 15-hour rule is also more technical than checking one busy week. MOEL's guidance assesses contractual hours over four-week periods. Ask 1350 for a period-by-period review if your schedule moved above and below 15 hours.
How severance pay is calculated
The practical formula used by MOEL is:
Severance pay = one-day average wage × 30 × continuous-service days ÷ 365
Under the Labor Standards Act, one-day average wage is generally the wage total paid for the three calendar months before the calculation date, divided by the total calendar days in that period—not only the days worked. MOEL's calculator also provides fields for qualifying annual bonuses and unused annual-leave pay. If the calculated one-day average wage is lower than the applicable one-day ordinary wage, the calculator notes that the ordinary wage is used.
For a simple illustration only: if the qualifying wage total for the final three-month period is 9,000,000 won and the period has 92 calendar days, the one-day average is about 97,826 won. For exactly 365 days of service, 30 days of that average is about 2,934,780 won before retirement-income tax. Bonuses, allowances, excluded periods, leave, or a longer service period can change the result.
Use the official MOEL severance-pay calculator. Enter the “retirement date” as the day after the last day worked, as the calculator instructs.
Can severance be included in monthly salary?
A sentence in a contract saying “severance included” does not automatically remove the statutory payment. The Supreme Court has held that an agreement to split and pay future severance with monthly wages is generally invalid. A lawful interim settlement is a separate procedure limited to reasons allowed by the Retirement Benefits Act and its decree.
If the payslip has a line named 퇴직금 every month, keep every payslip and bank record. Do not assume the employer is correct, but do not calculate the dispute alone either: the legal treatment of money already paid under an invalid split-payment agreement can be complicated.
When must the employer pay?
The current Retirement Benefits Act requires payment within 14 days from retirement. The deadline may be extended when special circumstances exist and the parties agree. A vague statement such as “later, when company finances improve” is not a useful record.
If you agree to an extension, put the amount, calculation, exact payment date, payment method, and employer identity in writing. Do not sign a full-settlement or waiver document unless you understand what rights and amounts it covers.
IRP or direct payment for a foreign worker?
As a rule, statutory severance is transferred to an individual retirement pension account (IRP) designated by the worker. The decree lists exceptions, including retirement at age 55 or older, a benefit of 3,000,000 won or less, death, and a worker who provided labor in Korea under a qualifying work status and departed Korea after retirement.
The departure exception is often misunderstood. Being a foreign national does not by itself create an automatic direct-payment exception while the worker remains in Korea. Ask HR and the financial institution which route applies, whether an IRP must be opened, and what proof is required if you plan to leave Korea after the job ends.
Before departure, keep access to your Korean phone number, bank or IRP account, email, and identity documents until payment and tax documents are complete.
What to collect before the last day
- Every employment contract, renewal, and amendment
- Final three months of pay statements and bank deposits
- Annual bonus and unused-leave payment records
- Work schedules, attendance, class or task assignments, and leave records
- Proof of the start date, last working day, and any gaps
- Employer's legal name, business address, and representative
- Written severance calculation and expected payment date
- IRP details or documents supporting a claimed payment exception
Ask for the calculation before leaving. Check the service dates, average-wage period, wage items, and whether the employer used the correct payment route. A bank deposit without a calculation does not show how the amount was produced.
If severance is unpaid after 14 days
- Send a calm written request stating the last workday, claimed service period, and request for the calculation and payment date.
- Keep screenshots and delivery records. Do not rely only on a phone call.
- Call MOEL at 1350 for guidance and identify the labor office responsible for the workplace.
- File an unpaid-wage petition through the MOEL Labor Portal or visit the competent local labor office.
- Upload or bring contracts, wage records, bank deposits, schedules, termination evidence, and the employer's contact details.
The Labor Portal explains that an inspector normally investigates both sides and, when a violation is confirmed, directs the employer to correct it. A worker can use the process for unpaid wages and severance; the application itself has no fee.
Do not wait for the three-year limit
The statutory right to severance expires if it is not exercised for three years. MOEL explains that the period begins on the day after retirement. That is a limitation period, not a recommended waiting period. Evidence, accounts, phone numbers, and employer contact become harder to preserve after leaving Korea.
If the business has closed or cannot pay, ask the labor office about the wage-payment-guarantee system (대지급금). Eligibility, filing deadlines, covered periods, and caps are separate from the ordinary severance calculation, so get case-specific instructions promptly.
This guide explains general statutory rules. Worker status, continuous service, excluded periods, wage items, retirement-plan type, taxes, and limitation issues can change the result in an individual case.
Related guides
- Korea National Pension Refund: Eligibility and Application Guide
- Can Foreign Residents Open KakaoBank? Salary Account Alternatives
- Korea Residence Card: Registration, Documents, and Fees
Official sources
- National Law Information Center — Act on the Guarantee of Employees' Retirement Benefits
- National Law Information Center — Article 9, Payment Within 14 Days and IRP Transfer
- National Law Information Center — Decree Article 3-2, IRP Transfer Exceptions
- National Law Information Center — Labor Standards Act Definition of Average Wage
- Ministry of Employment and Labor — Official Severance-Pay Calculator
- Supreme Court — Employee Status Depends on the Substance of the Relationship
- Supreme Court — Monthly Severance Split Agreements Are Generally Invalid
- Ministry of Employment and Labor — Unpaid-Wage Petition and Investigation Process
- Ministry of Employment and Labor — Three-Year Limitation Period
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