Marcus finished a two-year contract at a hagwon in Daegu. On his last day the director handed him his final salary and a cheerful goodbye card. No severance. "It's included in your monthly pay," the director said. "It's in the contract."
Marcus wasn't sure whether to argue. His flight was in ten days.
Marcus is owed about ₩5.4 million, and the “included in salary” clause doesn’t change that. Korean law makes severance a separate payment due within 14 days of the last day of work, for every worker of any nationality who completes one year.
Who is owed severance
You qualify when all three are true:
- You worked at least one year (365 days) for the same employer.
- Your scheduled hours averaged 15 or more a week.
- You were an employee (근로자), not a genuine freelancer, whatever your contract calls you.
Visa type doesn’t matter. E-2 teachers, E-7 professionals, E-9 factory workers and part-timers on D-2 permits are all covered by the Employee Retirement Benefit Security Act.
The formula
Severance = average daily wage × 30 × (days employed ÷ 365)
The average daily wage (평균임금) is your total pay in the 3 months before your leaving date, divided by the days in those 3 months. Add 3/12 of any bonuses and unused-leave pay from the last 12 months.
Marcus: ₩2,700,000 a month, 1 March 2024 to 28 February 2026 (730 days).
Last 3 months: ₩8,100,000 ÷ 90 days = ₩90,000 a day
₩90,000 × 30 × (730 ÷ 365) = ₩5,400,000
“Severance is included in your salary”
"Your monthly pay already includes severance, it's in the contract you signed."
Severance can't be prepaid in monthly installments. Courts treat those amounts as ordinary wages, and the full severance is still owed when you leave.
Getting paid when you’re about to fly out
- The deadline is 14 days after your last day. Ask for payment on the last day or the next payday, in writing (a KakaoTalk message counts as a record).
- If the money doesn’t arrive, report it to the Ministry of Employment and Labor: call 1350 (interpreters available) or file online at the labor portal. You can file before you leave Korea and follow up from abroad.
- Unpaid wages and severance can also be claimed by a labor attorney or the free legal aid service for workers.
Don't resign on day 364. Severance is all or nothing at the one-year mark, so if you're close, work through your first anniversary. Our severance calculator shows the exact date you cross the line.
Tax on severance
Severance is taxed as retirement income, which is taxed far more gently than salary. On a couple of years at an ordinary wage the tax is usually small. Your employer withholds it and gives you a statement.
Leaving Korea for good? Don’t forget your other payout, the National Pension refund, which may be worth even more.
Sources: Employee Retirement Benefit Security Act art. 4, 8, 9; Labor Standards Act art. 2 (average wage), 36.
Try it with your own numbersKorea Severance Pay CalculatorEnter your dates and recent pay to see the severance your employer owes when you leave.Written from the laws and official notices in force on the date above. Rules change and every case is different, so check with the office named in the article before an important decision. Spotted something out of date? Tell us.