Korean Severance pay (retirement pay) is the compensation that an employee in Korea is entitled to receive from their employer when employment ends. Under the Korean Employee Retirement Benefit Security Act, a regular full-time employee in South Korea shall receive severance pay within 14 days from termination of employment. The amount of severance pay equals the employee’s one-month salary for each year of consecutive service, pro-rated after the first year.
For similar articles, you may read: Statutory Severance Obligations in Korea after Acquisition of Company in Korea and Status of Interns Under the Korean Labor Standards Act: Employees Entitled to Severance/Minimum Wage?
Korean Severance Pay Law
How to Compute Severance Pay in Korea?
Korean severance pay is calculated by taking the employee’s average daily salary for the last three months and multiplying it by 30 days. The sum (Average Daily Salary x 30) will then be multiplied by the total number of consecutive service days divided by 365. Severance pay is only owed after one year of continuous service to the employer in Korea.
Severance Pay = Average Daily Salary x 30 (days) x (total days of consecutive service/365).
Right to Receive Severance Payment
Full-time employees are entitled to receive severance payments regardless of the reason for termination of employment. Hence, an employee who voluntarily resigned and an employee who was terminated for justifiable cause are both eligible to receive severance pay in Korea. However, severance pay is not owed to employees in Korea who work fewer than 15 hours per week or who have less than 1 year of service with the company.
If you would like to know more about Severance Payments or Korean Labor or Employment Law, you may schedule a No-Charge Initial Consultation with a lawyer at: Schedule a Call.
Additional Articles on Korean Severance by IPG Legal can be found below:
- Shall Korean Bonuses be Utilized for Calculating Average Wages for Severance Payment Calculation Purposes?
- Paying Severance Pay in Installments in Korea
- Not Paying Korean Statutory Severance to an Employee in Korea is a Crime
- Is a Non-Korean Employer Obligated to Pay Severance Pay under Korean Law?
- Statutory Severance Obligations in Korea after the Acquisition of a Company in Korea
- Korean Supreme Court: Broad Recognition of Status of “Employee” under the Korean Labor Standards Act
by Sean Hayes
Sean Hayes, a senior lawyer at IPG Legal, is widely recognized for advising multinational companies, investors, and executives on complex labor and employment law matters in Korea and across Asia. Drawing on decades of experience representing foreign companies operating in highly regulated and complex jurisdictions, Hayes regularly counsels clients on employment contracts, terminations, workplace investigations, labor compliance, and disputes before Korean labor authorities and courts. Through his work with global companies, franchises, technology firms, and manufacturing groups, he helps employers navigate Korea’s strict and ever-changing labor laws while minimizing litigation risk and ensuring compliance with evolving employment standards.
Sean’s profile may be found at: Sean C. Hayes. If you would like a consultation with an attorney, please: Schedule a Call with an Attorney.
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