Severance Pay in Korea (Toejikgeum) — Rules, Formula and Examples
Who gets severance pay in Korea, the one-year and 15-hour rules, how average wage is calculated, worked examples, payment deadlines and what foreign workers should watch out for.
Severance pay (퇴직금, toejikgeum) is one of the most valuable rights for workers in Korea, and foreign workers have exactly the same right as Koreans. Roughly, you get one month's pay for every year worked.
Who is entitled
- You worked for the same employer for at least one year (365 days).
- You were scheduled for 15 hours or more a week on average.
- You were an employee, not a genuine freelancer. Contracts that call you a freelancer but control your hours and work like an employee do not remove this right.
Your nationality and visa do not matter. It also does not matter whether you quit, finished your contract or were dismissed.
The formula
Average daily wage = total pay for the 3 months before your leaving date ÷ number of days in those 3 months. Add 3/12 of the bonuses and annual leave allowance you received in the last year.
Example: you worked 2 years and 2 months, earning ₩3,000,000 a month. Three months' pay is ₩9,000,000 over 92 days, so ₩97,826 a day. Severance = 97,826 × 30 × 791 ÷ 365 ≈ ₩6.36 million.
Rules that catch people out
- "Severance included in salary" clauses are generally invalid. Monthly payments labelled as severance can be treated as salary, and the employer still owes severance at the end.
- Splitting contracts into 11-month terms with a short gap to avoid the one-year rule can be challenged if the work was effectively continuous.
- Your leaving date is the day after your last working day. Make sure the 3-month period uses your normal pay, not a month of unpaid leave.
When it must be paid
Within 14 days of your leaving date, unless you agree in writing to a later date. After that, the employer owes delay interest of 20% a year. If your company has a defined contribution (DC) retirement pension, the money goes into your pension account and you withdraw it from there.
E-9 workers: departure guarantee insurance
Employers of E-9 workers pay 8.3% of monthly wages into departure guarantee insurance (출국만기보험). You claim it when you leave Korea. If it adds up to less than your legal severance, your employer must pay the difference.
If you are not paid
Call the Ministry of Employment and Labor on 1350 (interpreters available) or file a complaint at your local labor office. Calculate the amount you are owed first with the severance pay calculator.
This guide reflects Korean laws and official notices as of 2026-10-08. Rules change, so confirm with the relevant agency before making important decisions.