Severance Calculator

Severance pay equals the employee's average monthly pay (averaged over the last 3 months) multiplied by years of service. The formula is: avg. monthly pay × months employed ÷ 12.

Any employee with 1 or more years of continuous service is entitled to at least 30 days' average pay per year of service under the Labor Standards Act.

Since 2012, mid-term severance settlement has been generally restricted. It is only permitted under specific legal circumstances: purchasing a home without current ownership, securing a lease deposit (jeonse), covering medical costs requiring 6+ months of treatment, or when bankruptcy proceedings have been initiated. Employees enrolled in a DC-type (defined contribution) pension plan can make mid-term withdrawals instead.

Under a DC plan, the company deposits at least a set percentage of the employee's annual total wages into the employee's individual account each year. This means contributions are automatically accumulated on an ongoing basis, and there is no separate severance settlement at the time of resignation. The Severance Calculator is intended as a reference tool based on the statutory severance formula under the Labor Standards Act; DC plan members should check their actual account balance with the relevant financial institution.

Under the Korean Labor Standards Act, severance pay is only legally required for employees with 1 or more years of continuous service. Employees with less than 1 year of service are generally not entitled to statutory severance, though some companies voluntarily pay a prorated amount. Check your employment contract or company policy to see if this applies to you.

Severance pay is calculated using the formula: average wage × days of service ÷ 365, so it grows in direct proportion to tenure. For example, with an average monthly wage of 3 million won, 10 years of service yields approximately 30 million won and 20 years yields approximately 60 million won. Switch the tenure slider between 10, 20, and 30 years on the result card to see the change directly. This comparison is useful when considering mid-career resignation or the timing of re-employment.

The average wage used for severance calculation is based on total wages paid in the three months before the resignation date. Regularly paid bonuses and overtime pay may be included in the average wage under Article 6 of the Enforcement Decree of the Labor Standards Act, while expense-reimbursement items and welfare benefits may be excluded. Entering the accurate three-month average wage in the slider will bring the calculated result closest to the actual severance amount. For a precise determination, consult the Ministry of Employment and Labor or a labor attorney.