What is Severance Pay?
Severance pay is a statutory benefit required under Korea's Employee Retirement Benefit Security Act. Employers must pay severance to any employee who has worked continuously for 1 year or more upon their resignation or retirement. This applies to all employment types, including full-time, contract, and part-time workers, as long as they meet the eligibility requirements.
Severance Pay Formula
Average Daily Wage = Total wages for 3 months before resignation ÷ Total days in those 3 months (91 days)
Severance Pay = Average Daily Wage × 30 days × (Total service days ÷ 365 days)
※ Total wages include base salary, allowances, bonuses (3/12 of annual bonus), and annual leave allowance (3/12 of annual leave pay).
How to Use the Severance Pay Calculator
STEP 1. Select Join Date
In the 'Work Period' section at the top, click the left date field and select the date you first joined the company. Use the start date on your employment contract as the reference.
STEP 2. Select Resignation Date
Click the right date field and select your planned resignation date. The resignation date means the day after your last working day. For example, if you worked until December 31st, enter January 1st.
STEP 3. Enter 3-Month Total Salary
In the 'Salary Information' section, enter your total pre-tax salary for the last 3 months in the main input field. This is the sum of your base salary plus fixed allowances (meal, transport, etc.) for 3 months. Example: If your monthly salary is 3 million KRW, enter 9,000,000.
STEP 4. Enter Bonus & Leave Allowance (Optional)
If you received bonuses or annual leave allowance, enter them in the two smaller fields below. For bonus, enter the total annual amount (e.g., combined holiday bonuses). For leave allowance, enter compensation for unused annual leave days. You can leave these blank if not applicable.
STEP 5. Click 'Calculate Severance Pay'
After entering all information, click the 'Calculate Severance Pay' button at the bottom. Join date, resignation date, and 3-month salary are required fields. If your service period is less than 1 year, a notification will appear that you are not eligible for severance pay.
STEP 6. View Results
Once calculated, the estimated severance pay amount and total service period (XX years XX months) will be displayed in the result card. This is a pre-tax estimate; your actual amount may differ after retirement income tax deductions.
Severance Pay Calculator Use Cases
Check Expected Severance Before Resigning
If you're planning to resign or change jobs, use the severance calculator to estimate your payout in advance. This is essential information for financial planning, including living expenses and job search period funds. Check your recent payslips for accurate 3-month salary figures to get more precise results.
Verify Eligibility for Part-time & Contract Workers
Many part-time and contract workers are unaware they may be entitled to severance pay. If you've worked for more than 1 year and at least 15 hours per week, you're eligible regardless of employment type. Enter your work period and salary in the calculator to instantly check your eligibility and estimated amount.
Compare Total Compensation When Changing Jobs
When you receive a job offer, calculate the severance pay you would receive from your current employer as part of your total compensation package. By factoring in your current severance pay plus unused annual leave allowance, you can make a more informed comparison with the new employer's offer.
Eligibility Criteria
1+ Year Continuous Service
Period from join date to leave date must be at least 1 full year.
15+ Hours/Week
Average weekly working hours must be 15 hours or more over a 4-week period.
All Employment Types
Full-time, contract, and part-time workers are all eligible if conditions are met.
Retirement Income Tax Guide
Retirement income tax is levied on severance pay. Longer service periods receive greater deduction benefits. Below is the 2026 tax calculation process.
Service Years Deduction
Tax Calculation Process
① Apply service years deduction (Severance - Service Deduction)
② Calculate converted income (Post-deduction × 12 / Service years)
③ Apply income tax rate to converted income tax base
④ Calculated tax × Service years / 12 = Final retirement income tax
Frequently Asked Questions (FAQ)
Q. How is severance pay calculated?
Severance Pay = Average Daily Wage × 30 days × (Service days ÷ 365). The average daily wage is calculated by dividing the total wages for the 3 months before resignation (including base salary, allowances, bonuses, and leave pay) by the total number of days in those 3 months (approximately 91 days).
Q. Can part-time or contract workers receive severance pay?
Yes, they can. Regardless of employment type (full-time, contract, or part-time), workers who have been continuously employed for more than 1 year and worked an average of 15+ hours per week over a 4-week period are entitled to severance pay under the Labor Standards Act.
Q. Are bonuses and annual leave pay included in the calculation?
Yes, they are included. 3/12 (three months' worth) of annual bonuses and 3/12 of annual leave allowance are factored into the average wage calculation. In this calculator, simply enter the amounts in the 'Total Annual Bonus' and 'Annual Leave Allowance' fields to have them automatically reflected.
Q. What is the deadline for severance pay payment?
Employers must pay severance within 14 days of the employee's resignation date. Late payment incurs penalty interest at 20% per annum. However, the deadline may be extended by mutual agreement between the employer and employee.
Q. Can I get an interim settlement (mid-term withdrawal)?
In principle, interim settlement of severance pay is prohibited. However, exceptions are allowed for legally specified reasons such as purchasing a home (for non-homeowners), paying rent deposits, medical care for the employee or dependents lasting 6+ months, or natural disasters.
Q. Is severance pay subject to taxation?
Yes, severance pay is subject to retirement income tax. The tax is calculated based on your years of service and total severance amount, with longer service periods receiving greater deduction benefits. The amount shown in this calculator is pre-tax, so your actual take-home amount will be lower after tax deductions.
Important Notice
This calculator provides estimates only. Actual severance pay may vary depending on company policies and collective agreements. For accurate calculation, please contact your HR department or the Ministry of Employment and Labor (1350).