Korea Severance Pay for Foreigners: 30 Days' Pay for Each Year Worked

Last updated: 27 October 2026. Law read that day on law.go.kr: the Employee Retirement Benefit Security Act (근로자퇴직급여 보장법) in the version in force from 1 July 2026, its Enforcement Decree in force from 24 March 2026, the Labor Standards Act (근로기준법) in force from 8 October 2026, the Act on the Employment of Foreign Workers and the Income Tax Act. ₩1,334 = US$1 (Federal Reserve, 16 October 2026). A guide, not legal advice; sources at the end.

Korea severance pay (퇴직금, toejikgeum) is not a perk your employer chooses to offer. It is a legal debt. Under Article 8 of the Employee Retirement Benefit Security Act, a worker who leaves gets at least 30 days of average wage for every year of continuous service. In practice that is roughly one month's pay per year. It applies to every workplace in South Korea with employees, from a five-desk hagwon in Busan to a factory line in Gyeonggi, and it does not care what passport you hold: the Labor Standards Act bans different working conditions on the grounds of nationality.

There are two conditions, and both sit in Article 4. You must have worked one year or more without a break, and your contracted hours must average 15 or more a week over four weeks. Miss either and the law owes you nothing. So the answer to "what happens if I leave after 11 months" is zero, and some employers know it.

This guide sets out the formula with two worked examples, the one-year and 15-hour thresholds, the 14-day payment deadline, the tax on the payout, what EPIK and hagwon teachers on E-2 visas should check, and how the departure guarantee insurance (출국만기보험) works for E-9 factory and farm workers.

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Quick Guide: severance pay in Korea, October 2026

The figures above are the legal floor. A contract, an EPIK agreement or a company pension plan can give you more, never less.

No product changes what you are owed. The folder only makes it easier to prove.

The law in two articles: one year, 15 hours, 30 days

The Korean text is short. Article 4(1) of the Employee Retirement Benefit Security Act (근로자퇴직급여 보장법) says an employer must set up at least one retirement benefit scheme for departing workers, (our translation) "except for a worker whose continuous service is less than one year, or whose contracted working hours average less than 15 hours a week over four weeks." Article 8(1) says the severance scheme must pay "30 days' or more of average wage for each year of continuous service."

Three details in those lines matter to foreign workers:

• "Continuous service" (계속근로기간) is the time from your first day to the day the employment ends. A Korean worker and a foreign worker count it the same way.
• "Contracted hours" (소정근로시간) means the hours in your contract, not overtime. A part-time tutor contracted for 14 hours a week who regularly works 20 is in an argument about what the real contract was, not an automatic win.
• "30 days or more" is a floor. Employers can be more generous, and some public-sector and large-company contracts are.

Article 11 closes a loophole. If an employer never set up any scheme at all, the law treats it as having set up the standard severance scheme. "We don't do severance here" is not a legal position.

What about workplace size? Many Korean labour protections only apply at businesses with five or more regular employees. Severance is not one of them. Article 3 applies the Act to every business that uses workers, with only two exceptions: a business that employs only relatives living together, and domestic work inside a household.

How Korea calculates severance: the formula

The ministry's own calculator on moel.go.kr runs one line of arithmetic:

Severance = daily average wage × 30 × (days employed ÷ 365)

Daily average wage (평균임금) comes from Article 2(1)6 of the Labor Standards Act: the total wages paid in the three calendar months before the leaving date, divided by the total number of days in that period. That period is 89 to 92 days depending on the months, weekends included. The calculator adds two more items to the wage total: 3/12 of the annual bonus and 3/12 of the annual-leave allowance paid in the past year. It uses gross pay, before tax and insurance.

The leaving date in the calculator is the day after your last day of work. Last working day 28 February? Your leaving date is 1 March.

Two exclusions come from the Labor Standards Act Enforcement Decree, Article 2. If the three-month window includes a probation period (first three months), maternity leave, parental leave, sick leave approved by the employer, or a shutdown the employer caused, those days and the pay for them are taken out. That stops a low-paid stretch dragging the average down. One-off payments and payment in kind are also left out of the wage total.

The floor is in Article 2(2): if the average wage comes out lower than your ordinary wage (통상임금, the fixed pay for your contracted hours), the ordinary wage is used instead. On a flat monthly salary with no overtime, this check can change the answer, so enter both figures. The ministry calculator has a field for the daily ordinary wage and uses whichever is higher.

Worked examples: what you would actually receive

Both examples are hypothetical workers using the ministry's formula. Average wage only, no ordinary-wage adjustment.

Example A is the classic one-year teaching contract. The 90-day February window makes the daily figure high enough that a year comes out at exactly one month's pay. Example B shows why the bonus matters: a worker who gets a ₩1.2 million annual bonus and is paid out for unused annual leave raises the daily figure by about ₩4,900 and the payout by about ₩390,000.

Now the case people search for:

The pro-rating cuts both ways. Once you pass the one-year line, every extra day counts: 1 year and 6 months pays about 1.5 times the annual figure, not 1 times. Below the line there is no pro-rating at all. Wages and other money owed still have to be settled within 14 days under Labor Standards Act Article 36, including any unused annual-leave pay you have earned. Severance just isn't one of them.

You might like: Korea Minimum Wage 2027: ₩10,700 an Hour, ₩2,236,300 a Month — What Foreign Workers Are Owed and What They Actually Earn

Leaving after 11 months: what the law does and does not protect

The one-year rule creates an obvious temptation for employers: end the contract a few weeks before the anniversary. For an employer paying ₩2.5 million a month, that saves ₩2.5 million. What protection is there?

If the employer fires you, the Labor Standards Act still applies. Under Article 26, dismissal needs 30 days' notice or, instead, 30 days of ordinary wage, once you have worked three months. At workplaces with five or more regular employees, Article 23 also requires a justifiable reason, and you can bring an unfair-dismissal claim to the Labor Relations Commission. Being let go to avoid severance is not, by itself, a lawful reason. But fighting it takes time, and an E-2 visa tied to that employer does not wait.

If you quit at 11 months, there is nothing to claim. Severance is a debt that only exists after one year.

If your contract simply ends at 11 months and is not renewed, there is also no severance. Read the end date before you sign, not after. A standard one-year contract should end on the day before the anniversary of your start date, not two weeks earlier.

If your contracts were renewed back to back, Korean courts and the ministry generally count the whole run as one continuous period of service. Two six-month contracts in a row, with no real gap, are normally one year for severance. Courts have looked at gaps case by case: a short gap with no real reason has still been counted as continuous service (Supreme Court 2006.12.7, 2004다29736), so a gap engineered around the anniversary is worth challenging.

"Severance included in salary" clauses are a second trick. Korea's Supreme Court, sitting en banc in May 2010 (case 2007다90760), held that an agreement to split severance into the monthly salary is generally not a valid severance payment, because the right to severance only arises when you leave. The same ruling lets the employer reclaim the extra money it paid as unjust enrichment, though it can only offset that against the part of your severance above one half. The case concerned the pre-2005 Labor Standards Act, so the result is messy. If your contract says severance is "included", ask the labour office before you count on either outcome.

EPIK and hagwon teachers on E-2 visas

Most foreign searches for "south korea severance pay" come from English teachers on E-2 visas, either in public schools through EPIK (English Program in Korea, run with the provincial offices of education) or in private academies (hagwon, 학원). The statute treats both the same. A teacher who completes a full year, at 15 or more contracted hours a week, is owed at least 30 days' average wage.

What differs is the paperwork around it:

• EPIK contracts are one-year contracts with the local office of education, and payment arrangements (timing, how renewals are handled) are written into the contract and the yearly guidelines. Read the severance and renewal clauses in your own contract. No contract clause can go below the statutory floor.
• Hagwon contracts vary from careful to careless. Check three things on day one: the start date (it is what the one-year count runs from), whether the contracted hours are written down, and whether any line says severance is "included" in pay.
• Visa timing: an E-2 visa usually runs close to the contract. If the employer delays payment past day 14, you may be on a plane by the time interest starts. Ask in writing, before your last week, for the payment date and the amount.

Teachers from countries with a pension agreement can also claim back their National Pension contributions when they leave. That is a separate lump sum from a separate agency. The two together are the "money before you fly" that many teachers miss.

You might like: Korea National Pension Refund for Foreigners: 50 Countries Qualify, China and Japan Don't — Unless You Worked on an E-9 or H-2 Visa

How you get paid: 14 days, cash if you are leaving Korea

Article 9(1) gives the employer 14 days from the day the payment becomes due, which in practice means from your leaving date. The two sides may agree in writing to a later date "in special circumstances". An employer cannot impose that alone.

Since 2022, Article 9(2) has had a twist that Korean workers know and foreigners rarely hear about. Severance is supposed to be paid into an Individual Retirement Pension account (개인형퇴직연금, IRP) that the worker names, not into a normal bank account. The point is to push Koreans to save it for retirement.

The Enforcement Decree, Article 3-2(1), lists the exceptions where it can be paid directly, and one of them is written for foreigners: a worker who worked in Korea on a status of stay that permits employment under the Immigration Act Enforcement Decree, left the job, and then departed Korea. Others include workers aged 55 or over, a payout below a small amount set by the labour ministry, and death.

So:

If you stay in Korea and the money goes into an IRP, the severance income tax is deferred rather than withheld. You can usually close the account and take the money, but the deferred tax is then deducted. Ask the bank what you will receive after tax before you close it.

Late payment costs the employer. Article 37 of the Labor Standards Act applies delay interest to severance paid as a lump sum from the day after the 14-day deadline, and the Enforcement Decree, Article 17, sets the rate at 20% a year. On Example A's ₩2.5 million, that is about ₩1,370 a day.

Non-payment is a crime. Article 43(1) of the Retirement Benefit Act, in the version in force from 1 July 2026, punishes an employer who fails to pay severance under Article 9(1) with up to 5 years in prison or a fine of up to ₩50 million. There is a catch: the prosecution cannot proceed against the clearly expressed wishes of the worker, except for employers whose names are on the government's published list of wage defaulters during the listing period. Employers sometimes use that to bargain: pay part, if you drop the complaint.

The time limit is three years (Article 10). A teacher who left in February 2026 has until February 2029, even from abroad.

E-9 and H-2 workers: the departure guarantee insurance (출국만기보험)

Workers hired through the Employment Permit System (고용허가제, EPS), mostly on E-9 visas in factories, farms, fishing and construction, get their severance through a dedicated insurance policy. Article 13 of the Act on the Employment of Foreign Workers requires their employer to buy departure guarantee insurance or a trust (출국만기보험·신탁) in the worker's name and pay into it every month. Buying it counts as setting up the severance scheme.

The details are in the Act's Enforcement Decree, Article 21:

• Who must buy it: employers covered by the Retirement Benefit Act who hire an EPS worker with one year or more of permitted employment left. Employers in the construction special-employment scheme (H-2 construction) are excluded.
• When: within 15 days of the contract taking effect, with a monthly amount set by ministry notice on top of wages.
• When it pays: after one year or more of service, when the worker leaves Korea (not a short trip), dies or changes status of stay. Under one year, the money goes back to the employer, the same one-year rule again.
• How fast: the insurer pays within 14 days of departure, or 14 days from the claim if you claim after leaving or because your status changed (Act Art. 13(3)).
• The gap: if the insurance pays less than the statutory severance, the employer must pay the difference (Decree Art. 21(3)). You can ask the insurer for a written statement of the amount to check it (Art. 21(4)).
• Unclaimed money: the right expires after 3 years. The insurer then has one month to transfer the money to HRD Korea (한국산업인력공단) (Act Art. 13(4)), where it is held for the workers first.

It is separate from the return-cost insurance (귀국비용보험) the worker buys under Article 15, which covers the flight home. Many E-9 workers leave with three payouts: the departure guarantee money, the return-cost insurance and, for some nationalities, a pension refund.

You might like: Korea Health Insurance for Foreigners: At Least ₩158,630 a Month After Six Months — Students, Workers, and What Happens If You Don't Pay

Severance pay tax in Korea: usually small

Severance is taxed as retirement income (퇴직소득), on its own and not added to your salary. Under Income Tax Act Article 48, the tax for a Korean tax resident is worked out in four steps, and the employer withholds it:

1. Subtract a service deduction: ₩1 million per year of service up to five years (part years count as a full year).
2. Annualise: divide what is left by the years of service and multiply by 12.
3. Subtract a second deduction: 100% of the first ₩8 million of that annualised figure, plus 60% of the part between ₩8 million and ₩70 million.
4. Apply the normal income tax rates (6% up to ₩14 million) to the result, then divide by 12 and multiply by the years of service again (Art. 55(2)). Local income tax adds 10% of that.

For the amounts most foreign workers receive, the result is small. Example A's ₩2.5 million comes to about ₩20,000 of income tax plus ₩2,000 local tax. Example B's ₩8.2 million comes to about ₩77,600 plus ₩7,800. The numbers grow with long service and high pay, and anyone who was a non-resident for tax purposes, or who has a tax treaty question, should check the withholding statement the employer issues.

If your employer does not pay

The route is the same for Korean and foreign workers:

1. Ask in writing after day 14, quoting Article 9 of 근로자퇴직급여 보장법 and the amount you calculated. Keep the reply.
2. File a complaint (진정, jinjeong) with the regional employment and labor office for the workplace's area. It can be filed online through the Ministry of Employment and Labor's site or in person. The ministry's call centre is 1350.
3. Bring the evidence: contract, payslips or bank statements showing salary, the start and end dates, your residence card. A labour inspector calculates the amount and orders payment.
4. If you have left Korea, the three-year limit still runs. A complaint can be filed through a representative, but it is much easier to file before you go.

The law also puts severance near the front of the queue if the business fails. Under Article 12(2), severance for the last three years of service ranks ahead of secured creditors and taxes.

The honest part: what this guide cannot tell you

• The ordinary-wage check can raise your figure. Our examples use the three-month average only. If your fixed pay for contracted hours works out higher per day, Article 2(2) uses that instead. Enter both into the ministry calculator.
• Pension plans change the mechanics, not the floor. If your employer runs a defined-benefit plan (DB), the payout must still be at least 30 days' average wage per year (Art. 15). Under a defined-contribution plan (DC), the employer pays at least 1/12 of your annual wages into your account each year (Art. 20(1)), and what you get depends on how the account performed.
• Undocumented work and disputes over whether you were an employee at all (freelance tutors, platform work) turn on facts. Ask the labour office or a certified labour attorney (공인노무사).
• Contract terms differ. EPIK, universities and large companies may pay more than the law, or on a different schedule. Your contract governs anything above the floor.

FAQ

Q: How much is severance pay in Korea?

A: At least 30 days of average wage for each year of continuous service, pro-rated by days. For a salaried worker with no large bonus that is roughly one month's pay per year: about ₩2.5 million (about $1,874) for one year on ₩2.5 million a month. It is the same for foreign and Korean workers.

Q: Do I get severance pay if I leave after 11 months in Korea?

A: No. Article 4(1) of the Retirement Benefit Act excludes workers with less than one year of continuous service. Wages and unused leave pay are still owed within 14 days, but statutory severance is zero. Some contracts pay a completion bonus or pro-rated severance anyway; check yours.

Q: Is there a Korea severance pay calculator?

A: Yes. The Ministry of Employment and Labor runs one on moel.go.kr (퇴직금 계산기). Enter the start date, the leaving date (the day after your last working day), three months of gross pay, any annual bonus and annual-leave allowance, and your daily ordinary wage. It uses daily average wage × 30 × days ÷ 365.

Q: How long does an employer have to pay severance in Korea?

A: Fourteen days from when you leave, unless you both agree to a later date. After that, delay interest runs at 20% a year, and non-payment is a criminal offence with a maximum of five years in prison or a ₩50 million fine.

Q: Do part-time workers get severance pay in Korea?

A: Yes, if their contracted hours average 15 or more a week over four weeks and they have worked a full year. Below 15 contracted hours, the Act does not require severance.

Q: Is severance pay taxed in Korea?

A: Yes, as retirement income, separate from salary, and the employer withholds it. After the service and annualising deductions, the tax on one or two years' severance at typical salaries is usually tens of thousands of won, not hundreds of thousands.

Sources

• Employee Retirement Benefit Security Act (근로자퇴직급여 보장법), version in force from 1 July 2026 (amended 17 March 2026; MST 284455): Art. 2 (definitions), Art. 3 (scope), Art. 4(1) (one-year and 15-hour exclusions), Art. 8 (30 days' average wage per year; interim settlement), Art. 9 (14 days; IRP transfer), Art. 10 (3-year limitation), Art. 11 (deemed severance scheme), Art. 12 (priority of the last 3 years), Art. 15 (DB level), Art. 20(1) (DC 1/12) and Art. 43 (up to 5 years or ₩50 million), National Law Information Center (law.go.kr), read 27 October 2026.
• Enforcement Decree of the same Act (근로자퇴직급여 보장법 시행령), in force from 24 March 2026: Art. 3-2 (exceptions to IRP transfer, including foreign workers who leave Korea), law.go.kr, read 27 October 2026.
• Labor Standards Act (근로기준법), in force from 8 October 2026: Art. 2(1)6 and 2(2) (average wage; ordinary-wage floor), Art. 6 (no discrimination by nationality), Art. 26 (30 days' notice), Art. 36 (14-day settlement) and Art. 37 (delay interest), law.go.kr, read 27 October 2026.
• Enforcement Decree of the Labor Standards Act (근로기준법 시행령), in force from 23 October 2025: Art. 2 (periods and pay excluded from average wage) and Art. 17 (20% a year), law.go.kr, read 27 October 2026.
• Act on the Employment of Foreign Workers (외국인근로자의 고용 등에 관한 법률), in force from 1 October 2025: Art. 13 (departure guarantee insurance, 14-day payment, 3-year limitation) and Art. 15 (return-cost insurance), and its Enforcement Decree, Art. 21 (who must buy it, the one-year rule, the employer's duty to pay the difference), law.go.kr, read 27 October 2026.
• Income Tax Act (소득세법), in force from 1 January 2026: Art. 48 (retirement income deductions) and Art. 55 (rates; retirement income tax), law.go.kr, read 27 October 2026.
• Ministry of Employment and Labor, 퇴직금 계산기 (severance calculator), formula read from the page script 27 October 2026 (daily average wage × 30 × days employed ÷ 365; 3/12 of annual bonus and leave allowance; leaving date = day after the last working day).
• Supreme Court of Korea, en banc judgment of 20 May 2010, 2007다90760 (severance split into monthly salary), summary via korea.legal; judgment of 7 December 2006, 2004다29736 (renewed contracts and gaps).
• Exchange rate: Federal Reserve H.10 via FRED (DEXKOUS ₩1,334.03 per US$), 16 October 2026. Dollar figures are rounded.

The short version: work one full year at 15 or more contracted hours a week, and Korea owes you at least 30 days' average wage for every year, paid within 14 days and as cash if you are leaving the country. Leave one day short of a year and it owes you nothing, so check the end date on your contract the day you sign it.