Korea Severance Pay Calculator — With Retirement Income Tax
Enter your join date, last working day and three-month pay to calculate severance pay and the after-tax amount in Korea.
How severance pay is calculated
- Severance pay = average daily wage × 30 days × days of continuous service ÷ 365. For each year of continuous service the employer must pay at least 30 days of average wage (Employee Retirement Benefit Security Act, Art. 8(1)).
- Average daily wage = total wages paid in the three months before leaving ÷ the total number of days in those three months (Labor Standards Act, Art. 2(1)(6)). The number of days differs by month, between 90 and 92. Dividing monthly pay by 30 is only an approximation and differs from the real figure.
- Days of continuous service counts both the join date and the last working day. From 2022-01-01 to 2025-12-31 it is 1,461 days because a leap year falls in between.
- If the average wage is lower than the ordinary wage, the ordinary wage is used as the average wage (Art. 2(2) of the same Act).
- Service of less than one year, or an average of less than 15 hours a week over four weeks, is not covered by statutory severance pay (Employee Retirement Benefit Security Act, Art. 4(1) proviso).
Worked examples
| Situation | Service | Severance (before tax) | Tax (income + local) | After tax |
|---|---|---|---|---|
| 4 years of service (including a leap year), three-month pay ₩9,000,000 2022-01-01 ~ 2025-12-31 | 1,461 days · 4 years | ₩11,747,171 | ₩134,125 | ₩11,613,046 |
| 11 years 1 month of service, three-month pay ₩12,000,000 2015-03-02 ~ 2026-03-31 | 4,048 days · 12 years | ₩44,361,644 | ₩431,946 | ₩43,929,698 |
| Exactly 5 years of service, three-month pay ₩9,000,000 2021-01-01 ~ 2025-12-31 | 1,826 days · 5 years | ₩14,681,954 | ₩167,602 | ₩14,514,352 |
The table is calculated with the same function as the calculator on this page. Exactly five years counts as 5 years of service for tax (rounding 1,826 days ÷ 365 up would wrongly give 6). One day more counts as 6 years.
How the retirement income tax is calculated (Income Tax Act, Arts. 48 and 55)
- Subtract the service-year deduction from the severance pay. Years of service are counted by the calendar, and any part of a year counts as a full year.
- Divide that amount by the years of service and multiply by 12 to get the converted salary.
- Subtract the converted-salary deduction from the converted salary to get the taxable base.
- Multiply the taxable base by the basic tax rates (6 to 45%), then divide by 12 and multiply by the years of service to get the retirement income tax. Local income tax is 10% of that.
| Years of service | Service-year deduction |
|---|---|
| 1 year | ₩1,000,000 |
| 5 years | ₩5,000,000 |
| 10 years | ₩15,000,000 |
| 20 years | ₩40,000,000 |
| 30 years | ₩70,000,000 |
What this calculation does not include
- The wages to include in the average wage (whether bonuses, annual-leave pay and performance pay count) must be added up and entered by you. Following a Ministry of Employment and Labor interpretation, it is common to add three months' worth (3/12) of a year's bonuses and annual-leave pay.
- If you receive the money through a DC-type retirement pension or an IRP, the timing and rate of tax differ (a reduction for deferred retirement income tax). Special rules for service before 2012 and the cap on severance for company officers are not reflected either.
- If you took an interim settlement, count the period of continuous service anew from the settlement date (Employee Retirement Benefit Security Act, Art. 8(2)).
- Foreign employees — how severance pay works for a foreign worker can depend on the visa type (some foreign workers are covered by a separate scheme paid through insurance or a trust). This page applies the general statutes to anyone and does not decide how your visa affects your pay. Ask your employer or the local Employment Center.
Basis: National Law Information Center — Employee Retirement Benefit Security Act, Arts. 4 and 8; Labor Standards Act, Art. 2; Income Tax Act, Arts. 48 and 55 (the version in force in 2026, checked October 2026). This is an estimate; the actual amount is set by what your company pays and its rules of employment.
Frequently asked questions
Can I estimate severance as monthly pay × years of service?
The estimate is close but not exact. The average wage is three months' pay ÷ the number of days in those three months, so even with the same monthly pay it varies slightly with the month you leave, and it grows as the days of service increase over a leap year.
What date do I enter as the last day?
Enter the last day you actually worked. The retirement date is treated as the day after, and every day from the join date to the last working day is counted.
How do I include bonuses?
A Ministry of Employment and Labor interpretation says to add 3/12 of the total bonuses received in the year before leaving to the three-month wages, and 3/12 of that year's annual-leave pay in the same way. This is an interpretation, not a statute, so your company's practice may differ.
Is what I enter saved?
No. The calculation happens only in your browser; nothing is sent to a server or stored.
I am a foreign national. Am I entitled to severance pay?
The statute applies to employees working in Korea, but how it works for a foreign worker can depend on the visa and the contract (for example some workers are covered by a separate scheme). This page only calculates the statutory formula. Confirm your entitlement with your employer or the local Employment Center.
Is severance pay taxed?
Yes. Severance pay is retirement income, taxed separately from your salary using the service-year deduction and the converted-salary deduction described above. The page shows the income tax and the local income tax (10% of it). If you receive the money through a retirement pension account, the timing of tax can differ.
What is the ordinary wage and why does it matter?
The ordinary wage is the fixed pay for regular work, such as base pay and fixed allowances, expressed per hour or day. If the average wage calculated from your last three months is lower than the ordinary wage — for example when pay in those months was unusually low — the ordinary wage is used instead, so the real severance can be higher than this calculator shows.
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