South Korea Severance Calculator (퇴직금)
Calculate Korean severance pay: 1 month average wage per year of service. Minimum 1 year eligibility. Includes prorated partial year, estimated severance tax, and net amount.
Employment Details
Severance Calculation
Come utilizzare South Korea Severance Pay Calculator (퇴직금)
Enter average monthly salary for last 3 months
Korean severance is based on the average daily wage over the last 3 months. Enter the average monthly salary (including allowances, but excluding irregular bonuses unless included).
Enter years and months of service
Enter full years worked and additional months. Minimum 1 year of service and 15+ hours/week average are required for severance eligibility.
Configure bonus inclusion
If annual bonuses should be included in the severance calculation (1/12 of annual bonus added to daily wage base), toggle this option and enter the annual bonus amount.
Review severance and estimated tax
See severance for full years, prorated partial year amount, total severance, estimated severance tax (퇴직소득세), and net amount.
Suggerimenti
- Transfer severance to an IRP account to defer taxes — taxes are paid only when you withdraw from IRP, often at a lower rate in retirement.
- The Labor Standards Act minimum (30 days/year) applies to regular employees. Some companies offer enhanced severance in their employment contracts.
- If your salary varied significantly in the last 3 months, severance could be higher or lower than 1 month's current salary — use the actual 3-month average.
- Keep records of all wage components — disputes over severance calculation are common and require detailed payroll documentation.
Domande frequenti
What is Korean severance pay (퇴직금)?
Korean severance pay (퇴직금) is a mandatory lump sum payment under the Labor Standards Act. It equals 30 days of average wages for each year of service. All employees working 1+ year with 15+ hours/week average are entitled. It is paid upon any termination: resignation, dismissal, retirement, or contract end.
How is average daily wage calculated?
Average daily wage = (Total wages in the last 3 months) ÷ (Total calendar days in those 3 months). This includes base salary, allowances, and pro-rated bonuses (1/12 of annual bonuses if paid regularly). The 3-month period is the 3 months immediately before termination.
What is the difference between severance (퇴직금) and IRP (개인형 퇴직연금)?
Traditional severance (DB/DC 퇴직금) is paid as a lump sum or accumulated in a corporate account. Since 2022, companies with 10+ employees must use a retirement pension scheme (퇴직연금 DB/DC/IRP). The IRP (Individual Retirement Pension) transfers severance to an individual retirement account with tax deferral benefits.
How is severance taxed (퇴직소득세)?
Severance pay receives preferential tax treatment as retirement income (퇴직소득). The tax is calculated by: (1) deducting근속연수공제 (service duration deduction), (2) annualizing the remaining amount, (3) applying progressive income tax rates, (4) de-annualizing back. The effective rate is much lower than equivalent salary income.
Does severance apply to part-time workers?
Part-time workers (단시간근로자) who work fewer than 15 hours per week on average are excluded from the mandatory severance scheme. However, part-time workers working 15+ hours/week on average qualify for severance under the same rules as full-time workers.