Severance Pay Calculator
Calculate your severance pay based on tenure and average salary
Input
| 3-Month Salary Total | ₩9,000,000 |
| Bonus Addition (3mo/12) | +₩750,000 |
| Leave Addition (days/12) | +₩125,000 |
This calculator is for informational purposes only and should not be considered as financial advice. Actual values may vary.
What is Severance Pay Calculator?
The Severance Pay Calculator computes the legally mandated severance payment that Korean employers must provide to employees who have worked for one year or more. Under the Korean Labor Standards Act, severance pay is calculated as the daily average wage multiplied by 30 days for each year of continuous service. The daily average wage is determined by dividing the total earnings for the last three months (including base salary, bonuses, and unused annual leave allowance) by the total number of calendar days in those three months. The formula is: Severance Pay = Daily Average Wage × 30 × (Total Tenure Days / 365). This calculator requires your start and end dates of employment, the base salary for each of the last three months, any bonuses or additional pay received during those three months, and the monetary value of unused annual leave. It then automatically computes your total tenure, daily average wage, and final severance amount. Severance pay is a significant financial right for Korean workers, and employers must pay it within 14 days of the employee's last working day. Understanding how severance is calculated helps you verify your employer's calculations and plan your finances during career transitions.
How to Use
- Select the start date and end date.
- Enter the base salary for each of the last 3 months.
- Enter the bonus for the last 3 months and unused annual leave allowance.
- The severance pay will be calculated automatically.
Tips & Best Practices
- Keep records of all salary payments, bonuses, and overtime for the last three months of employment, as these directly affect your severance calculation.
- Use all your annual leave before resigning if possible, but know that unused days must be included as allowance in the severance calculation if you do not.
- If you receive irregular bonuses, calculate the three-month prorated amount carefully, as this can significantly increase your daily average wage.
- Consider transferring your severance pay to an Individual Retirement Pension (IRP) account to defer taxes and benefit from tax deductions.
- Verify that your employer includes all forms of regular compensation (overtime, night shift pay, holiday pay) in the last three months' total for an accurate calculation.
Use Cases
Resignation Planning
Calculate your expected severance pay before submitting a resignation to plan your finances during the job transition period.
Employer Verification
Cross-check the severance amount offered by your employer against this calculator to ensure the calculation is correct.
Retirement Planning
Estimate your total severance payout after a long career to incorporate it into your retirement savings plan.
Career Change Evaluation
Factor in severance pay when evaluating whether to leave a current position for a new opportunity, especially for long-tenured employees.
FAQ
What are the conditions for severance pay?
Workers who have been employed for at least 1 year are eligible. It is calculated as daily average wage x 30 x (tenure days / 365).
How is the daily average wage calculated?
Add the total salary for the last 3 months, plus prorated bonus (annual bonus/12*3) and unused leave allowance, then divide by the total days in those 3 months.
What is the severance pay system in Korea?
Under Korea's Labor Standards Act, all workers employed for at least one year must receive severance pay of at least 30 days' average wages per year of service upon leaving.
What is the difference between severance pay and retirement pension (DC/DB)?
Severance pay is a lump sum at retirement, while DB pension is managed by the employer and DC pension by the employee. Retirement pensions can be transferred to an IRP account for tax benefits.
Is my salary data stored?
No, all calculations are performed in your browser and no salary data is sent to or stored on any server.
When must severance pay be paid?
The employer must pay severance within 14 days of the employee's last day. Unjustified delays incur penalty interest at an annual rate of 20%.
What if I worked for less than one year?
Legally, severance pay is only mandatory for employees who have worked for at least one year. If your tenure is less than 12 months, you are generally not entitled to statutory severance pay, though some companies may offer it voluntarily.
Are bonuses included in severance pay calculations?
Yes, bonuses received during the last three months are prorated and included. The calculation adds (total bonus for last 3 months / 12 × 3) to the three-month salary total before computing the daily average wage.
Is severance pay taxable?
Yes, severance pay is subject to retirement income tax in Korea. However, if you transfer it to an IRP account, taxes are deferred until withdrawal, and the tax rate applied at retirement is generally lower.
What if the employer refuses to pay severance?
If an employer fails to pay severance within 14 days without justifiable reason, they must pay penalty interest at 20% per year on the overdue amount. You can file a complaint with the Ministry of Employment and Labor.
Does part-time work qualify for severance pay?
Yes, part-time workers who have worked at least 15 hours per week for over one year are entitled to severance pay. The calculation is based on their actual hours and wages.
How does the DB/DC retirement pension system relate to severance?
If your company has a Defined Benefit (DB) pension, severance is calculated the same way but paid from the pension fund. With Defined Contribution (DC), the employer makes regular contributions equal to 1/12 of annual salary, which you manage in your own pension account.